Legislative Costing Notes

Introduction of the Canada Emergency Business Account (CEBA) – Update

The Canada Emergency Business Account provides interest-free loans of up to $40,000 to small businesses and not-for-profits, to help them cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus. 
To qualify for this program, these organizations will need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25%. The program will be implemented by banks and credit unions in collaboration with Export Development Canada.
Sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll are also eligible for the CEBA after the expansion of the eligibility criteria in May 19, 2020. To qualify under the expanded eligibility criteria, applicants must have payroll lower than $20,000 and will need to demonstrate that they have:
- a business operating account at a participating financial institution
- a Canada Revenue Agency business number and have filed a 2018 or 2019 tax return.
- eligible non-deferrable expenses between $40,000 and $1.5 million. 
Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance.
PBO estimates this program to cost $9.335 billion in 2020-2021. The time horizon for this costing is aligned to PBO’s current Economic and Fiscal Scenario.

Special payment to Disability Tax Credit certificate holders

Introducing a one-time, tax-free payment to individuals who are certificate holders of the Disability Tax Credit (DTC) as of 1 June 2020. Payments will be equivalent to:
a. $600 for Canadians with a valid DTC certificate; 
b. $300 for Canadians with a valid DTC certificate and who are eligible for the Old Age Security (OAS) pension; and 
c. $100 for Canadians with a valid DTC certificate and who are eligible for the OAS pension and the Guaranteed Income Supplement (GIS). 
PBO estimates 1.33 million Canadians will receive a special payment and that the total net cost of this measure will be $595 million in 2020-21. 
The time horizon for this costing is aligned to PBO’s current Economic and Fiscal Scenario, although there may be potential fiscal impacts for subsequent years.

Canada Emergency Response Benefit (CERB) – Eight Week Extension

On June 16, 2020 the Government announced that eligibility for benefits under the Canada Emergency Response Benefit (CERB) will be extended by an additional 8 weeks, bringing the maximum to 24 weeks total. 
The CERB is a taxable benefit that provides $500 a week for workers who lose their income due to reasons related to COVID-19.  This includes Canadians who have lost their job, are sick, quarantined, taking care of someone who is sick with COVID-19 as well as working parents who must stay home without pay to care for children who are at home because of school and daycare closures. 
Workers are defined as anyone who received at least $5,000 in the previous 12 months in employment income, self-employment income, Employment Insurance benefits, or other provincial benefits as outlined in Bill C-13. 
Workers who earn less than $1,000 in a 4-week period are eligible for the CERB. Individuals who have exhausted their Employment Insurance regular benefits between December 29, 2019 and October 3, 2020 are also eligible for the CERB.
PBO estimates the cost to extend the maximum duration of benefits from 16 to 24 weeks under the CERB program to be $17.9 billion.  This would bring the total estimated program cost to $71.3 billion.

Financial Support for Indigenous Businesses and Aboriginal Financial Institutions

Introducing the Financial Support for Indigenous Businesses and Aboriginal Financial Institutions (FSIBAFI) to provide up to $40,000, interest-free loan of $30,000 and  non-repayable contribution of $10,000, to First Nations, Inuit, and Métis small and medium-sized businesses, to help them cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus. 
The financial support will be provided through Aboriginal Financial Institutions and administered by the National Aboriginal Capital Corporations Association and the Métis Capital Corporations in partnership with Indigenous Services Canada.
PBO estimates this program to cost $75 million in 2020-2021. The time horizon for this costing is aligned to PBO’s June 18, 2020 Economic and Fiscal Scenario.

Canada Emergency Response Benefit (CERB) – without 8 week extension

Canada Emergency Response Benefit (CERB) is a taxable benefit that would provide $500 a week for up to 16 weeks for workers who lose their income due to reasons related to COVID-19.  This includes Canadians who have lost their job, are sick, quarantined, taking care of someone who is sick with COVID-19 as well as working parents who must stay home without pay to care for children who are at home because of school and daycare closures. 
Workers are defined as anyone who received at least $5,000 in the previous 12 months in employment income, self-employment income, Employment Insurance benefits, or other provincial benefits as outlined in Bill C-13. 
Workers who earn less than $1,000 in a 4-week period are eligible for the CERB. Individuals who have exhausted their Employment Insurance regular benefits between December 29, 2019 and October 3, 2020 are also eligible for the CERB.
PBO estimates the CERB program will have a total cost of $53.4 billion in 2020-2021.

