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April 19, 2021

Your CFA Update on COVID-19

2021 Federal Budget tabled today

Today, federal Deputy Prime Minister and Finance Minister Chrystia Freeland tabled the governments first full budget in 2 years.

The 724-page document provides $101.4 billion in new spending over three years to fuel the recovery and kick-start the transition to a green economy.

The budget does extend pandemic business and health supports and puts $30 billion over 5 years towards a national child-care plan and $8.3 billion per year after that to create and sustain a national child care program with the goal is a $10/day child care service by 2025-2026.

The budget— titled “A Recovery Plan for Jobs, Growth, and Resilience”— shows that the federal deficit is projected to sit at $354.2 billion for the year that just ended, with it slated to drop to $154.7 billion in the current 2021-22 fiscal year.

Federal Budget – By the Numbers

Deficit and debt

  • Deficit at $354.2 billion in 2020-21 and $154.7 billion in 2021-22, expected to gradually decline to $30.7 billion in 2025-26, or approximately 1 per cent of GDP.
  • Debt-to-GDP ratio soars above 50 per cent, then falls to 49.2 per cent by 2025-2026.

Jobs and the Economic Recovery

  • Extension of maximum period of employment insurance sickness benefits, from 15 weeks to 26 weeks.
  • Projection of 1 million new jobs created by the end of the year.
  • A new $15 federal minimum wage.

Other highlights

  • $4.4 billion to help homeowners with green retrofits through interest-free loans of up to $40,000.
  • $3 billion over five years to help provinces/territories improve long-term care.
  • $2.5 billion to build and repair 35,000 housing units for vulnerable Canadians.
  • $1 billion for the tourism sector for festivals and cultural events.
  • New tax of 10 to 20 per cent for luxury cars and aircraft worth more than $100,000 and luxury boats over $250,000.
  • $300 million to support Black and other underrepresented entrepreneurs.
  • $236.2 million over five years, and $33.5 million per year afterward, for the departments of National Defence and Veterans Affairs to eliminate sexual misconduct and gender-based violence in the military and to support survivors.
  • Extension of interest-free period for Canada student and apprentice loans to March 31, 2023, at a cost to the government of an estimated $392.7 million in 2022-23.

What wasn’t in the budget

  • No promise of funding to implement a national pharmacare program. 

CEWS and CERS Extension to September 25, 2021 but…

Budget 2021 proposes to extend the wage subsidy until September 25, 2021. It also proposes to gradually decrease the subsidy rate, beginning July 4, 2021, in order to ensure an orderly phase-out of the program as vaccinations are completed and the economy reopens.

The wage subsidy program is currently set to expire in June 2021.

The federal government also signalled that they may extend the wage subsidy beyond September to November 20, 2021, should the economic and public health situation require it beyond September 2021.

Clawback of CEWS in certain circumstances

Budget 2021 also proposes to require that any publicly listed corporation receiving the wage subsidy and found to be paying its top executives more in 2021 than in 2019 will need to repay the equivalent in wage subsidy amounts received for any qualifying period starting after June 5, 2021 and until the end of the wage subsidy program.

New Canada Recovery Hiring Program

Budget 2021 also proposes to introduce the new Canada Recovery Hiring Program for eligible employers that continue to experience qualifying declines in revenues relative to before the pandemic. The proposed subsidy would offset a portion of the extra costs employers take on as they reopen, either by increasing wages or hours worked, or hiring more staff. This support would only be available for active employees and will be available from June 6 to November 20, 2021.

Under the program eligible employers would claim the higher of the Canada Emergency Wage Subsidy or the new proposed subsidy. The aim is to make it as easy as possible for businesses to hire new workers as the economy reopens.

As the rates for both the wage subsidy and the hiring program will slowly ramp down over time, employers will have a strong incentive to begin hiring as soon as possible and maximize their benefit.

The Canada Recovery Hiring Program will help Canadian-controlled private corporations, individuals, charities, and non-profits hire the workers they need so that the economy can fully recover, more quickly.

