COVID-19 & Your Finances: What Canada’s Economic Relief Means for You
COVID-19 is having a significant and sudden impact on our economy, leaving many Canadians unable to work or struggling with lost income. In response, the government has enacted an emergency plan aimed at reducing the financial strain that individuals and businesses are facing.
To help you identify the support that’s available to you at this challenging time, we’ve broken down who qualifies for the various changes and benefits, and how to take advantage of them.
At a glance:
- If you’ve lost income or are unable to work, you should qualify for a $2,000 monthly benefit for up to four months.
- Families can expect to receive additional benefits this year, including an increase to the monthly Canada Child Benefit.
- Canadians can pause their Canada Student Loan repayment for six months, interest-free.
- The government has reduced minimum withdrawals on Registered Retirement Income Funds by 25% for 2020.
- Beyond the government’s plan, homeowners will also see some relief as Canada’s big six banks have announced that they will allow mortgage holders to defer payments for six-months.
- The deadline to file your taxes is extended to June 1, 2020 for individuals. If your assessment shows that you owe taxes, you can defer payment until after August 31, 2020.
- For businesses, the government won’t initiate GST/HST assessments or income tax audits for the next four weeks. Businesses will also have a grace period for income taxes they accumulate between March 18, 2020 and August 31, 2020.
Here’s what else you need to know:
If you’ve lost your job or are unable to work
The government has introduced the Canada Emergency Response Benefit (CERB), which will provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic.
This new benefit is available to individuals who wouldn’t typically be eligible for Employment Insurance (EI).
You’re eligible to receive the benefit if you:
- Lost your job or, are still employed but aren’t receiving income because your work situation has been disrupted
- If you’ve had your hours or pay cut back and your monthly income has fallen to $1,000 or less, even if you’re still employed.
- Are sick or quarantined
- Are taking care of someone who is sick with COVID-19
- Are a parent who must stay home without pay to care for children who are sick or at home because of school and daycare closures.
The portal for accessing the CERB will be available in early April. If you qualify, you’ll start to receive those payments within 10 days of applying. They will be paid every four weeks for up to four months.
If you’ve lost your income, you can also apply for EI benefits here, and if you’re eligible, EI benefits would kick in after those four months.
At this time, there’s no more one-week waiting period to claim EI sickness benefits, and you won’t need a medical certificate to access those benefits.
If you’re facing reduced hours
You should talk to your employer about applying for the EI Work Sharing Program which has now been extended from 38 weeks to 76 weeks. This program provides EI benefits to workers who agree to reduced hours based on a recent decline in the business.
If you have children
The government is increasing the maximum Canada Child Benefit payments by $300 per child for the 2019-2020 benefit year. According to the government, that means the average family with kids under 18 will receive an additional $550 per month. If you qualify for the Canada Child Benefit, you’ll see this increase on your May payment.
If you’re a parent facing unexpected scenarios when it comes to your income, you may also qualify for other forms of support listed throughout this article, including the Canada Emergency Response Benefit outlined above.
If you have a low or modest-income
The government plans to provide a one-time special payment to low and modest-income families by early May 2020 through the Goods and Services Tax credit (GSTC). For those who qualify, on average, single individuals will receive close to $400, and couples will receive nearly $600.
For retired Canadians
In light of volatile market conditions, the government has reduced the minimum withdrawals on Registered Retirement Income Funds (RRIFs) by 25% for 2020, recognizing that the market downturn could impact many seniors’ retirement savings. This also applies to those receiving variable benefit payments under a Registered Pension Plan.
If you’re a WealthBar client with a RRIF account, you’ll be hearing from us with more details within the next few weeks.
If you have a mortgage
Canada’s big six banks have announced that they will allow mortgage holders to defer payments for six-months.
Borrowers should contact their bank to discuss their options when it comes to mortgage payment deferral. Some lenders may defer payments interest free, and others may compound the interest on deferred payments. Here’s how you can contact your bank to learn what your options are:
- BMO: 1 (877) 225-5266
- CIBC: 1 (800) 465-2422
- National Bank: 1 (888) 835-6281
- RBC: 1 (800) 769-2511
- Scotiabank: 1 (800) 472-6842
- TD: 1 (866) 222-3456
For tax season
You can delay submitting your individual tax return until June 1, 2020 and you can defer paying any taxes owed until after August 31, 2020.
If you expect to receive the Canada Child Benefit in the 2020-2021 tax year, the government suggests that you don’t delay so that you can have your benefit determined properly.
If you own a small business or freelance
The government won’t initiate GST/HST assessments or income tax audits over the next four weeks. Business owners will also have a grace period on taxes owed on their corporate or individual assessment and on instalment payments based on tax expenses that become owing between March 18, 2020 and the end of August. They won’t have to pay until after August 31, 2020.
To help prevent lay-offs based on lost revenue, the government intends to provide a temporary wage subsidy over three months, equal to 10% of an employee’s salary over that period up to a maximum of $1,375 per employee and $25,000 per employer.
The government is also making it easier to access credit through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) with more flexible borrowing terms, payment postponements, lower borrowing rates, and more available credit.
What happens next
Many of these changes have already taken place. For example, you won’t need a medical certificate to apply for EI, and you won’t need to file your taxes until June 1.
As these changes are unfolding rapidly, expect more details from the government in the days and weeks ahead with more specifics.
Source: the Government of Canada, Department of Finance