March 18, 2020 by Adam Malik
The Insurance Brokers Association of Canada (IBAC) is welcoming the federal government’s announcement of a slew of measures to assist Canadian employees, consumers, and businesses throughout the COVID-19 pandemic.
Prime Minister Justin Trudeau announced that the financial aid, worth about $82-billion, will provide a wage subsidy for small businesses, create the Emergency Care Benefit for those who don’t qualify for Employment Insurance, boost the Canada Child Benefit, and defer Canada Student loan payments for six months. Tax payments will also be delayed until August.
The new Emergency Care Benefit will provide up to $900 every two weeks for up to 15 weeks. It will provide income support to workers who have to stay home but don’t have access to paid sick leave. Those who can apply for it are:
For small businesses, a temporary wage subsidy will be available for three months. It will cover 10% of the remuneration paid during that time up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
IBAC CEO Peter Braid told Canadian Underwriter that the “package represents a strong signal of support for businesses. The major credit and liquidity supports announced are also important measures for the small business community.”
Braid said brokers are in a strong position to keep their operations going despite the challenges and serve the needs of customers with virtually no major disruptions. “However, it is reassuring to know that in the event that it is needed, a small business brokerage may be eligible for financial support depending on their individual circumstances,” he said.
“Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration,” according to the Prime Minister’s Office. “Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.”
IBAC will still be engaging with its member associations to monitor and respond to the impacts of COVID-19 on its member brokerages, many of which are small businesses, Braid said. “Member Associations are proactively supporting their membership with a wide range of supports, including assistance with virtual platforms, communications, and co-ordination of efforts on emerging issues related to the pandemic.”
In a Q&A session following the Prime Minister’s announcement, it was noted that the Canadian Federation of Independent Business felt that the 10% number wasn’t enough, comparing it to a country like Denmark which is at 75%. Finance minister Bill Morneau didn’t answer the question directly, saying the government was implementing these measures to ensure the economy can return to normal when the pandemic subsides.
Businesses will also be able to defer payment of any income tax owing until September. Gareth Watson, a wealth advisor at Richardson GMP in Toronto, stressed to CBC News that “this is deference, not forgiveness.”
The $82 billion in funding is equivalent to about 3% of Canada’s gross domestic product, Trudeau noted. The government said Canada is in a strong financial position to will allow it to absorb the costs of these measures.
“Public health should never hinge on financial considerations,” Trudeau said Wednesday at his home at Rideau Cottage in Ottawa, where he is in self-isolation after his wife, Sophie Gregoire Trudeau, tested positive for the virus. “No matter who you are or what you do, you should be focused on your health.”
It is not known how long these measures will be in place. Trudeau simply said the measures would last for as long as necessary.
Canada’s big six banks jointly announced that they will work with personal and small business clients to cope with the economic fallout of COVID-19. Those measures include mortgage payment deferrals of up to six months and relief on other credit products for customers facing hardship.
Trudeau also announced that he and U.S. President Donald Trump have agreed to close the U.S.-Canada border to non-essential travel. That means visitors and tourists won’t be allowed in, but the border will be open to commerce and goods between the two countries.
There was no date given on when it would start, just that it would be “very soon,” Trudeau said.