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The federal government recently announced a new set of economic measures to help stabilize the economy during the COVID-19 pandemic. Outlined below are new measures implemented by the federal government, along with expanded existing programs, that are designed to assist Canadians individuals facing financial challenges during the pandemic.
Changes to Employment Insurance (“EI”)
The EI sickness benefit is 55% of an employee’s earnings, up to a maximum of $573 per week. The one-week waiting period for EI sickness benefits will be waived if individuals are quarantined; and, as a result, they are able to be paid for the first week of their claim. If an individual cannot complete the claim due to quarantine, the claim can be backdated to cover the period of delay. Priority will be given during application processing for those under quarantine, without the need to provide a doctor’s note confirming contraction of the virus.
New Canada Emergency Response Benefit (“CERB”)
This program provides $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic. The CERB covers Canadians who have lost their job, are sick, quarantined or taking care of someone who is sick with COVID-19, as well as working parents who must stay home to care for children due to school and daycare closures. The CERB applies to wage earners, as well as contract workers and self-employed individuals who are not otherwise eligible for EI. Additionally, workers who are still employed but are not receiving income because of disruptions to their work situation due to COVID-19 also qualify for the CERB. The CERB is expected to be accessible through a secure web portal starting in early April as well as via an automated telephone line or via a toll-free number.
Changes to the Goods and Services Tax Credit (“GSTC”)
Changes to this program will double the maximum annual GSTC payment amounts for the 2019-20 benefit year. The average boost to income for those benefitting from this measure will be close to $400 for single individuals and close to $600 for couples.
Changes to the Canada Child Benefit (“CCB”)
For individuals receiving the CCB, payments will be increased for the 2019-20 benefit year, by $300 per child.
Changes to Tax Deadlines and Procedures
The filing deadline for personal tax returns has been extended to June 1, 2020 (and to May 1, 2020 for trusts having a taxation year ending on December 31, 2019). All taxpayers are permitted to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020, without interest or penalties. Notwithstanding the deferral, individuals who expect to receive benefits under the GSTC or the CCB are encouraged not to delay the filing of their return to ensure their entitlements for the 2020-21 benefit year are properly determined. The Canada Revenue Agency will also recognize electronic signatures as meeting the requirements for signatures for income tax purposes.
Changes to Registered Retirement Income Fund (“RRIF”) Withdrawals
The minimum withdrawals under RRIFs are subject to a 25% reduction for 2020. Similar rules will apply to variable benefit payments under defined contribution registered pension plans. Old Age Security and Guaranteed Income Supplement payments will continue on a regular basis.
Canada Mortgage and Housing Corporation (“CMHC”) is providing increased flexibility for homeowners facing financial difficulties to defer mortgage payments on homeowner CMHC-insured mortgage loans. CMHC will permit lenders to allow payment deferral beginning immediately. Individuals need to contact their respective lenders to access available deferrals.
Student Loans Relief
the federal government has implemented a six-month, interest-free moratorium on the repayment of Canada Student Loans.
Miller Thomson is closely monitoring the COVID-19 situation to ensure that we provide our clients with appropriate support in this rapidly changing environment. For articles, information updates and firm developments, please visit our COVID-19 Resources page.