Summary

On March 18, 2020, in response to the unprecedented COVID-19 pandemic, the Government of Canada published their COVID-19 Economic Response Plan (the "Response Plan"), which aims to stabilize the economy through providing over $82 billion in financial assistance to individuals and businesses.

The majority of these initiatives are expected to be implemented in April, as the corresponding legislation still requires royal assent.

Highlights from the Response Plan include:

  1. Delayed Tax Filing - Individuals will now have until June 1, 2020 to file their 2019 taxes.
  2. Deferred Income Tax Payments - Individuals and businesses may defer, until after August 31, 2020, the payment of any income taxes (and for businesses, instalment payments) that become owing on or after March 18, 2020 and before September 2020.
  3. GST - A one-time special payment will be made to eligible individuals and families through the Goods and Services Tax Credit prior to May 2020. On average, single individuals will receive $400 and couples will receive $600.
  4. Temporary Wage Subsidies - To assist small businesses facing losses and to minimize layoffs, $3.8 billion will be used towards providing eligible employers with a temporary wage subsidy. This will translate to:
    • approximately 10% of the remuneration paid by an eligible business during the next 3-month period,
    • a maximum subsidy of $1,375 per employee, and
    • a maximum $25,000 per employer.
  5. Business Credit Availability Program - More than $10 billion will be used to extend credit to small and medium-sized businesses through a Business Credit Availability Program.

Further Detail

Furthermore, Canada's Big Six Banks and mortgage default insurers have separately announced their own measures to support Canadians during this time.

Canadian Government

Flexibility for Taxpayers and Businesses

The Response Plan allocates $55 billion to provide more flexibility to individuals and businesses in their tax filings for 2019.

  • Individuals will now have until June 1, 2020 to file their 2019 taxes.
  • Individuals and businesses may defer, until after August 31, 2020, the payment of any income taxes (and for businesses, installment payments) that become owing on or after March 18, 2020 and before September 2020.

As a temporary administrative measure, effective immediately, the Canada Revenue Agency ("CRA") will also accept electronic signatures for tax documents.

The CRA will also not contact any small or medium businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks.

For the majority of businesses, the CRA will temporarily suspend audit interaction with taxpayers and representatives.

Goods and Services Tax Credit

A one-time special payment will be made to eligible individuals and families through the Goods and Services Tax Credit prior to May 2020. On average, single individuals will receive $400 and couples will receive $600. The credit will be targeted towards low and modest-income families.

Wage Subsidies

To assist small businesses facing losses and to minimize layoffs, $3.8 billion will be used towards providing eligible employers with a temporary wage subsidy. This will translate to:

  • approximately 10% of the remuneration paid by an eligible business during the next 3-month period,
  • a maximum subsidy of $1,375 per employee, and
  • a maximum $25,000 per employer.

Business Credit Availability Program

More than $10 billion will be used to extend credit to small and medium-sized businesses through a Business Credit Availability Program (BCAP). Click here for more information on accessing the BCAP.

Mortgage Default Insurers

Mortgage Default Assistance

On March 16, 2020, Canada Mortgage and Housing Corporation ("CMHC") announced that it would revive and update a version of the Insured Mortgage Purchase Program it used during the 2008-09 financial crisis to provide stable funding to banks and mortgage lenders to ensure continued lending to Canadian consumers and businesses. The federal government plans to purchase up to $50 billion worth of insured mortgage pools under the Response Plan.

Private mortgage default insurance providers, which include CMHC, Genworth Canada and Canada Guaranty, are stepping up efforts to assist struggling homeowners amid the COVID-19 emergency. For example, Canada Guaranty, through its Homeownership Solutions Program ("HSP") is prepared to extend the option to allow lenders a separate and independent capitalization of six monthly mortgage payments (up from a limit of four monthly mortgage payments) to help eligible homeowners as they navigate through these challenging circumstances. Click here for more information on the HSP.

Financial Institutions

Financial Institutions Offering Mortgage Payment Deferrals

Canada's Big Six Banks will allow mortgage payment deferrals for up to six months, as well as the opportunity for relief on other credit products.

Effective immediately, the Big Six Banks have made a commitment to work with personal and small business banking customers on a case-by-case basis to provide flexible solutions to help them manage through challenges caused by the pandemic, including pay disruption, childcare disruption from school closures, and illness.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.