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November 6, 2020

Your CFA Update on COVID-19

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Canada Emergency Rent Subsidy (CERS) details released

On October 9, the government announced the new Canada Emergency Rent Subsidy which will provide direct rent relief to businesses affected COVID-19. The new rent subsidy would be available retroactive to September 27, 2020, until June 2021.

The government published the proposed details for the first 12 weeks of the program, until December 19, 2020. According the media release the CERS program would mirror the Canada Emergency Wage Subsidy, providing a simple, easy-to-understand program for affected qualifying organizations.

The new rent subsidy would provide benefits directly to qualifying renters and property owners, without requiring the participation of landlords.

Canada Emergency Rent Subsidy

New Lockdown Support details released

The new Lockdown Support, which would provide an additional 25 per cent through the Canada Emergency Rent Subsidy for qualifying organizations that are subject to a lockdown and must shut their doors or significantly limit their activities under a public health order issued under the laws of Canada, a province or territory (including orders made by a municipality or regional health authority under one of those laws). Combined, this would mean that hard-hit businesses subject to a lockdown could receive rent support of up to 90 per cent.

Lockdown Support for Businesses Facing Significant Public Health Restrictions

Details on the Canada Emergency Wage Subsidy Extension released

On November 5, the federal government release more details in the Canada Emergency Wage Subsidy details for periods 8, 9 and 10 (until December 19, 2020). The wage subsidy would remain at the current rate of up to 65 per cent of eligible wages until December 19, 2020.

Canada Emergency Wage Subsidy Extension

Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support

2020 Ontario Budget – a Deep Dive (courtesy of Temple Scott Associates)

Finance Minister Rod Phillips released the 2020 Ontario Budget today, delayed by the government’s response to COVID-19.  It sets in place a platform that will be further built out when the next budget is released in March 2021, just four months away.

Thursday’s Budget had three pillars. The first is to PROTECT – making good on Premier Ford’s commitment to do whatever it takes to get through the pandemic. The second pillar is SUPPORT with measures aimed helping families and businesses cope with the economic fallout from COVID-19.  The third pillar is RECOVERY – setting out measures for post-pandemic economic recovery.

Highlights include:

  1. PROTECT: $7.5 billion in new spending on healthcare, particularly the ongoing COVID-19 response.  This is in addition to the existing $7.7 billion in supports to date, and includes investing an additional $572 million in hospitals for costs incurred during the pandemic.
  2. SUPPORT: $2.4 billion in new measures for individuals and businesses, including an additional $1.8 billion in funding for the Support for People and Jobs Fund over the next two years.
  3. RECOVERY: $4.8 billion in recovery funding, including an investment of $680 million over the next four years in broadband infrastructure and an additional $57 million for the Digital Main Street program to help small businesses enhance their online presence.

Fiscal Overview

For 2020–21, the government is projecting a deficit of $38.5 billion, unchanged from the deficit forecast at the time of the 2020–21 First Quarter Finances.

Beyond 2020-21 the government is forecasting deficits of $33.1 billion in 2021–22 and $28.2 billion in 2022–23.

Ontario’s real GDP is projected to decline by 6.5 per cent in 2020 and rise by 4.9 per cent in 2021, 3.5 per cent in 2022, before moderating to 2.0 per cent in 2023.

Program spending is set to grow by an annual average growth rate of 4.2 per cent between 2019–20 and 2022–23, primarily due to the temporary expenses associated with COVID-19.

Ontario’s 2020–21 net debt-to-GDP ratio is now forecast to be 47.0 per cent, compared to 47.1 per cent at the time of the 2020–21 First Quarter Finances.

Budget Highlights

Infrastructure: The government forecasts major investments in transit, highways, schools, hospitals and broadband. Planned investments over the next 10 years total $142.9 billion, including $13.6 billion in 2020–21.

