Earlier this morning, prime minister Justin Trudeau announced an $82 Billion dollar COVID-19 Economic Response Plan to help Canadian citizens and businesses cope with the Coronavirus pandemic. Here’s what it means for your personal finances.
What is the COVID-19 Economic Response Plan?
The Government of Canada proposed an $82 billion dollar plan to help lift up the most vulnerable Canadians in this time of crisis. While imperfect, it includes income support, additional payments, and reduction of requirements in accessing benefits.
The COVID-19 Economic Response Plan is lengthy and you can read the full version here. If you want a brief overview, we’ve outlined the parts most likely to apply to you. However, if you’re a small business owner, there may be even more to benefit from, so make sure you check out the official site!
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Here’s how some of Justin Trudeau’s $82 Billion support plan will make its way into your pockets.
Support income for people who are sick with COVID-19 or caring for someone who is
COVID-19, or Coronavirus, is a serious respiratory infection that can be fatal, especially for the elderly. Even young people can see severe illness that can take as long as 2 weeks to recover from.
Two weeks is just long enough to really feel the pinch of no income, but usually not quite long enough to qualify for Employment Insurance (EI) Benefits. Here’s how that’s changing:
No waiting period or medical certificate required for EI benefits
The federal government has waived the one-week waiting period for those individuals in imposed quarantine that claim Employment Insurance (EI) sickness benefits. You also will not need to provide a medical certificate to access EI sickness benefits.
Income support for the workers and self-employed who do not qualify for EI
The Canada Emergency Response Benefit will provide a taxable benefit of $2,000 per month for 4 months. It will be administered through the Canada Revenue Agency (CRA). Applications will open in April, and you will need to attest you meet the eligibility requirements.
Your Federal Student Loans are now payment-free and interest-free for the next six months
If you have Federal Student Loans in repayment, you’re getting a break on your interest costs. Your Canada Student Loan will be payment-free and interest-free for the next six months. Students do not need to apply for the student loan relief period. Your student loans are automatically payment and interest-free.
If you have any provincial student loans or private student loans, those are unchanged unless your lender has modified your interest or payment schedule. Note that the Bank of Canada recently lowered interest rates (and likely will again soon), which does make any other variable rate loans you’re carrying more affordable.
Benefits and payments for parents with children
Parents have been one of the hardest-hit groups financially in managing the Coronavirus pandemic. As schools and daycares closed across the country, many working parents had to stop their own employment to take on full-time childcare duties.
The Government of Canada has proposed 3 solutions: the Canada Emergency Response Benefit of $2,000 per month for 4 months, up to an extra $300 per child in CCB, and up to an extra $600 in GST credit. Here’s the breakdown:
Income support for parents with children affected by the school closures, and are unable to earn income
The same Canada Emergency Response Benefit listed above will provide $2,000 per month for 4 months to parents who cannot work because they now have to care full-time for children affected by school and daycare closures.
Applications will open in April.
Extra $300 per child in Canada Child Benefit (CCB) to be distributed in May 2020
The Canada Child Benefit (CCB) is a monthly payment made by the Government of Canada to eligible families with children. 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.
Doubling the Goods and Service Tax Credit to provide $400 for singles and close to $600 for couples to be distributed in May 2020
For low- and modest-income families, 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.
Emergency income support for those facing long term reduced hours or unemployment
For those not who are not simply taking a couple of weeks off for quarantine or a month or two off to care for children, the federal government is suggesting income support for those who will face job loss or longterm reduced hours as a result of the Coronavirus pandemic.
The following two supports have been put forward:
- Introducing an Emergency Support Benefit delivered through the CRA to provide up to $5.0 billion in support to workers who are not eligible for EI and who are facing unemployment.
- Implementing the EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process. This was announced by the Prime Minister on March 11, 2020.
How will I get the benefits I qualify for in the COVID-19 Economic Response Plan?
Many of the benefits, like additional CCB or GST payment will be distributed automatically. These will be direct deposited in your bank account if your income taxes are up to date and the Government of Canada has your banking information. Likewise, your federal student loan is now automatically interest-free and payment-free already.
Other benefits, like EI sickness benefits, will need to be applied for as you need them. Likewise, the Emergency Care Benefit for workers who do not qualify for EI, the self-employed, or parents now not working because they have to care for children, will have an application on the Canada Revenue Agency website.
Many of the above benefits announced in the plan will not be distributed until May, so their applications do not open until April. More information about how to apply to the benefits will be shared here when those applications open up.
Want more information now? You can check out Canada’s complete COVID-19 Economic Response Plan here.