Canadian Economic Response to the Covid-19 Outbreak
On March 19th, we provided some information on preliminary steps that the Government of Canada had taken to provide relief to those financially impacted by the Covid-19 outbreak. At that time, the federal government promised that these were just initial measures and that additional relief and changes would be made as the situation evolved. True to their word, over the past week we have seen both new announcements as well as changes to previously announced relief. We have summarized these updates and new announcements below; however, we note that there are still a number of details yet to be released and the possibility for more change as the situation evolves.
Relief for Individuals
Employment Insurance (EI)
Those who have been temporarily laid off or have significantly reduced hours, and qualify for EI benefits, can apply for EI benefits through Service Canada. For more information on EI benefits visit: www.canada.ca/en/services/benefits/ei/ei-regular-benefit.html
In addition, those that are eligible, can also access the EI sickness benefits if they are unable to work due to injury, illness or quarantine. You can find more information on EI sickness benefits at https://www.canada.ca/en/services/benefits/ei/ei-sickness.html.
Canada Emergency Response Benefit (CERB)
This benefit will replace the previously announced Emergency Care Benefit and Emergency Support Benefit. The CERB will provide a benefit of $2,000 a month for up to four months.
Specific eligibility criteria have not been released however the government has noted vast eligibility criterion including:
· Workers who must stop working due to COVID-19 and do not have access to paid leave or other income support.
· Workers who are sick, quarantined, or taking care of someone who is sick with COVID-19.
· Working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures.
· Workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work.
· Wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.
While this benefit appears to cover most employees and self-employed individuals who have ceased work, it is yet to be seen whether there will be any benefit for self-employed individuals who have not completely stopped working but who’s income has been significantly reduced as a result of Covid-19. The Government has noted they are targeting April 6th to start taking applications for this new benefit. Until this time, they have noted that those eligible for EI can continue to apply for employment insurance.
Both EI benefits and the new CERB benefit are taxable benefits and will need to be reported as income on your 2020 tax return. Often, when administering these benefits, insufficient income tax is withheld which results in unexpected tax owing when you file your tax return.
Other Measures Being Taken:
· Mortgage and other financing – Banks are working with customers on a case by case basis. Those requiring assistance should reach out to their financial institution for accommodation.
· Support for Senior – Reduced minimum withdrawals from RRIFs by 25% for 2020.
· Six month interest free moratorium on repayment of Canada Student Loans.
· One-time special payment of the GST/HST Credit for low/modest income families.
· One-time special Canada Child Benefit payment of $300 per child to be paid in May.
Relief for Businesses
Helping Businesses Keep Their Workers
The government has updated this proposal, offering a revised temporary wage subsidy up to 75% of remuneration. The subsidy appears to still be targeted at small and mid-sized business with a goal of keeping or returning workers to employment. No information on revised maximum benefits has been announced and eligibility criteria is forthcoming.
New Canadian Emergency Business Account
Available through eligible financial institutions, small businesses and not-for-profits will be able to apply for interest-free loans of up to $40,000 during a period where their revenues have been temporarily reduced. Full eligibility criteria is forthcoming however the government has noted that applicants will need payroll between $50,000 and $1,000,000 annually. They have also indicated their intention to forgive 25% of the loan if the loan is repaid by December 31, 2022.
Businesses, including self-employed individuals, have been given a deferral of their HST payments until June 30th. The following HST payments are deferred until June 30th:
· Monthly Filers – February, March and April 2020 payments
· Quarterly Filers – January – March 2020 quarter payments
· Annual Filers – Amounts collected and owing from previous fiscal year and instalments in respect of your current year
Tax Filing Deadlines
The Canada Revenue Agency has announced a number of updated filing deadlines – you can find a list of them all here: https://bit.ly/2UL2Pr4