On March 18, 2020, Canadian Prime Minister Justin Trudeau announced a number of measures aimed at responding to a number of economic pressures already arising or anticipated resulting from the COVID-19 crisis, including $22 billion in direct support and $55 billion in liquidity support. We provide a general summary of these pronouncements below; we will provide further updates as the measures evolve.  The Department of Finance Canada has released a more detailed summary of these measures, which may be found here. Our summary reflects the categories used in the Department of Finance Canada.

The Department of Finance Canada divides its explanation of these measures into “Support for Canadians” and “Support for Businesses”.

Support for Canadians [1]

Tax Measures

A number of individual tax filing and payment deadlines will be relaxed.

• individual (other than trust) 2019 income tax return filing deadline extended to June 1, 2020
• trust 2019 income tax return filing deadline extended to May 1, 2020
• all taxpayer payments of taxes and instalments due currently or become due before September 2020 may be deferred until September 2020 without interest or penalties
• other administrative changes to allow compliance online rather than in person or by paper copy

Financial Institutions and Mortgages

Responding to the Minister of Finance and the Superintendent of Financial Institutions, “banks in Canada have affirmed their commitment to working with customers to provide flexible solutions, on a case-by-case basis, for managing through hardships caused by recent developments [including] up to a 6-month payment deferral for mortgages”.

In addition, Canada Mortgage and Housing Corporation (CMHC) is providing additional flexibility for financial institutions to defer payments on homeowner CMHC-insured mortgage loans.

Temporary Income Support

This measure will apply to individuals who do not have paid sick leave or similar arrangements and who are sick, quarantined or self-isolated, or who are forced to stay home to care for children or other family members.[2]  Highlights of the measure include:

• Employment Insurance sickness benefits
  • waiver of one-week waiting period for individuals in imposed quarantine
  • waiver of medical certificate requirement
• Emergency Care Benefit
  • up to $900 bi-weekly for up to 15 weeks
  • available for workers and self-employed
  • available for parents unable to earn employment income while caring for children due to school closures
  • applications begin April 2020 online or by telephone

Longer-Term Support

This measure will apply to workers losing jobs or facing reduced hours due to COVID-19.

• Emergency Support Benefit for unemployed workers who are not EI-eligible
• EI Work Sharing Program (previously announced March 11, 2020)

Low- and modest-income family support

A number of measures focus on most vulnerable individuals and families.

• GST Credit increase for current fiscal year
• Canada Child Benefit increase for current fiscal year
• $305 million Indigenous Community Support Fund
• Canada Student Loan interest-free six-month repayment moratorium
• reduced minimum RRIF withdrawals
• $157.5 million funding to Reaching Home Initiative
• $50 million funding for women’s shelters and sexual assault centres

Support for Businesses

The measures announced by the federal government on March 18 are in addition to those capital markets initiatives announced on March 13.

Tax Measures

• as with individuals, businesses may defer payments of taxes and instalments due currently or become due before September 2020 until September 2020 without interest or penalties[3]
• CRA will suspend initiation of post-assessment GST/HST and income tax audits for the next four weeks
• CRA will “temporarily” suspend audit interactions with taxpayers and their representatives for “the vast majority of businesses”[4]

Worker Employment

The government proposes to prove a three-month wage subsidy equal to 10% of remuneration paid by smaller employers, to a maximum of $1,375 per employee and $25,000 in total.  This subsidy will be available to employers including corporations eligible for the “small business deduction”, non-profit organizations and charities.

Access to Capital

The government is undertaking a number of further initiatives to improve access to business financing, including export support provided through Export Development Canada and financing provided through Business Development Bank of Canada and Farm Credit Canada.  In addition, the government is acting to provide indirect support by loosening the ability of Canada’s large banks to make loans, by cutting the Bank of Canada rate to 0.75%, and by undertaking an “Insured Mortgage Purchase Program” to buy up to $50 billion of insured mortgage pools, thus freeing up available loan capital in the private sector.[5]

What to Do Next

In the immediate future, businesses and other taxpayers should review these proposals, particularly with a view to identifying initiatives (such as deferred tax remittances) which could have an immediate positive cash flow impact.  Other proposals will have a more deferred or indirect impact, but will still merit careful monitoring as details and implementation move forward.

Should you have any questions or require further information, please contact any member of the Clark Wilson Tax Group