Deputy Prime Minister and Minister of Finance Chrystia Freeland (pictured at an event in Mexico City, Mexico, in February 2018) announced Canada’s Fall Economic Statement on November 30 (Getty Images/Hector Vivas)
In the long-awaited Fall Economic Statement tabled on November 30, the federal government announced plans to invest up to $100 billion over the next three years to ensure a strong and resilient economic recovery.
Those investments to jumpstart the economy will come once the virus is under control. Until then, significant challenges remain and the ongoing critical fiscal support for Canadians and businesses is anticipated to be necessary well into the 2021.
The government says its stimulus efforts “will focus on investments capable of both having a real, tangible impact on jobs and demand in the short term, while also strengthening Canada’s competitiveness and productivity in the longer term.”
“COVID-19’s impact on the Canadian economy cannot be understated,” says Bruce Ball, vice-president, taxation, Chartered Professional Accountants of Canada (CPA Canada). “We applaud the federal government for its continued focus on the immediate needs of Canadians and the business community. Unprecedented damage has come from the pandemic’s fall out so it is essential that urgent requirements be addressed, but the country must maintain a focus on the longer-term as well.”
Mostly because of COVID-19 spending, the government projects the national deficit to be at least $381.6 billion this fiscal year. The Economic Statement says “Canadians should not have to take on debt that their government can better shoulder.”
The federal government believes lessons can be learned from past recessions, especially around the premature withdrawal of fiscal support. According to the Economic Statement, the experiences of many countries suggests “economies that withdrew fiscal support too quickly experienced slower growth afterwards.”
CPA Canada is disappointed that a fiscal anchor is not yet being established for greater accountability over the long-term.
“We believe that Canada’s finances must be managed in a transparent, accountable, disciplined and sustainable manner,” explains Charles-Antoine St-Jean, president and CEO, CPA Canada. “To help accomplish this, CPA Canada urges the government to put forward a suitable fiscal anchor or rule. This will help instill the business confidence that will foster greater investment in the productive capacity of the country.”
ECONOMIC STATEMENT – IMPORTANT MEASURES ANNOUNCED
Immediate support will come in the form of measures such as supporting business, both big and small, through this second wave of the pandemic by increasing the Canada Emergency Wage Subsidy to 75 per cent beginning December 20, 2020 through to March 13, 2021.
The Canada Emergency Rent Subsidy and Lockdown Support rates will also be maintained until March 13, 2021 at their current level. Both programs will continue for businesses through to June 2021.
The Canada Revenue Agency (CRA) will allow employees working from home in 2020 due to COVID-19 to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses, and will generally not request that individuals provide a signed T2200 form from their employers. More details will follow.
Additional immediate support will go to families with young children to provide temporary support up to $1,200 for each child under the age of six for those families who are entitled to the Canada Child Benefit. Groundwork has also been laid for a national Early Learning and Child Care System.
A new $1 billion Safe Long-term Care Fund will also be established to help better protect seniors and government will move forward with a plan to set new national standards. Some of the allocated funds will be used to better control and prevent infections in long-term care homes.
The government is also looking to help support Canadians in greening their homes to become more energy efficient, as well as a plan to plant two billion trees.
Other key highlights include:
- Beginning July 1, 2021, foreign-based vendors selling digital products to consumers in Canada will be required to register for, collect and remit the GST/HST on taxable sales.
- The government has proposed a tax on corporations providing digital services, effective January 1, 2022.
- Previously announced changes to the tax rules for stock options will proceed and will be effective July 1, 2021.
- The government will launch consultations on the modernization of Canada’s tax anti-avoidance rules and the General Anti-Avoidance Rule in particular.
The full statement can be found here.
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