Canada’s Government and Banks Acts to Support its Economy during Coronavirus
Last week the Canadian Federal Government issued its first significant investment into fighting the effects of Coronavirus. It totalled $1 billion, which targeted investments into our health care system. Read our summary here. Last week, Trudeau insinuated that this would be the first installment and that we should stay tuned for their additional financial package that would address the economic impact of the Coronavirus. At that time, Trudeau had mentioned that it may be in the $10 billion range.
Today, with great pride, I am delighted to advise that the Canadian government has comprehensively come through for us and issued an $82 billion package, factoring in health, employment, tax and social justice issues. This constitutes 3% of Canada’s GDP. Below we provide a summary of the Canadian government’s policy to help Canadians and Canadian businesses during Coronavirus. We also encourage you to go to the Prime Minster’s website for his direct policy statement.
This is a long list. At the end of this list, I also include a summary of what the banks are doing and strongly encourage you to also read that section.
A Summary of the Federal Government’s $82 Billion Economic Stimulus Package
1. $27 billion will be set aside for direct support for Canadian workers and businesses;
2. $55 billion will be used to facilitate tax deferrals. This enables Canadians to keep money in their pockets during this time.
3. $2 billion boost into Canada Child Benefit payments to assist families with children.
4. Up to $10 billion for income support for workers, which includes $900 bi-weekly payments to workers who do not have access to paid sick leave or EI benefits, who must stay at home because of either (a) self isolation/quarantine and/or (b) taking care of dependents/elderly who are sick. Currently, this is capped at 15 weeks.
5. Up to $5 billion for Emergency Support Benefit, delivered through the CRA, to support workers who are not eligible for EI benefits and who are facing unemployment.
6. Additional assistance for low to modest incomes for a top up through their GST credit. (There is some vagueness in how they describe this and so I am uncertain as to the specific amount set aside.)
7. Waive the 1 week waiting period for those who qualify for EI to have access. This is currently only applicable for the next 6 months.
8. Waive the requirement for a medical certificate to qualify for EI sickness benefits.
9. This section relates to personal taxes. Deferring personal tax payments until August 31, 2020. The tax filing deadline has been extended to June 1, 2020. There will be no late payment penalties during this time period. Again, this enables Canadians to have more money in their pocket. But, recognize that this is a deferral in payment. You will have to pay your taxes. Be careful and strategic as to how you spend this money as it will be money owed.
10. Eligible Canadian small businesses will be granted a 10% wage subsidy for the next 90 days up to a maximum of $1,375 per employee and $25,000 per employer.
11. Providing bank lenders with flexibility to deter mortgage payments for home owners. I have additional comments on what the banks are doing below.
12. This section relates to corporate taxes. Deferring corporate tax payments to after August 31, 2020. There will be no late payment penalties during this time period. This enables Canadian businesses to have more money in their pocket. But, recognize that this is a deferral in payment. You will have to pay your taxes. Be careful and strategic as to how you spend this money as it will be money owed.
13. $10 billion investment to increase credit available for small, medium and large businesses, which is available through BDC and EDC.
14. The scope of EDC, which currently is to support Canadian businesses exporting internationally, will be expanded to also provide support to domestic businesses.
15. The government also has the ability to provide additional support to Canadian businesses where additional support would be in the national interest to deal with exceptional circumstances. It is possible that this is code for a tourism, hospitality or airline industry bail out.
16. $50 billion investment into the Canada Mortgage and Housing Corporation to stabilize Canada’s housing market.
17. The Government is also contemplating the social justice issues that may be exacerbated during this time:
– protecting Registered Retirement Income Funds to protect seniors’ investments;
– a 6 month hold on paying back Canada Student Loan payments;
– a fund set aside for indigeneous communities;
– funds support for women and children fleeing abusive home lives;
– funds to support homeless shelters.
A Summary of the Canadian Banks Support of the Economic Stimulus Package
The Canadian banks have also been working together to help Canadians and Canadian businesses. Yesterday, Canada’s 6 largest banks (BMO, CIBC, RBC, NBC, Scotia and TD) have agreed to do their part to help personal and small businesses. This will be done on a case by case basis. This support includes up to a 6 month deferral on mortgage payments, as well as other relief on debt payments. As of right now, this is very much of a case by case situation and I was not able to get more concrete details. However, I recommend that you contact your bank directly to see what can be done about your mortgage payments and loan payment plans.