*Updated March 25, 2020
On March 18, 2020, Prime Minister Justin Trudeau and Minister of Finance Bill Morneau announced an $82 billion economic stimulus package aimed at providing financial aid to individuals and businesses impacted by the COVID-19 pandemic. The emergency aid bill, entered into the House of Commons on March 24, 2020, will provide up to $27 billion in direct support to Canadian workers and businesses and $55 billion in estimated tax deferrals. See below for a summary of the highlights.
Support for individuals
- Increasing the Canada Child Benefit (CCB)
For families with children, the Government is proposing to increase maximum annual Canada Child Benefit (CCB) amounts, only for the 2019-20 benefit year, by $300 per child, effective for the May payment.
- Goods and Services Tax (GST) Credit Special Payment
For low and modest-income families, the Government is proposing to provide a one-time special payment by early May through the GST tax credit. This measure will double maximum annual GSTC payment amounts for the 2019-20 benefit year. The average increase to income for those benefiting from this measure will be close to $400 for single individuals and close to $600 for couples.
- Employment Insurance (EI) Waiting Period Elimination
The one-week waiting period for individuals in imposed quarantine who claim Employment Insurance (EI) sickness benefits will be waived. This temporary measure is in effect as of March 15, 2020. The requirement to provide a medical certificate to access EI sickness benefits is also being temporarily waived.
- New Canada Emergency Response Benefit (CERB)
On March 25, 2020 Justin Trudeau announced the government is merging the two previously announced EI benefits — the Emergency Care Benefit and Emergency Support Benefit — into the Canada Emergency Response Benefit (CERB) that will provide up to $2,000/month for the next four months. The benefit is for people who are off work and without an income as a result of COVID-19, including those who are self-employed. Application for this benefit is aimed to open on April 6th and Canadians are told they should receive this assistance approximately 10 days after applying.
- Tax Deadline Extension
For individuals (other than trusts), the return filing due date will be deferred until June 1, 2020. For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020. The Canada Revenue Agency will allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020. This relief applies to tax balances due, as well as installments. No interest or penalties will accumulate on these amounts during this period.
- Mortgage and Loan Payment Deferrals
Providing assistance to homeowners through the Canada Mortgage and Housing Corporation (CMHC) and other mortgage insurers, with options that may include payment deferral, loan reamortization, capitalization of outstanding interest and other special arrangements.
- Freeze Interest Payments on Student Loans
Implementing a six-month freeze on interest payments related to the repayment of Canada Student Loans.
- Reduced Registered Retirement Income Fund (RRIF) Withdrawals
Reducing the required minimum withdrawals from RRIF's by 25% for 2020. Similar rules would apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan.
Support for businesses
- Temporary Wage Subsidy
To support businesses and help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Eligible small businesses are those eligible for the small business deduction, non-profits and charities.
- Tax Deadline Extension
Businesses may defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020. This relief would apply to tax balances due, as well as installments. No interest or penalties will accumulate on these amounts during this period.
- GST/HST and Income Tax Audits Suspended
Implementing a freeze on contacting small and medium-sized businesses regarding GST/HST or Income tax audits for the next four weeks.
- Enhanced Access to Credit
The Business Credit Availability Program (BCAP) will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. The Office of the Superintendent of Financial Institutions (OSFI) announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets, effective immediately. This action will allow Canada’s large banks to inject $300 billion of additional lending in to the economy.
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