The Government of Canada's response to the COVID-19 Crisis
March 18th, 2020
Today the Government of Canada released its plan to address the economic impact of the COVID-19 virus on Canada. The economic stimulus package presented addressed a wide range of needs across Canada. As individuals are increasingly working from home and businesses are closing their doors, there is less economic activity and spending across the country. This additional economic stimulus follows last week's announcement from the Bank of Canada (BoC) to cut to the overnight rate to 0.75%.
In my opinion, I think this is an excellent stimulus package that will help Canadian's during these testing times.
Here are the highlights that I gathered from the Government's response plan:
Today the Government of Canada released its plan to address the economic impact of the COVID-19 virus on Canada. The economic stimulus package presented addressed a wide range of needs across Canada. As individuals are increasingly working from home and businesses are closing their doors, there is less economic activity and spending across the country. This additional economic stimulus follows last week's announcement from the Bank of Canada (BoC) to cut to the overnight rate to 0.75%.
In my opinion, I think this is an excellent stimulus package that will help Canadian's during these testing times.
Here are the highlights that I gathered from the Government's response plan:
- The package is a total of $82 billion which is equivalent to 3 per cent of Canada’s GDP.
- Individuals and businesses will receive $27 billion and $55 billion through tax deferrals to meet liquidity needs.
- For Canadians without paid sick leave: This also applies to quarantined individuals and those who must look after children at home. --> The government will waive the medical certificate requirement for EI benefits. Introduction of the $900 bi-weekly, for up to 15 weeks, this will be through the CRA. Individuals must reconfirm their status online every two weeks.
- For those who need long-term assistance: $5 Billion in support will be provided for workers who are not eligible for EI, also through the CRA.
- Low-income assistance: One-time special payment by early May 2020 through the Goods and Services Tax credit (GSTC). This will double the maximum annual GSTC payment amounts for the 2019-20 benefit year. This will inject $5.5 Billion into the economy.
- Families with children: Increase in the maximum annual Canada Child Benefit (CCB) payment amounts, for the 2019-20 benefit year, by $300/child. This will supply $2B in extra support.
- Indigenous communities: To address the need in Indigenous communities, a $305 million for a new distinction-based Indigenous Community Support Fund.
- Placing a six-month interest free period on the repayment of Canada Student Loans.
- Reducing the required minimum withdrawals on RRIFs by 25% for 2020, to assist seniors to navigate through market volatility.
- Homelessness assistance: Providing $157.5 million for financial support. The funds can be used for a wide range of needs.
- Supporting women and children fleeing violence, by providing up to $50 million to women’s shelters and sexual assault centres to help with their capacity to manage or prevent an outbreak in their facilities.
- Taxpayer flexibility: For non-trust individuals, the return filing date has been deferred until June 1, 2020. The CRA will allow all taxpayers to defer, until after August 31, 2020, for the payment of any income tax amounts that are owed today until September 2020. This is for tax balances due and installment. No interest will accrue during this period.
- Financial Institutions: Financial institutions are expected to use the additional lending capacity to support Canadian businesses and households. This could include up to a 6-month mortgage payment deferral. All decisions by banks will be on a case by case basis for those affected.
- Small businesses: The government is proposing to provide eligible small employers with a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of the remuneration paid during that period. Up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
- Small businesses tax deferral: The Government of Canada has deferred payment of taxes for small businesses form March 18th-September 1st, 2020. This applies to tax balances and installments, in addition to no accrued interest during this period.
- Business Credit Availability (BCAP): Will allow the Business Development Bank of Canada and Export Development Canada to provide more than $10 billion of additional support targeted at SME’s.
- The office of the Superintendent of Financial Institutions (OFSI) is lowering the domestic stability buffer by 1.25% of risk-weighted assets. This will allow Canada’s big banks to inject $300 billion of additional lending into the economy.
- Supporting Financial Markets: The government is launching an Insured Mortgage Purchase Program (IMPP). The government will purchase $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation. This is aimed at providing stability for banks and mortgage lenders.
Select the link in the references to see the full details for the government's response plan.
References:
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