The information that follows was available as of April 23, 2020. Changes may have occurred since we went to publication.
While governments across Canada have announced measures to help alleviate the economic fallout from COVID-19 on individuals, families, businesses and industries, the furthest-reaching initiatives have been announced in Canada’s COVID-19 Economic Response Plan (ERP). The information below summarizes several key components of the COVID-19 ERP as we currently understand it. The plan can be viewed online in its entirety on the Department of Finance Canada’s website.1
Measures for Individuals/Families
Canada Emergency Response Benefit (CERB)2
CERB is a taxable temporary income support of $500 per week for up to 16 weeks (March 15 until October 3) if you are eligible for or exhausted your Employment Insurance (EI) regular or sickness benefits during the eligible period, or stopped working on or after March 15 for reasons related to COVID-19. Applicants must not have earned more than $1,000 of employment or self-employment income (including tips, honoraria, royalties and non-eligible dividends) for at least 14 consecutive days in the initial four-week period; for subsequent claims, the income limit applies to the entire four-week benefit period. You may be ineligible for CERB if you had less than $5,000 of employment or self-employment income in 2019 or in the 12 months before applying.
Employment Insurance (EI) changes
Your claim will be automatically processed through the CERB program if you become eligible for EI regular or sickness benefits after March 14; a medical certificate is also no longer required. The one-week waiting period is waived if you claim sickness benefits after March 14. If your EI benefits started before March 15 (including regular, maternity, parental, sickness or other benefits), you can apply for CERB once EI benefits end, if eligible. The EI Work-Sharing program4 has also been made more flexible for employers and employees who reduce normal working hours to share available work.
Canada Emergency Student Benefit (CESB)3
CESB will provide a monthly benefit of $1,250 from May through August 2020 to eligible post-secondary students ($1,750 if they have a dependent or permanent disability). Similar to CERB, students may also earn up to $1,000 per month from work.
More time to file and pay income taxes
In our April Odlum Brown Report, we provided a summary of extensions to income tax filing and payment deadlines for individuals and businesses, including the self-employed.
Reduced 2020 Registered Retirement Income Fund (RRIF) minimum withdrawals
The required minimum RRIF withdrawal will be reduced by 25% in 2020 to provide flexibility to seniors who are concerned about volatile market conditions when liquidating RRIF assets to meet minimum withdrawal requirements. The reduction is optional, and any excess amounts withdrawn may not be recontributed.
Canada Summer Jobs program
Private and public sector employers can receive increased wage subsidies of up to 100% of the minimum hourly wage, with flexibility to hire part-time staff, adapt projects and job activities, and extend employment to February 28, 2021.
Wage subsidy programs
A business wage subsidy of up to 10% of an employee’s wages (from March 18 to June 19), up to a maximum of $1,375 per employee and $25,000 per employer, is available to eligible employers (certain individuals, partnerships, non-profits, registered charities and Canadian-controlled private corporations). The subsidy reduces income tax withheld on employees’ remuneration, but not EI or Canada Pension Plan (CPP) remittances. Canada Emergency Wage Subsidy (CEWS)5 is a separate 12-week program from March 15 to June 6 to support employers of all sizes across all sectors; it can cover 75% of an employee’s wages, up to $847 per week. Qualifying employers must have suffered a drop in gross revenues (at least 15% in March; 30% in April and May 2020); however, employers eligible in one period will automatically qualify in a subsequent period. Non-arm’s-length employees may qualify.
A CEWS-eligible employer can also receive a 100% refund of certain employer contributions to EI and CPP with respect to employees on leave with pay.
Establishing a Business Credit Availability Program (BCAP)6
The BCAP is offering $40 billion of additional support for small and medium-sized enterprises through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). Both programs support term loans of up to $6.25 million through financial institutions. While BDC offers co-lending, EDC offers loan guarantees.
Canada Emergency Business Account (CEBA)7
The new CEBA rolled out with financial institutions provides 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, organizations need to have paid between $20,000 and $1.5 million in total payroll in 2019.
Canada Emergency Commercial Rent Assistance (CECRA)8
The CECRA will be implemented in partnership with provincial governments to provide loans, including forgivable loans, to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May and June.
Other Tax Measures
In addition, Canadian taxpayers may consider the following programs.
Canada Training Credit
Taxpayers age 25 to 65 who are Canadian residents throughout the taxation year and earn $10,000 to $147,667 (as of 2019) through employment or self-employment can accumulate amounts available as a refundable tax credit for training or education costs. The maximum available claim for 2020 is $250.
More time to pay provincial taxes
BC has extended filing and payment deadlines until September 30, 2020, for Employer Health Tax returns and Sales Tax (including provincial sales tax, carbon tax, motor fuel tax and tobacco tax).
BC Emergency Benefit for Workers
This measure provides a non-taxable one-time $1,000 payment to BC residents who receive EI or CERB because of COVID-19.
BC Temporary Rental Supplement
Renters experiencing financial hardship due to COVID-19 can apply to BC Housing for a rent supplement of up to $500 per month, for up to three months, paid directly to the landlord. The tenant is responsible for paying the difference between the benefit and their rent.
Federal and provincial government responses to the economic hardships related to COVID-19 are constantly evolving. Odlum Brown Financial Services Limited is committed to keeping Odlum Brown clients informed and updated on the latest changes. Please visit the Client Financial Planning Centre within the Client Centre at odlumbrown.com for updates on COVID-19 economic measures, or speak with your Odlum Brown Investment Advisor or Portfolio Manager.