Canada Emergency Wage Subsidy (CEWS) for employers with reduced revenues

Introducing a wage subsidy for employers with reduced revenues.
The subsidy is available for wages paid in six 4-week periods from 15 March 2020 to 29 August 2020. Employers are eligible for the subsidy in relation to a period if they have a qualifying revenue decline based on the leading calendar month. The required revenue decline is 15% for March, 30% for April and May, and is assumed to remain 30% for June, July and August. 
Employers may choose to compare their revenue level to the average of January and February or to the same month in the prior year. Once an eligible employer has determined that it has experienced the qualifying reduction in revenue for a particular claim period, it is also deemed eligible for the immediately subsequent claim period.
For existing employees, the subsidy is up to the lesser of 75% of pre-crisis wages and $847 per week. For new employees, the subsidy is 75% of wages paid, up to $847 per week. “Pre-crisis” refers to the period of January 1 to March 15th. The level of subsidy is assumed to remain the same for June, July and August. Employers do not have to pay employees their full pre-crisis wages to qualify for the wage subsidy.
Eligible employers can also recover 100% of employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan in relation to employees on leave with pay.
Eligible employers include individuals, taxable corporations, and partnerships as well as non-profit institutions and registered charities. Public bodies are not eligible.
For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10% wage subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.
The PBO estimates the total net cost of this measure to be $56 billion in 2020-21. 
The time horizon for this costing is aligned to PBO’s current Economic and Fiscal Scenario, although there may be potential fiscal impacts for subsequent years.

Canada Emergency Student Benefit (CESB)

Providing $1,250 per month for eligible students or $2,000 per month for eligible students with dependents or a disability from May to August 2020.
Canada Emergency Student Benefit (CESB) is a taxable benefit that would provide support to students and new graduates who are not eligible for the Canada Emergency Response Benefit or Employment Insurance or who are unable to work due to COVID-19.  Students who earn less than $1,000 in a 4-week period are also eligible for the CESB. 
Students are defined as Canadian citizens or permanent residents in Canada enrolled in a post-secondary educational program that leads to a degree, diploma or certificate, at any time between December 1, 2019, and August 31, 2020. In addition, secondary school graduates this year that applied for or plan to enroll in programs that will begin before February 1, 2021, are eligible. 
PBO estimates total net cost of this measure to be $5.9 billion in 2020-21 reaching approximately 1.1 million unique recipients. This includes an estimated cost of $6.0 billion for the benefit and an estimated cost recovery of $163 million for 2020 tax revenues. No additional administrative costs are anticipated. 
The time horizon for this costing is aligned to PBO’s current Economic and Fiscal Scenario, although there may be potential fiscal impacts for subsequent years.

Suspension of audit activities

Providing additional support to individuals and businesses. The Canada Revenue Agency (CRA) will not initiate contact with taxpayers for audits, with certain exceptions. There will be:
- no new audits being launched, 
- no requests for information related to existing audits; and 
- no audits should be finalized, and no reassessments should be issued.

PBO estimates total net cost of this measure to be $616 million in 2020-21. 
The time horizon for this costing is aligned to PBO’s current Economic and Fiscal Scenario, although there may be potential fiscal impacts for subsequent years.  For example, should there be an increase in audit activities in subsequent years, a portion of the lost revenue in 2020-21 could be recouped.

Mandatory Isolation Support for Temporary Foreign Workers Program (MISTFWP)

The Mandatory Isolation Support for Temporary Foreign Workers Program (MISTFWP) is a subsidy for employers that hire temporary foreign workers (TFW) to work in occupations related to the food supply chain, such as agriculture, fishing, food production, and processing. The program reimburses employers for costs associated with the mandatory 14-day isolation period for temporary foreign workers after entering Canada. 
Employers are reimbursed for expenses incurred after March 25th, 2020 up to a maximum of $1,500 per TFW.
PBO estimates 39,689 workers will be eligible for the program and the program will have a total cost of $59.5 million in 2020-2021.

The Fish Harvester Benefit and Fish Harvester Grant

The Fish Harvester Benefit offers income support to self-employed fish harvesters and sharespersons. This benefit covers up to 75% of income losses beyond a 25% threshold in the 2020 tax year. The maximum benefit is $847 per week for a period of up to 12 weeks, equivalent to that of the Canada Emergency Wage Subsidy.
The Fish Harvester Grant provides grants to self-employed fish harvesters in order to address non-deferrable business costs. The grant program provides non-repayable support of up to $10,000, dependent on the level of the fish harvesters’ historic revenue. 
The estimated net cost of the Fish Harvester Benefit is $271 million. The estimated cost of the Fish Harvester Grant is $90 million.