The business environment is changing rapidly due to the unfolding COVID-19 situation, prompting the Canadian federal government to take steps to make economic resources available to mitigate the damage. We have compiled a short list of the most significant of these measures to date, and we will continue to follow future announcements closely so you can stay focused on your business.
Since it was declared a pandemic, COVID-19 has had a significant economic impact, with reduced consumer spending, interrupted global supply chains and historic downturns in stock markets around the world.
In response, on March 13, Canada’s federal government announced that the House of Commons would be adjourned until April 20, and potentially longer. Several other significant announcements were made:
- The federal budget is postponed indefinitely (originally slated for March 30).
- The Canada-United States-Mexico Agreement (aka NAFTA 2.0) was officially ratified.
- The Bank of Canada implemented its second interest rate cut of 50 basis points in just over a week.
- Rumours circulated that Finance Minister Bill Morneau would be announcing the extension of tax filing deadlines as part of a package of tax measures to be introduced this week.
To combat the negative impact COVID-19 has had on the Canadian economy and soften a potential downturn, the federal government introduced measures last week that may be important to your business.
1. Employment insurance
The regular one-week wait-time to access employment insurance (EI) will be removed for individuals who are placed under 14-day quarantine.
Employment insurance provides workers with 55 percent of their earnings, up to a maximum of $573 per week. The normal requirement of obtaining a doctor’s note will be waived. The government has not yet stated what type of documentation will be required but noted that the intention is to minimize the amount of effort required for the quarantined individual.
The government has also stated that it may provide additional income support for those who are not eligible for EI sickness benefits (e.g., those who have been self-employed for less than 12 months or have not accumulated at least 600 insured hours in the 52 weeks before quarantine).
2. Work Sharing Program
The Work Sharing Program allows employers and employees to minimize the impact of an economic downturn by having employees share their work hours in an effort to avoid layoffs.
Employers can normally participate in the program for a maximum of 38 weeks, however, those impacted by COVID-19 can extend the participation time up to 76 weeks (this extension has already been granted to businesses in the forestry and aluminum/steel industries). Furthermore, an attempt to “streamline processes” is being made to allow employers to access this program as soon as possible.
3. Access to credit and flexibility with tax obligations
The government intends to support businesses by investing in the Business Development Bank of Canada and Export Development Canada, both federal lending agencies, in order to increase the amount of financing available to businesses. Furthermore, Prime Minister Justin Trudeau stated that “flexible arrangements could be made for businesses trying to meet payment obligations to the Canada Revenue Agency.” Minimal details have been provided on these measures, but we will continue to keep you updated as we gain more information.
A link to the news release that includes the announcement of these measures can be found here.
4. CanExport Program
The government continues to provide assistance to businesses through the CanExport Program. This is a funding program that provides small and mid-sized enterprises (those with revenues between $100,000 and $100 million in the prior fiscal year) with assistance to help them expand to new international markets. Funding may be available for eligible costs, which include market research, intellectual property-related costs, legal advice and more.
We are here to help
We understand that you want to be agile and responsive as the situation unfolds. Having access to specialists, insights and accurate information as quickly as possible is critical – but your resources may be stretched at this time. As the situation changes businesses need to remain agile and alert. We can support you to manage many of the impacts of coronavirus on your business.
The federal government is expected to announce additional measures this week. We will continue to keep you updated on all the latest announcements as they come in.