Canada’s COVID-19 Economic Response Plan: Support for Canadians and businesses

On Wednesday, March 18, 2020, the Government of Canada announced a number of tax deadline extensions.

• For individuals, the return filing due date of April 30, 2020 will be deferred to June 1, 2020. Filing returns earlier is encouraged for those that are entitled to receive benefits under the Goods and Services Tax Credit (GSTC) or Canada Child Benefit (CCB).
• For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020, from its current due date of March 30, 2020.
• The Canada Revenue Agency (CRA) will allow all taxpayers to defer, until August 31, 2020, the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020. This applies to tax balances due, as well as monthly or quarterly instalments.  No interest or penalties will accumulate on these amounts during the deferral period.
• The CRA will not contact any small or medium business to initiate any post assessment GST/HST or Income Tax audits for the next four weeks and will temporarily suspend audit interaction with taxpayers and representatives.

The Government of Canada also announced the following initiatives:

Temporary Income Support for Workers and Parents

• Waiving the one-week wait period for individuals in imposed quarantine to claim Employment Insurance (EI) sickness benefits
• Waiving the requirement to provide a medical certificate to access EI sickness benefits
• Introducing the Emergency Care Benefit of up to $900 bi-weekly, for up to 15 weeks. This benefit provides income support to:
  • Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits
  • Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent, but who do not qualify for EI sickness benefits
  • Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not

Long-term Income Support of Workers

• An Emergency Support Benefit is being introduced to provide up to $5B in support to workers not eligible for EI and are facing unemployment
• EI Work Sharing Program will be implemented to provide EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employer

Income Support for Individuals Who Need It Most

• A one-time special payment by early May through the GSTC. The payment will double the maximum annual GSTC payment amounts for the 2019/2020 benefit year.  The average boost will be close to $400 for single individuals and $600 for couples.
• An increase in the maximum annual CCB payment amounts for the 2019/2020 benefit year by $300 per child. Effected families will receive the increase as part of their May payment.
• Additional measures include the following:
  • Providing $305M for a new distinctions-based Indigenous Community Support Fund to address the immediate needs in First Nations, Inuit and Métis Nation communities
  • Six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans
  • Reducing the required minimum withdrawals from RRIFs by 25% for 2020 in recognition of volatile market conditions
  • Providing $157.5M to the Reaching Home Initiative to continue to support people experiencing homelessness during the COVID-19 outbreak
  • Supporting women and children fleeing violence, by providing up to $50M to shelters and assault centres to help with their capacity to manage or prevent an outbreak in their facilities.

Helping Business Keep their Workers

• To support businesses facing revenue losses and to help prevent lay offs, 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% or remuneration paid during that period, up to a maximum of $1,375 per employee and $25,000 per employer.  Businesses will immediately benefit from this support by reducing their remittances of income taxes withheld on their employee’s remuneration.  Businesses eligible for the small business deduction, as well as non-profit organizations and charities will be eligible for this benefit.

Ensuring Businesses Have Access to Credit

• The Business Credit Availability Program will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10B of additional support to small and medium-sized businesses. BDC and EDC are cooperating with private sector lenders on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism.  Farm Credit Canada will also provide support to farmers and the agri-food sector.
• The office of the Superintendent of Financial Institutions is lowering the Domestic Stability Buffer effective immediately. This will allow Canada’s large banks to inject $300B of additional lending into the economy.
• The Bank of Canada cut interest rates by 0.75% as a proactive measure in light of the impact of COVID-19 on the Canadian economy.

Over the coming days and weeks additional details related to these initiatives will be forthcoming.  Should you have any questions, please reach out to your Fuller Landau LLP engagement team.