Health Care: Ontario's COVID-19 health response is now projected at $15.2 billion.  Key measures from today’s budget include:

  • An additional $572 million for Ontario's hospitals to support additional testing, assessment centres, laboratory and medical equipment, and PPE. This brings the total funding to hospitals above and beyond what was provided last year to over $2.5 billion.
  • $18 billion in capital grants over 10 years to build new and expanded hospital infrastructure.
  • $500 million to improve infection prevention and control, allow for the purchase of more personal protective equipment (PPE), and to build a strong health care workforce for those in long-term care.
  • A COVID-19 contingency fund of $4 billion for 2020/2021 and $2 billion the following year to plan for the unknown life of the pandemic.  Contingency funding will be available to support hospital beds, address the surgical backlog and purchase additional influenza vaccines.

Support to Business: The budget announced a number of new supports for Ontario businesses.  The following key measures were announced:

  • $60 million was set aside for one-time grants of up to $1,000 for eligible small businesses — in retail, food and accommodations, and other service sectors, to offset the unexpected costs of personal protective equipment (PPE).
  • $50 million for the Ontario Together Fund.  This fund will provide support for those businesses who retool their operations in order to manufacture essential medical supplies and equipment or provide other innovative solutions to the COVID-19 pandemic.
  • New measures to improve access to high-speed internet and cell service for households, businesses, and farms across Ontario.  This includes an additional $150 million for the Improving Connectivity for Ontario (ICON) program.
  • New funding for the Investing in Canada Infrastructure Program (ICIP).  With the new funding there will be over $1 billion in federal and provincial funding under the newly established COVID-19 Resilience stream. This additional stream will support health and safety through the accelerated delivery of priority municipal infrastructure projects as well as investments to retrofit schools and long-term care homes.
  • $300 million to assist eligible businesses to pay the costs associated with property taxes and energy bills, in any region in Ontario where the Province determines recently modified Stage 2 public health restrictions are necessary.
  • An additional $1.8 billion in funding for the Support for People and Jobs Fund over the next two years.
  • $57 million Digital Main Street program to help small businesses increase their online presence.

Taxation Measures: The Budget announced a number of tax measures designed to stimulate the economy as Ontario moves beyond the pandemic and back to a normal economy.

  • A lowering of the Business Education Tax (BET) rates for over 200,000 employers, or 94 per cent of all business properties in Ontario, to a rate of 0.88 per cent.
  • Giving municipalities the ability to cut property tax for small businesses and a provincial commitment to consider matching these reductions.
  • Making permanent the Employer Health Tax (EHT) exemption increase from $490,000 to $1 million. With this additional relief about 90 per cent of employers would pay no EHT, saving them $360 million in 2021–22 that could be reinvested in jobs and growth.
  • Providing a six-month interest- and penalty-free period to make payments for most provincially administered taxes.
  • Allowing a six-month deferral of premium payments to the Workplace Safety and Insurance Board.
  • Freezing of beer tax rates until March 1, 2022, and is proposing to retroactively cancel the increase in wine basic tax rates legislated to occur on June 1, 2020.

Seniors: The Budget announced a new Seniors’ Home Safety Tax Credit for the 2021 taxation year — a 25 per cent credit on eligible renovations of up to $10,000.

Tourism: Budget 2020 is investing $100 million over two years for the Community Building Fund to support community tourism, cultural and sport organizations that are experiencing significant financial pressures due to the pandemic.

Opposition Reaction

NDP Reaction: Andrea Horwath (NDP Leader):  NDP Leader Andrea Horwath said the budget amounts to the Premier “waving the white flag” at the Coronavirus pandemic.  Ms. Horwath stated that the budget did not address the needs of Ontario workers and their families.

Liberal Reaction: Steven Del Duca (Liberal Leader):  Liberal leader Steven Del Duca called the budget a betrayal of seniors in nursing homes and school aged children and their families, groups that are significant risk of contracting COVID-19. 

Green Party Reaction: Mike Schreiner (Green Leader): Called the budget a bare bones budget that fails to help Ontarians now.

What This Means for the CFA and its members

While showing its commitment to supporting Ontarians through the pandemic, the budget is very much a stepping stone to March 2021 when the government will begin the process of dealing with a deficit blown out of proportion by the pandemic.

Consultations on the March budget will begin almost immediately, and the CFA is working to advocate for more supports for franchised businesses in Ontario over the next three months in the lead up to the March 2021 Ontario budget. 


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