THE WEEK IN REVIEW - 20 MARCH 2020
your rennie brief
what you need to know about the latest COVID-19 initiatives in canada
• In response to the anticipated disruptions caused by the spread of COVID-19, Canada’s federal government, the Bank of Canada, the Province of BC and other institutions are taking steps to help mitigate the negative effects. • Each week rennie will publish a summary of the latest policy changes, financial market interventions, and other relevant actions introduced in the preceding week. • This summary includes all announcements up to 20 March 2020.
federal government The federal government is preparing a $82 billion stimulus package for Canadians, including $27 billion in direct support to individuals and businesses (equal to more than 1% of GDP) and the deferral of $55 billion in tax revenue (equivalent to leaving 3% of GDP in the economy). The package, to be voted on by parliament, would include the following measures: A new EMERGENCY CARE BENEFIT (ECB) that will, every two weeks, provide individuals who must stay home and do not have access to paid sick leave with up to $900 ($450 per week) for up to 15 weeks. It is intended for those who are ill, in quarantine, self-isolating, taking care of family members that are sick, or parents who have to look after children. It will also provide coverage for those not eligible for employment insurance (EI), including contractors, gig workers, part- time workers, many agricultural workers, and free-lancers. The ECB will be available beginning in early April, with individuals filing applications online and payments received by direct deposit. The EMERGENCY SUPPORT BENEFIT will provide up to $5 billion for up to 14 weeks of support for anyone who has lost their job and does not qualify for EI. More details of this program to come. An additional GST CREDIT averaging $400 for single adults and $600 for couples will be introduced. The CANADA CHILD BENEFIT will be increased by $300 per child. There will be a temporary 25% REDUCTION IN THE MINIMUM WITHDRAWAL made for Registered Retirement Income Funds (RRIFs) in 2020. A TEMPORARY WAGE SUBSIDY is available immediately to small businesses. The eligibility criteria is not yet known, but eligible small businesses will receive an amount equivalent to 10% of wages payable to all employees for three months, up to a maximum subsidy of $1,375 per employee or $25,000 per employer. Businesses can access this benefit immediately by reducing the remittance of income tax withheld on employees’ remuneration. The BUSINESS CREDIT AVAILABILITY PROGRAM will provide $10 billion in credit support for businesses. It will be administered through Business Development Bank of Canada and Export Development Canada.
Personal TAX-FILING DEADLINES will be extended from April 30 to June 1, 2020. Additionally, individual and corporate taxpayers will have until August 31 to pay any outstanding tax bills without penalties. A six-month, interest-free MORATORIUM ON CANADA STUDENT LOAN PAYMENTS will provide up to one million Canadian students with an additional $160/month. (Interest will not accrue during the moratorium.) A new $305 million INDIGENOUS COMMUNITY SUPPORT FUND will address immediate needs in First Nations, Inuit, and Metis Nation Communities. There will be a $200 million investment into SHELTERS for homeless, sexual assault survivors, and women and children. canadamortgage housing corporation CMHC will reinstate the INSURED MORTGAGE PROTECTION PROGRAM , which includes up to $50 billion for banks and other lenders to offer mortgage payment deferrals of up to six months to home owners with insured mortgages. Additional support is being provided by Canada’s private financial institutions and the Central Bank, as follows: financial institutions Canada’s six largest banks (RBC, BMO, CIBC, National Bank, TD Canada Trust, and Scotiabank), as well as some credit unions (including Vancity and others), will also provide up to six months of MORTGAGE PAYMENT DEFERRALS , as well as relief measures for auto/credit card payments. bank of canada The Bank’s OVERNIGHT TARGET RATE was lowered from 1.75% to 0.75% to stimulate spending. The DOMESTIC STABILITY BUFFER has been lowered to allow Canada’s large banks to provide $300 billion of additional lending. To improve market and financial institutions’ liquidity, eligible collateral in the Bank’s TERM REPO FACILITY have been expanded.
For further information please contact Ryan Berlin (rberlin@rennie.com) or Andrew Ramlo (aramlo@rennie.com). The information set out herein (the “Information”) is intended for informational purposes only. RAR & RMS has not verified the information and does not represent, warrant or guarantee the accuracy, correctness and completeness of the information. RAR & RMS does not assume any responsibility or liability of any kind in connection with the information and the recipient’s reliance upon the information. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information may change any time without notice or obligation to the recipient from RAR & RMS.
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