Canada's COVID-19 Economic Response Plan - Summarized
During the recent outbreak of the COVID-19, we all have made many changes to our daily routines. With schools, childcare, and non-essential businesses closing, along with the social distancing requirements, the Government has had to come up with financial solutions for individuals and businesses. Canada’s COVID-19 Economic Response Plan (ERP) will provide up to $27 billion in direct support to Canadian workers and businesses.
Support for Canadians
Temporary Income Support for Workers and Parents
The ERP will assist in providing a temporary income support for Canadian workers whom do not have paid sick leave (or similar workplace accommodation) who are sick, in quarantine, or parents forced to stay home to care for children.
Waiving the one-week waiting period for those individuals in imposed quarantine that claim Employment Insurance (EI) sickness benefits. This temporary measure is in effect as of March 15, 2020.
Waiving the requirement to provide a medical certificate to access EI sickness benefits.
Introducing the Canada Emergency Response Benefit (CERB) providing a taxable benefit of $2,000 a month for up to 4 months. The CERB will provide income support to:
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.
Application for the Emergency Care Benefit will be available starting April 2020, via your CRA My Account secure portal. Learn how to create your My Account. Applicants will also be able to apply via an automated telephone line or via a toll-free number.
Longer-term income support is being made available for workers who are loosing or have lost their jobs due to the current pandemic.
Additional details on the Canada Emergency Response Benefit will be available soon.
Income Support for Individuals Who Need It Most
The Government is proposing to provide a 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. The average boost to income for those benefiting from this measure will be close to $400 for single individuals and close to $600 for couples.
The Government is proposing to increase the maximum annual Canada Child Benefit (CCB) payment amounts, only for the 2019-20 benefit year, by $300 per child. The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 per child as part of their May payment.
Mortgage Support - Canadian banks have committed to work with their customers on a case-by-case basis to find solutions to help them manage hardships caused by COVID-19. Canadians who are impacted by COVID-19 and experiencing financial hardship as a result should contact their financial institution regarding flexibility for a mortgage deferral.
Flexibility for Taxpayers
For individuals (other than trusts), the return filing due date will be deferred until June 1, 2020. However, the CRA encourages individuals who expect to receive benefits under the GSTC or the Canada Child Benefit not to delay the filing of their return to ensure their entitlements for the 2020-21 benefit year are properly determined.
For all taxpayers, the payment of any income tax amounts that become owing on or after March 15. 2020 and before September 2020, the deadline to make payment has been extended to September 1, 2020. This relief would apply to tax balances due, as well as installments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
For detailed information on filing and payment deadlines please see Revised 2020 Corporate and Personal Tax Deadlines.
Support for Businesses
Canada’s COVID-19 Economic Response Plan also helps support businesses that are also experiencing difficulty during the outbreak.
Helping Businesses Keep their Workers
To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy up to 75% of wages for qualifying businesses, for up to 3 month, retroactive for March 15, 2020.
Businesses will be able to benefit immediately by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.
Ensuring Businesses Have 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. BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism. As a first step, businesses in need of credit support should contact their financial institution.
Learn more about the Business Credit Availability Program.
The New Canada Emergency Business Account
The new Canada Emergency Business Account - a new loan program, that will be implemented rapidly by eligible financial institutions in cooperation with Export Development Canada (EDC).
Will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.
To qualify, these organizations will need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 per cent (up to $10,000).
Additional details on accessing this program will be available soon.
A New Loan Guarantee and new co-lending program for Small and Medium-Sized Enterprises
Export Development Canada is working with financial institutions so that they can issue new operating credit and cash flow term loans.
The Co-Lending Program will bring the Business Development Bank of Canada (BDC) together with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
Businesses should contact their financial institution to determine whether this program is a good fit for their needs.
Flexibility for Businesses Filing Taxes
Will allow all businesses to defer to September 1, 2020, the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 1, 2020. This relief would apply to tax balances due, as well as installments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
Will allow businesses, including self-employed individuals, to defer until June 30, 2020 payments of the Goods and Services Tax / Harmonized Sales Tax (GST/HST), as well as customs duties owing on their imports.
The deferral will apply to GST/HST remittances for the:
February, March and April 2020 reporting periods for monthly filers;
January 1, 2020 through March 31, 2020 reporting period for quarterly filers; and
For annual filers, the amounts collected and owing for their previous fiscal year and installments of GST/HST in respect of the filer’s current fiscal year.
Last updated: April 21, 2020
For more in-depth and up-to-date information on how the COVID-19 Economic Response Plan affects and supports you, please refer to the Government of Canada - Department of Finance website.