Highlights of the Trudeau government's 2020 fall economic update
Finance Minister Chrystia Freeland unveiled her long-awaited fall economic statement today, updating the federal government's fiscal strategy for coping with the ongoing COVID-19 pandemic and shaping the recovery.
Today's fiscal update projects the deficit will reach $381.6 billion by the end of March 2021 and could climb even higher, depending on factors such as the severity of future shutdowns and the rate of COVID-19 infections.
The Liberal government says it is preparing to spend up to $100 billion to kick start the post-pandemic economy. The short-term stimulus package is valued at $70 billion to $100 billion over roughly three years.
The government says the stimulus spending — intended to build a greener, more inclusive, more innovative and competitive economy — will launch after a vaccine is distributed and life begins to return to normal.
In the meantime, the federal government is adding a number of supports to help people and businesses and raise revenues. Here are some of the highlights:
Family supports
Middle and low income families will get up to $1,200 for each child under the age of six in 2021.
Families that qualify for the Canada Child Benefit and earn a net income of $120,000 or less will get the money in four tax-free payments of $300 each.
The first $300 payment will come shortly after the enabling legislation is passed, with the remaining payments coming in April, July and October.
Families that earn a net income above $120,000 would be entitled to half the payment lower income families get and would receive it along the same schedule.
Child care agencies in the provinces and territories and in First Nations will also get quarterly $300 payments for every child they care for under the age of six.
Supports for youth
The federal government will spend $447.5 million in 2021-22 to create an additional 40,000 summer job placements for young people. The government is also making changes to the program to allow employers to hire youth outside of the summer period.
The plan also allows employers to claim up to 100 per cent of the value of the minimum wage for each youth hired. The new supports include measures to allow employers to hire part-time workers more easily.
The government also is investing $575.3 million in its Youth Employment and Skills Strategy over the next two years to create 45,300 job placements for young people who lost jobs or are unable to participate in the workforce because of the pandemic.
Graduates of post secondary institutions or apprenticeship programs will also see interest on the federal portion of their student or apprenticeship loans eliminated for 2021-22. The move will cost $329.4 million and the federal government says it will help up to 1.4 million Canadians.
The green economy
Canadians will be able to qualify for grants of up to $5,000 for work to improve the energy efficiency of their homes.
The Home Energy Retrofit program will cost $2.6 billion over 7 years, starting in 2020-21. The funding also will cover the cost of providing one million free EnerGuide efficiency assessments and pay for the recruiting and training of auditors to perform the work.
Details of the plan have yet to be announced but the grants will be retroactive to Dec. 1, 2020.
The federal government is also allocating $150 million over three years to help Natural Resources Canada increase the number of recharging stations that support zero-emission vehicles.
GST/HST Relief
The federal government will remove GST/HST from face masks and face shields. The initiative will cost $95 million over two years, starting in 2020-21.
Safe communities
Front line RCMP officers will be getting body cameras. The program will cost $238.5 million over the next six years, beginning in 2020-21. After that, the program will be sustained with $50 million in annual funding.
The initiative is being implemented to "respond to concerns about policing from racialized and Indigenous communities."
The federal government is also giving municipalities and community-led initiatives $250 million over five years, starting in 2021-22, to support anti-gang programs.
Fiscal Stabilization Program
The Fiscal Stabilization Program provides financial assistance to a province facing a year-over-year decline in non-resource revenues greater than five per cent. Up to now, the maximum a province could receive under the program was $60 per person.
Today, the federal government announced that the cap will nearly triple, to $170 per person in 2019-20 and 2020-21, and will grow over time.
Long term care
Today's economic statement promises a $1 billion fund to help provinces and territories improve COVID-19 infection control in long-term care facilities over the next three years. The pandemic exposed deadly gaps in infection control in nursing and long-term care homes across the country.
The federal government said the funding will be allocated to the provinces on a per-capita basis but will be contingent on the provinces and territories providing detailed spending plans and demonstrating that investments have been made according to those plans.
Digital giants
Foreign-based companies selling digital products or services in Canada will be required to register for, collect and remit the GST/HST on their taxable sales.
The federal government said the proposed tax will increase boost federal revenues by $1.2 billion over five years, starting in 2021-22.
The government said that while it is working with international partners to develop a tax for corporations providing digital services, it's also prepared to go it alone.
The fiscal statement says the federal government will implement a digital tax directly on corporations providing digital services and that the tax will take effect on Jan. 1 2022. The government estimates it will bring in $3.4 billion over five years.
Working from home
Because so many Canadians are now working from home, the Canada Revenue Agency will allow Canadians "with modest expenses" to claim up to $400 as a tax deduction for working from home without having to keep a detailed account of their expenses.
New revenue streams
The federal government will start applying GST/HST to digital platform-based short-term rentals in July of 2021. Companies such as Airbnb and other vacation rental websites will be affected. The move is expected to raise $360 million in new revenue over five years.
The government is placing a new $200,000 annual limit on employee stock option grants that can qualify for the employee stock option deduction. The limit will be based on the fair market value of the shares underlying the options, at the time the options are granted. The move is expected to raise government revenues annually by $200 million.
The federal government says it will also take steps in the coming year to implement a tax that targets housing units owned by non-resident non-Canadians.
The government also says it will spend $606 million over the next five years to fight international tax evasion, with a view to collecting $1.4 billion in unpaid revenues.
WATCH | Freeland delivers fiscal update speech
