COVID-19: Multi-billion dollar relief and beyond

by | Mar 18, 2020 | 0 comments

The implications for aftermarket businesses from efforts to limit the COVID-19 outbreak are far reaching, and there are a number of resources, including financial relief, that are being made available by government and agencies including, but not limited to, the just announced multi-billion dollar relief package.

On March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period. These measures, delivered as part of the Government of Canada’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses.

For over 12 million low- and modest-income families, who may require additional help with their finances, the Government is proposing to provide a one-time special payment by early May 2020 through the Goods and Services Tax credit (GSTC). This will double the maximum annual GSTC payment amounts for the 2019-20 benefit year. The average boost to income for those benefitting from this measure will be close to $400 for single individuals and close to $600 for couples. This measure will inject $5.5 billion into the economy.

For over 3.5 million families with children, who may also require additional support, the Government is proposing to increase the maximum annual Canada Child Benefit (CCB) payment amounts, only for the 2019-20 benefit year, by $300 per child. The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 per child as part of their May payment. In total, this measure will deliver almost $2 billion in extra support.

Together, the proposed enhancements of the GSTC and CCB will give a single parent with two children and low to modest income nearly $1,500 in additional short-term support.

The government is changing the Canada Account so that the Minister of Finance would now be able to determine the limit of the Canada Account in order to deal with exceptional circumstances. The Canada Account is administered by Export Development Canada (EDC) and is used by the government to support exporters when deemed to be in the national interest. This will allow the government to provide additional support to Canadian companies through loans, guarantees or insurance policies.

To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

The Canada Revenue Agency will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020.  This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. 

The Business Credit Availability Program (BCAP) will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. 

As a further proactive and coordinated measure to bolster the financial system and the Canadian economy, the government announced on March 16 that it is launching an Insured Mortgage Purchase Program (IMPP). Under this program, the government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). This action will provide long-term stable funding to banks and mortgage lenders, help facilitate continued lending to Canadian consumers and businesses, and add liquidity to Canada’s mortgage market.

MORE INFORMATION ON THE MOST RECENT ECONOMIC STIMULUS PACKAGE HERE

COVID-19 CONSIDERATIONS FOR BUSINESS

Four main aspects of the affects of the restrictions and closures are at hand: employees, financials, business travel and events, exports and international business.

Employees

Employees are the lifeblood of a business, but in these unprecedented times, it may be necessary for some workers to stay at home. Government of Canada’s $1 billion COVID-19 Response Fund goes towards support for employers and workers through the Work-Sharing program, and by waiving the one-week waiting period for Employment Insurance sickness benefits. DETAILS HERE

Businesses

No business is going untouched. There are measures being rolled out to help businesses *and individuals) bridge the gap financially. Canadian businesses to have contingency plans in place to manage potential financial risk. The Canadian Chamber of Commerce, as well as Business Development Canada, has developed helpful and comprehensive guides to help you with planning and preparedness. MORE DETAILS HERE

Canada’s Business Development Bank has also rolled out some programs for entrepreneurs affected by COVID-19 including access to capital and working capital loans. MORE DETAILS HERE

In addition, Canada’s chartered banks have announced measures to help individuals and businesses. These are announced as “case-by-case basis” measures to provide relief. SEE THE ANNOUNCEMENT HERE

Travel and Events

Virtually all non-essential travel and events have been put on hold. While most organizations have already put travel bans in place and aftermarket events planned for the near future have also been postponed or cancelled entirely. As of this writing, all international travel from and to Canada is severely restricted and the border with the U.S. is expected to be closed to all but commercial and essential traffic. CHECK FOR UPDATES HERE

International Business

Canada’s automotive aftermarket relies on a global supply chain that has been disrupted by the COVID-19 outbreak. For many businesses already affected by a changing trade and tariff environment, this comes as a severe blow with implications for the supply chain at large. While aftermarket professionals are urged to work with their supply chain partners directly, there are also broader resources available:

Aftermarket organizations are urged to keep apprised of current best practices, mandates, and advisories from local authorities.

Government of Canada updates and essential resources are available HERE

In addition, the Automotive Industries Association of Canada has pledged to provide updates on association activities. SEE HERE FOR PERIODIC UPDATES

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