The economic impact of the COVID-19 pandemic is unprecedented in Canada – both in terms of the scale of the economic devastation and the speed by which it has ravaged the economy. In March alone, one million Canadians lost their jobs as businesses were forced to close in the wake of the stay-at-home protocols put in place to reduce the transmission of the virus.
With new programs seemingly being introduced each day for both private individuals as well as employers and businesses, keeping track of all these changes can be confusing. In this blog article, we’ll review some of the new government initiatives intended to help individuals manage their way through the crisis.
Income Replacement and Support
Many of the policy announcements from the federal government have centred on income replacement for those who’ve lost employment as a direct result of the pandemic. One of the first programs created by Ottawa was the Canada Emergency Response Benefit, or “CERB”. Since then, several additional programs to support this initial policy have been proposed.
Canada Emergency Response Benefit (CERB)
As noted above, the CERB is intended to provide temporary benefits for workers who have lost their jobs as a result of the COVID-19 crisis. It provides a maximum of $500 per week for up to 16 weeks. To be eligible for the CERB, you must be a resident of Canada and be at least 15 years of age.
Temporary Salary Top-up
This new salary top-up is targeted to essential workers such as front-line health professionals, first responders, and retail employees, including grocery store workers. The federal government has committed to working with provincial governments to provide a subsidy to full-time essential workers earning less than $2,500 per month.
Canada Emergency Wage Subsidy (CEWS)
To help employers keep their staff on the payroll, the government created the Canada Emergency Wage Subsidy (CEWS). Employers can receive up to 75% of an employee’s wages for a total of 12 weeks to re-hire workers previously laid off due to COVID-19. Not only will this help reduce job losses, but it also ensures companies have the staff they need on hand when business picks up following the crisis.
Child Benefit Increase
Those receiving the Canada Child Benefit (CCB) will collect a one-time increase of $300 per child, and this will be included in the May 2020 benefit payment. If you currently qualify for the CCB, you will automatically receive the extra payment amount.
Goods and Service Tax Credit Increase
The Goods and Service Tax Credit is paid four times a year and is designed to help lower-income individuals and families. Starting April 9, the government will provide a one-time payment of nearly $400 for individuals and $600 for couples who already qualify for this credit. There is no need to apply for the payment.
While not specifically a government-sponsored program, the government encouraged mortgage lenders to allow homeowners who have lost their incomes to defer their mortgage payments for up to six months. Borrowers who choose to apply for a deferral need to understand that they will still owe the payments and the interest accrued during the deferral period. But for those who have lost income as a result of the pandemic, this provides a little breathing space during a difficult time.
Tax Payment Extension
An additional break for beleaguered Canadians comes courtesy of the Canada Revenue Agency. The filing date for the 2019 income tax year has been extended an extra two months to June 1, 2020. For those who owe additional income tax, the payment due date has been moved back to August 31, 2020. No penalty or additional interest will be charged for those taking advantage of the new due date.
Benefits for Students
In recent weeks, Ottawa announced several changes together with new proposals, yet to be launched, specifically to help students. These include:
Canada Emergency Student Benefit (CESB)
If implemented as planned, the new Canada Emergency Student Benefit (CESB) will provide up to $1,250 per month to students and new graduates who do not qualify for either the new Canada Emergency Response Benefit or regular Employment Insurance benefits. The first CESB payment is scheduled to start in May and will run until August 2020.
Changes to the Canada Student Loans Program (CSLP)
Proposed changes to the Canada Student Loans Program (CSLP) will potentially double the amount qualifying students could receive under the program. This initiative means that eligible full-time students may receive up to $6,000 for the 2020-2021 school year.
Other changes to help students facing a potential cash crunch include suspending payments for the federal portion of student loans and the interest on these loans until September 30, 2020. The government is also committing to an immediate expansion of the existing federal youth employment program to create an estimated 116,000 student summer jobs.
Canada Student Service Grant (CSSG)
The Canada Student Service Grant (CSSG) is a new grant that provides up to $5,000 to students who are returning to school in the fall, and who spend the summer working in essential sectors including agriculture, health services, and other essential roles. The grant is intended to help students gain relevant skills and work experience by helping their communities deal with the pandemic. Specific details for this new grant will be provided soon.
The Need for Further Fiscal Programs
In recent days there has been talk about plans to ease the need for isolation and physical distancing. The reality is that even in a best-case scenario, it will be some time yet before we can expect to see current rules relaxed in a meaningful way. In the meantime, the need for continued government action will continue to grow, and we will likely see additional government programs announced in the coming weeks.