Prime Minister Justin Trudeau on Wednesday announced additional economic measures to help Canadians affected by the novel coronavirus pandemic.
Trudeau said the government will spend up to $82 billion, including $27 billion in direct support for Canadian workers and businesses.
“These are extraordinary times. Our government is taking extraordinary measures,” Trudeau said. “The measures we’re announcing today will provide up to $27 billion in direct support to Canadian workers and businesses, plus $55 billion to meet liquidity needs of Canadian businesses and households through tax deferrals to help stabilize the economy.”
Trudeau said combined, the $82 billion in support represents more than three per cent of Canada’s GDP.
He said the economic measures will ensure that Canada’s economy rebounds after the pandemic.
“While we are taking a significant step today to help families get through these challenging times, our government is prepared to do more,” he said.
Here’s what the government has announced.
Sickness benefits beyond EI
For Canadians without paid sick leave or access to employment insurance sickness benefits, the government is introducing a new Emergency Care Benefit that will provide up to $900 bi-weekly for up to 15 weeks. The benefit, which the government estimates could cost up to $10 billion, is for workers who must self-isolate, those who are caring for a family member sick with COVID-19 and parents who are unable to earn income while schools are closed as a result of child-care duties.
Applications for the benefit will be available in April, the government said.
Unemployment benefits beyond EI
Ottawa will also be extending income supports to workers who lose their jobs or see their hours reduced as a result of the pandemic.
The Canada Revenue Agency will provide up to $5 billion for unemployed workers without access to EI through the new Emergency Support Benefit.
Economists had been calling on the government to introduce paid leave for those who typically are ineligible for EI benefits, such as freelancers, contractors, shift workers and those who labour in the gig economy.
But while the Emergency Support Benefit is a step in the right direction, the government’s announcement was scant on details, said Tammy Schirle, an economics professor at Wilfrid Laurier University.
Whether the measure actually reaches workers who are currently excluded from traditional unemployment benefits will depend in no small part on how the government designs eligibility criteria, Schirle said.
“What kind of work history do they need to be eligible and what kind of documentation they’re going to need?”
The government also has yet to release details on the income replacement rate and maximum duration of the new benefit.
Wage subsidy
To help prevent layoffs, the government is also eyeing a measure that would provide businesses struggling with the economic impact of COVID-19 with a subsidy equal to 10 per cent of employee wages, up to $1,375 per employee and $25,000 per employer.
The wage subsidy would cost $3.8 billion, Ottawa estimates.
Income supports
Trudeau said Ottawa will also temporarily boost the Canada Child Benefit (CCB) over the coming months. The government is proposing to boost the maximum annual CCB payment amounts by $300 per child for the 2019-20 benefit year.
Families receiving the CCB will get an extra $300 per child as part of their May payment, the government said.
Ottawa will also double the maximum annual Goods and Services Tax Credit (GSTC), providing an average income boost of $400 for low-income income individuals and close to $600 for couples.
Finance Minister Bill Morneau told reporters single parents could be eligible for up to $1,500 in support from the two measures combined.
Tax deadline postponed
Ottawa is moving the tax-filing deadline from April 30 to June 1 for individuals, mirroring a similar move implemented in the U.S. Individual taxpayers will also be able to defer payments on taxes owed to August 31 interest-free.
The Chartered Professional Accountants of Canada welcomed the decision to move the tax deadline. However, the association also noted that Ottawa “did not provide a comprehensive update on all tax deadlines including some quickly approaching.”
Moratorium on student loan payments
Trudeau said the government is also proposing a six-month, interest-free moratorium on the repayment of federal student loans.
Lower mandatory withdrawals for retirees
Morneau said Canadian retirees will be allowed to make smaller withdrawals from their retirement accounts.
The move is meant to help seniors who have seen the value of their retirement savings drop as financial markets plunge amid the health emergency. Withdrawing funds during a market crash crystallizes investors’ losses and negates the possibility to capture the gains of a market recovery.
The government is reducing mandatory minimum withdrawals from registered retirement income funds (RRIFs) by 25 per cent for 2020. Similar rules would apply for seniors receiving variable benefit payments under a defined-contribution registered pension plan.
Help for Canadian businesses
The Canadian government will allow businesses to defer payments of income tax amounts until after Aug. 31. No interest or penalties will accumulate.
The government will also increase the tax credits available to small, medium and large businesses.
On Monday, Trudeau announced the new Business Credit Availability Program, which will provide more than $10 billion in additional support to businesses through the Business Development Bank of Canada and Export Development Canada.
The government said it will also “further expand Export Development Canada’s ability to provide support for domestic businesses, and provide flexibility on the Canada Account limit, so the government can support Canadian businesses of national interest.”
The government will also augment the credit available to farmers and the agri-food sector through Farm Credit Canada.
Lastly, the government will launch an Insured Mortgage Protection Program to purchase up to $50 billion of insured mortgage pools through CMHC.
The government will do this by raising CMHC’s legislative limits to “guarantee securities and insure mortgages by $150 billion each,” the release said.