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COVID-19 & Your Finances: What Canada’s Economic Relief Means for You

COVID-19 is having a significant and sudden impact on our economy. In response, the Canadian government has introduced a $27-billion plan to help support individuals and businesses that are financially strained as a result of the crisis. 

If you’re facing unexpected financial struggle, you’re not alone. To help you understand what support may be available to you at this challenging time, we’ve broken down the Government of Canada’s COVID-19 Economic Response Plan.

At a glance:

  • If you’re unable to work, you may qualify for a $900 bi-weekly benefit, even if you don’t qualify for EI.
  • 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 the virus has impacted your ability to work 

Many Canadians will be unable to work because they’re either sick with the virus, quarantined, or forced to stay home to take care of children or loved ones. If you aren’t covered by a sick leave policy, you might qualify for additional government support.

Specifically:

  1. If you’re sick with the virus, quarantined, or caring for someone who is sick and you don’t qualify for EI benefits, you qualify for the Emergency Care Benefit which will pay up to $900 bi-weekly for up to 15 weeks. This applies to those who are self-employed, too. 

    Parents who can’t work as they take care of their kids full-time in light of school closures also qualify for this benefit, regardless of whether or not they qualify for EI. 

  2. There’s no longer a one-week waiting period to claim Employment Insurance (EI) sickness benefits, and you won’t need a medical certificate to access those benefits. 

You’ll be able to apply for these new benefits through the CRA website, or a toll-free number that has not yet been shared. The CBC has more details on these benefits.

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 Emergency Care Benefit 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.

If you lose your job or are facing reduced hours

The government is creating an Emergency Support Benefit for those who aren’t eligible for EI, though the details haven’t been finalized yet. It will also be extending the EI Work Sharing Program which provides benefits to workers who agree to reduced hours based on a recent decline in the business.

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 freelancer

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 are already in effect. 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. 

The actual process for applying for some of the new benefits, such as the new Emergency Care Benefit, have yet to be outlined. Expect more details from the government in the days and weeks ahead.

Some of these specific financial commitments have yet to be reviewed in parliament, but the opposition parties have expressed a desire to work together with the Trudeau government to ensure the Canadians get the support they need — and to do so as quickly as possible.

Source: the Government of Canada, Department of Finance

The post COVID-19 & Your Finances: What Canada’s Economic Relief Means for You appeared first on WealthBar Blog.

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