COVID-19 – Supporting Canadian Businesses.
Important message from Sven Spengemann, MP Mississauga-Lakeshore
To our local business owners and entrepreneurs:
As your Member of Parliament, I wanted to take this opportunity to share with you what the Government of Canada is doing to support Canadian businesses facing financial hardship as a result of the COVID-19 pandemic.
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’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses. Here are some important measures that may be of interest to you:
HELPING BUSINESSES KEEP THEIR WORKERS
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.
FLEXIBILITY FOR BUSINESSES FILING TAXES
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 Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.
The Liaison Officer service offers help to owners of small businesses to understand their tax obligations. Traditionally available in-person, this service is now available over the phone and will be customizing information during these challenging times by ensuring small businesses are aware of any changes such as filing and payment deadlines, proactive relief measures, etc.
ENSURING BUSINESSES HAVE ACCESS TO CREDIT
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. This will be an effective tool for helping viable Canadian businesses remain resilient during these very uncertain times. BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism. The near term credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.
The Office of the Superintendent of Financial Institutions (OSFI) announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets, effective immediately. This action will allow Canada’s large banks to inject $300 billion of additional lending in to the economy.
The Bank of Canada also took a series of actions to support the Canadian economy during this period of economic stress, enhance the resilience of the Canadian financial system, and help ensure that financial institutions can continue to extend credit to both households and businesses. This included cutting the interest rate to 0.75% as a proactive measure in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices.
SUPPORTING CANADIAN BUSINESS THROUGH THE CANADA ACCOUNT
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 during these challenging times.
SUPPORTING FINANCIAL MARKET LIQUIDITY
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. Details of the terms of the purchase operations will be provided to lenders by CMHC later this week.
The IMPP enhances the already substantial set of measures announced on March 13 to support the economy and the financial system. CMHC stands ready to further support liquidity and the stability of the financial markets through its mortgage funding programs as necessary.
Further, the Bank of Canada has announced that it will adjust its market liquidity operations to maintain market functioning and credit availability during the current period of uncertainty in which conditions are evolving rapidly.
The Bank of Canada also announced that it will broaden eligible collateral for its term repo facility to include the full range of collateral eligible under the Standing Liquidity Facility, with the exception of the non-mortgage loan portfolio. This expansion of eligible collateral will provide support to funding conditions for financial institutions by providing a backstop to regular private funding.
The Bank also announced that it stands ready, as a proactive measure, to provide support to the Canada Mortgage Bond (CMB) market so that this important funding market continues to function well. This would include, as required, purchases of CMBs in the secondary market. Similar to the increase in Government of Canada bond buybacks, this will support market liquidity and price discovery.
ADDITIONAL MEASURES TO SUPPORT CANADIANS
To learn more about the above measures, and other support for workers, individuals, and families, visit: https://www.canada.ca/en/department-finance/economic-response-plan.html
I encourage you to stay informed and updated via the Government of Canada’s website, https://canada.ca/coronavirus. If you, a family member or loved one are feeling unwell, your first resource is Telehealth Ontario, at 1-866-797-0000.
I would like to thank you for your significant contributions to our community, and I invite you to reach out to our office should you have any further questions. Following the guidance of the Public Health Agency of Canada, our Constituency Office has closed to the public until further notice, however, our team remains available to help you via e-mail at email@example.com or via phone at (905) 273-8033.
We are all in this together, and we will get through it together.
With my best wishes,
Member of Parliament for Mississauga-Lakeshore