Canada’s COVID-19 Government Response Plan

A thorough discussion of financial measures implemented by the government to provide relief to individuals, families and businesses.

In the wake of COVID-19 outbreak, many Canadians are fearful of not only contracting the virus, but are also feeling anxious about joblosses, layoffs, and reduction in business activity. In order to mitigate the financial effects of such adversities, Canadian government has put in place various financial measures, including the new Canada Emergency Response Benefit (CERB).

Here we discuss the most noteworthy financial measures which can be of assistance to individuals, families and businesses. These measures are expected to take effect in early April.

Support for individuals and families

An extra $300 per child will be provided through the Canada Child Benefit (CCB) for 2019-2020.
Qualified low and modest-income families will be provided a one-time early payment in May 2020 for the Goods and Services Tax Credit.
Filing income tax return for the 2019 tax year will be extended until June 1, 2020. In addition, any income tax balances due or installment payments will also be deferred until August 31, 2020 with no interest or penalties being charged.
Government has struck an agreement with Canadian banks to provide deferral of mortgage payments on a case-by-case basis. Individuals and businesses are advised to contact their banks directly.
For seniors, there will be a reduction in withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020.
Effective March 30, 2020 there will be a six month moratorium on the repayment of Canada student loans. No loan repayment will be required, and no interest will accrue during this time.

Support for people facing unemployment, are quarantined or in self-isolation

The new Canada Emergency Response Benefit (CERB) has been initiated to provide a $2,000 per month taxable benefit for 4 months. This benefit is available to:

Workers who must stop working due to COVID-19 and do not have access to paid leave or other income support.
Working parents who have to stay home without pay to care for children that are sick or need additional care due to school and daycare closures.
Workers who are still employed but are not being paid because of lack of work.
Wage earners and self-employed individuals, including contract workers, who are not eligible for employment insurance.

Application for CERB will begin the week of Monday, April 6, 2020. Click here to find out how to apply.

Support for businesses

Extension of work-sharing program
Work-Sharing (WS) program helps employers and employees avoid layoffs if there is reduction in the level of business activity that is beyond the employer’s control. In the past WS has provided income support for 38 weeks to employees eligible for employment insurance. Considering reduction in business activity resulting from COVID-19 pandemic is beyond the employer’s control, the government is extending the duration of income support to a maximum of 76 weeks (at the time of writing this blog post).

Small business wage subsidies
As a means to help businesses cover the cost of wages, the government would bear 75% of the amount of salaries for up to 3 months, retroactive to March 15, 2020.

Canada Emergency Business Account
Canada Emergency Business Account will provide interest-free loan of up to $40,000 to small businesses and not-for-profits (NFPs) to help them cover operating costs.

Deadline extension for income tax payment
Businesses can defer payment of any income tax amounts, including balances due and installments, until after August 31, 2020. This extension applies to amounts that become owing on or after March 18 and before September 2020.

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The financial effects resulting from COVID-19 pandemic can turn out to be very severe for a lot of people. At Alpha Accountzy, we are offering free financial consultations during these difficult times. You can reach us through our contact page.