With the significant financial challenges faced by Canadian individuals and businesses during the CODIV-19 pandemic, the Government of Quebec and the federal government have announced a series of measures.
We will give you a short summary here.
Federal
The Bank of Canada announced its key rate cut of 0.5% on March 4, 2020 and a second cut of 0.5% on March 16, 2020 in order to lessen the substantial negative shock that COVID-19 represents on the economy of Canada. The Bank of Canada interest rate is now 0.75%.
These two reductions in the interest rate have the effect of reducing the prime rate of financial institutions and, by the same token, variable rate loans such as lines of credit and mortgages.
On March 18, 2020, new measures were announced by the Government of Canada to stabilize the economy by providing up to $ 27 billion in direct support to workers and businesses across the country.
Temporary income for workers and parents
Since March 15, 2020, Canadians (including the self-employed) who are sick in quarantine or who need to stay at home to care for their children who do not receive financial compensation (health insurance or other) will receive up to $ 900 every two weeks for a maximum period of 15 weeks.
The usual week waiting period for EI sickness benefits is eliminated, no medical certificate is required, and EI eligibility is not required.
This service will be available as of April 2020 following a request and its renewal every two weeks using one of these three methods: CRA My Account portal, Service Canada My Account or by automated request to a toll-free telephone number.
Long-term income support for workers
An emergency support allowance will provide up to $ 5 billion to workers who are ineligible for EI who have lost their jobs or have their work reduced.
Income assistance for people with low or modest incomes
An additional payment of the GST credit will be paid, by the beginning of May, to double the usual benefits.
A single person will thus receive approximately $ 400 more while couples will receive approximately $ 600 more.
This will inject more than $ 5.5 billion into the economy.
The Canada Child Benefit (CCB) is also increased by $ 300 per child starting in May.
Immediate needs of indigenous communities
New funding of $ 305 million.
Canadian Student Loans
Six-month interest-free moratorium.
Minimum RRIF / LIF withdrawals
All usual minimum withdrawals rates are reduced by 25% for 2020 in response to the sharp downturn in the financial markets.
Homeless person
New funding of $ 157.5 million.
Women and children fleeing violence
Funding up to $ 50 million for help centers or shelters.
2019 tax returns
The usual filing deadline of April 30 is extended to June 1, 2020 for individuals and May 1 for trusts (rather than March 30).
Individuals receiving GST credits or the Canada Child Benefit should, however, adhere to the usual production date so as not to delay payment of these benefits.
Taxpayers with a balance of tax payable or installments payable (due between March 18 and September 2020) will have until August 31, 2020 to make their payment, without interest or penalty.
Financial institutions
The Ministry of Finance encourages financial institutions to be flexible with individuals or businesses with liquidity problems related to COVID-19.
Each situation will be considered on a case-by-case basis and could include a delay in mortgage payments for up to six months or relief from other credit products.
The government will buy up to $ 50 billion in mortgages from financial institutions to provide them with more liquidity.
Helping businesses keep their employees
A wage subsidy of 10% of remuneration (maximum $ 1,375 / employee and $ 25,000 / employer) will be available for small businesses to prevent layoffs.
March 25, 2020
As of March 25, 2020, the assistance plan announced last week has been adopted and is now in effect. The value of the plan was even increased by $ 25 billion. It has also been announced that the new Canadian Emergency Benefit (CEB) will replace the emergency care allowance and the support allowance for the sake of simplicity.
The individuals who will be eligible for the CEB are: workers who do not have access to employment insurance, the self-employed and contract employees. These individuals will also need to: have lost their jobs as a result of COVID-19, have no salary even with a job link, have COVID-19 or in isolation or be at home to care for children or the elderly.
The CEB will make a taxable monthly payment of $ 2,000 for up to four months. The application form should be available around April 6 and there will be a delay of approximately ten days to receive the first benefits.
March 27, 2020
The Bank of Canada has announced a further cut in its key rate by 0.5%, the key rate is now 0.25%.
The wage subsidy is increased to 75% of remuneration for a maximum of three months.
Payment of the amounts collected for GST / QST is postponed to June 30, 2020.
A $ 25 billion Canadian business emergency account will provide interest-free loans of up to $ 40,000 to small businesses and non-profit organizations.
Business loan guarantees are also announced.
In Quebec
The usual filing deadline of April 30 is extended to June 1, 2020 for individuals and May 1 for trusts (rather than March 30).
Individuals receiving tax benefits should, however, respect the usual production date so as not to delay payment of these benefits.
Taxpayers with a balance of tax payable or installment payments payable (due between March 18 and September 2020) will have until August 31, 2020 (federal harmonization) to make their payment, without interest or penalty.
Temporary Worker Assistance Program (PATT)
Workers aged 18 and over in isolation not eligible for another financial assistance program can obtain an amount of $ 573 / week for a maximum of four weeks.
The isolation must be due to a positive test for COVID-19, have been in contact with an infected person or have returned from abroad.
Benefits will be paid in partnership with the Red Cross.
The following sites can be consulted for more details:
Canada.ca
Quebec.ca
In these difficult times, we remain available to measure the potential impact on your financial planning.