The Canadian federal government has released their economic support response plan for helping businesses and Canadians financially through COVID-19. Mentor Works has broken down what this response means for your business and what you can do about it.
This blog may feature government funding programs that have since changed or evolved, view our COVID-19 support page for the latest updates.
Below, we have categorized the government’s response into three sections. Use the following hyperlinks to jump to the designated section.
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1. Financial Support for Canadian Businesses
Update: On March 27 the federal government announced a 75% wage subsidy for businesses that have seen a 30% drop in revenue during the COVID-19 pandemic. Businesses not applicable for the 75% Canada Emergency Wage Subsidy Program can still apply for the 10% Temporary Wage Subsidy for Employers.
Subsidizing 10% of Employees Wages for Small Business Employers
To help businesses currently facing revenue loss and to prevent lay-offs related to COVID-19, the Canadian government will provide eligible small business employers with a temporary wage subsidy for a period of up to three months.
- Subsidy will be equal to 10% of remuneration paid to employees during that period.
- Maximum subsidy of $1,375 per employee and $25,000 per employer, up to three months.
- Businesses can benefit from this immediately by reducing their remittances of income tax withheld on their employees’ remuneration. Depending how you file your taxes, this is done via MyAccount on the CRA website or through your payroll service provider.
Allocated Funding: $3.8 billion
Eligibility: Corporations who are eligible for the small business deduction, as well as non-profit organizations and charities.
Stay tuned by signing up for the Mentor Works newsletter to get the latest updates on financial support for Canadian employers affected by COVID-19.
Loans, Guarantees & Insurance Policies for Canadian Exporters
The Canada Account is used by the government to support Canadian exporters when deemed to be in the national interest. Export Development Canada (EDC) will administer financial support to businesses that export through loans, guarantees, and insurance policies.
Allocated Funding: The Canada Account
Income Tax Payments Can Be Deferred Until August 31, 2020
The Canada Revenue Agency (CRA) is allowing businesses to defer any income tax payments that became owing on or after March 18, 2020 and before September 2020, until August 31, 2020.
- No interest or penalties will accumulate on these amounts during this period.
- No Income Tax audits or post assessment GST/HST will be initiated with any SME businesses for the next four weeks.
- Liaison Officers will offer over-the-phone help to small business owners to understand their tax obligations.
Allocated Funding: $55 billion (for both individual and corporate taxpayers)
Eligibility: All Businesses
Ensuring Canadian Businesses Have Access to Credit
Providing $10+ Billion in Additional Support Through the Business Credit Availability Program (BCAP): In order to help eligible small and medium-sized businesses stay strong during the COVID-19 pandemic, BCAP will allow Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) to provide more than $10 billion to viable Canadian businesses.
The BDC and EDC are currently working with private sector lenders to find credit solutions that will work for individual businesses, including the oil and gas, air transportation and tourism sectors. There will be an increase in the near-term credit available to farmers and the agri-food sector through Farm Credit Canada (FCC).
OSFI lowers the Domestic Stability Buffer: The Office of the Superintendent of Financial Institutions (OSFI) announced that, effective immediately, they will be lowering the Domestic Stability Buffer by 1.25%. The lowered Domestic Stability Buffer allows Canada’s largest banks to inject $300 billion of additional lending into the economy.
The Bank of Canada Lowers Interest Rate: The Bank of Canada has cut their interest rate to 0.75% as a proactive measure against the recent shocks to the Canadian economy and dramatic drop in oil prices.
Supporting Financial Market Liquidity
The government is launching an Insured Mortgage Purchase Program (IMPP) that will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). The IMPP will ensure that Canada’s mortgage market will continue to collect liquidity while delaying mortgage payments for SME businesses. In addition to this, the Bank of Canada has announced that it stands ready to provide necessary support to the Canada Mortgage Bond (CMB).
Learn more about funding support options related to COVID-19 by registering for our webinar on COVID-19 Support for Canadian Businesses that will be held on Wednesday, March 25, 2020 at 10:30am – 11:00am ET.
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2. Income Support for Canadians
Temporary Changes to Employment Insurance (EI)
View our infographic on navigating income support options for Canadian individuals.
Changes to Employment Insurance (EI) Sickness Benefits: Effective March 15th, 2020 there has been a temporary lift in the one-week waiting period needed to claim Employment Insurance (EI) sickness benefits. The requirement to provide a medical certificate in order to access EI sickness benefits has also been waived.
Eligibility: Canadians without paid sick leave who are forced to stay home due to being sick, quarantined, or needing to take care of children. If you are ineligible, see Emergency Care Benefits below.
Update: The Emergency Care Benefit and Emergency Support Benefit have been combined into the Canada Emergency Response Benefit (CERB). It will provide a taxable benefit of $2,000 a month up to four months, for people who are off work and without an income as a result of the coronavirus.
Rolling Out A New Emergency Care Benefits Program: For those not eligible to access EI sickness benefits, the Government has introduced a flat-payment benefit administered through the Canada Revenue Agency (CRA) providing up to $900 bi-weekly, for up to 15 weeks.
Eligibility: Canadian workers (including those self-employed) who are quarantined or sick with COVID-19, or care for a family member who is sick with COVID-19 are eligible, as well as parents who require supervision of their children due to school closures, and are unable to earn employment income, regardless of whether they qualify for EI or not.
How and When to Apply: Application for the Emergency Care Benefit will be available in April 2020. Like EI programs, Canadians are required to reconfirm their eligibility online every two weeks. Canadians can apply for these benefits by choosing one of three methods:
- Through your CRA MyAccount secure portal;
- Accessing it from your My Service Canada Account; or
- Calling a toll-free number (1-800-267-6999) which will take you through an automated application process.
Disclaimer: Support programs related to COVID-19 are rapidly changing each day. You can view the Canadian government’s full economic response plan to COVID-19 for Canadian citizens and businesses on their website.
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3. Economic Response Plan Breakdown – Cost and Implementation
| Measure | 2020-2021 Cost/Impact | Implementation |
| Emergency Care Benefit | Up to $10 billion | Early April *requires Royal Assent |
| Emergency Support Benefit | Up to $5 billion | Early April *requires Royal Assent |
| GST Credit | $5.5 billion | By Early May *requires Royal Assent |
| Enhanced Canada Child Benefit | $1.9 billion | May * requires Royal Assent |
| Temporary Business Wage Subsidy | $3.8 billion | Immediately Supporting legislation to follow |
| Canada Student Loan Payments | $190 million | Early April * requires Royal Assent |
| Support for Indigenous Communities | $305 million | April *requires Royal Assent |
| Support for people experiencing homelessness (through Reaching Home) | $157.5 million | April *requires Royal Assent |
| Support for women’s shelters and sexual assault centres including on reserve | $50 million | April *requires Royal Assent |
| Lower Registered Retirement Income Fund Minimum Withdrawal Amounts | $495 million | Immediately Supporting legislation to follow |
| Total | $27.4 billion | |
| Other supports | ||
| Flexibility for individual and corporate taxpayers (tax payment deferral until September) | $55 billion | Immediately |
| Business Credit Availability Program (BCAP) through BDC and EDC | $10 billion + | Immediately |
| Credit and liquidity support through financial Crown corporations, Bank of Canada, OSFI, CMHC and commercial lenders (e.g., Domestic Stability Buffer, Insured Mortgage Purchase Program, Banker’s Acceptance Purchase Facility) | In the range of $500 billion | Immediately |
Take action against the coronavirus and register for one of our upcoming Webinars on navigating COVID-19 government funding programs.
Updated: March 27, 2020