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Changes to the Canada Small Business Finance Program

Budget 2021 proposes to improve the Canada Small Business Financing Program through amendments to the Canada Small Business Financing Act and its regulations. These proposed amendments are projected to increase annual financing by $560 million, supporting approximately 2,900 additional small businesses. They include:

  • Expanding loan class eligibility to include lending against intellectual property and start-up assets and expenses.
  • Increasing the maximum loan amount from $350,000 to $500,000 and extending the loan coverage period from 10 to 15 years for equipment and leasehold improvements.
  • Expanding borrower eligibility to include non-profit and charitable social enterprises.
  • Introducing a new line of credit product to help with liquidity and cover short-term working capital needs.

The details of the changes will be worked out in the coming weeks and months by the Department of Innovation, Science and Economic Development.

CFA will continue to work with Minister Ng and her officials to help improve this program to make it work better for franchised businesses.

Federal $15 minimum wage floor for federally regulated sections

The Trudeau government is establishing a $15 federal minimum wage for federally regulated sectors. Previously, federally regulated employees were paid at the prevailing rate of province in which work is performed.

According to the Budget documents this will impact about 26,000 workers who currently make less than $15 per hour in the federally regulated private sector.

If the provincial minimum wage is higher then that will apply. If the provincial minimum wage is below $15 then the federally regulated employee will be paid $15 per hour.

It is unclear how this change would impact third party contractors that do work in government buildings. The CFA will work with the federal government and the Canadian Chamber of Commerce to get greater clarity on how this change might affect franchised businesses.

New Canada Digital Adoption Program

The federal government is launching the Canada Digital Adoption Program, which they claim will create thousands of jobs for young Canadians and help as many as 160,000 small and medium-sized businesses adopt new digital technologies.

This program will provide businesses with two streams of support.

  • To help main street businesses expand their customer bases online, they can access support to digitize and take advantage of e-commerce opportunities. Eligible businesses will receive microgrants to help offset the costs of going digital—and support to digital trainers from a network of up to 28,000 well trained young Canadians.
  • Some businesses will require more comprehensive support to adopt new technology, and a second stream will be in place for “off-main street” businesses, such as small manufacturing and food processing operations. Support for these businesses will emphasize advisory expertise for technology planning and financing options needed to put these technologies to use.

To deliver on this they will spend $1.4 billion over four years to:

  • Work with organizations across Canada to provide access to skills, training, and advisory services for all businesses accessing this program.
  • Provide microgrants to smaller, main street businesses to support costs associated with technology adoption.
  • Create training and work opportunities for as many as 28,000 young people to help small and medium-sized businesses across Canada adopt new technology. Budget 2021 proposes to provide $2.6 billion on a cash basis over four years, starting in 2021-22, to the Business Development Bank of Canada to help small and medium-sized businesses finance technology adoption.

Tax on Credit Card Swipe Fees will be reduced

With a rise in online transactions during the pandemic, small- and medium-sized businesses incur interchange fees for these transactions. The government will engage with key stakeholders to:

  • lower the average overall cost of interchange fees for merchants;
  • ensure that small businesses benefit from pricing that is similar to large businesses; and
  • protect existing rewards points for Canadian consumers.

Following consultations with stakeholders, the detailed next steps will be outlined as part of the 2021 Fall Economic Statement, which will include the necessary legislative amendments to regulate interchange fees, if necessary.

New tax on vacant homes

There is also a new tax coming on vacant homes owned by foreigners. Ottawa's proposing to implement a 1 per cent tax on homes owned by non-Canadians "considered to be vacant or underused."

It's not immediately clear what the yardstick will be for declaring a home "vacant" — nor is there much detail in the budget about enforcement. Despite that, the government predicts this tax could bring in up to $175 million a year starting in January, when it's set to be implemented.


In the coming months, the federal government will release a backgrounder to provide stakeholders with an opportunity to comment on further parameters of the proposed tax.

Reaction from the Opposition

Conversative Leader Erin O'Toole says Liberals delivered 'election-style budget' during pandemic

Conservative Leader Erin O’Toole said on Monday in reaction to the federal budget release that the Conservatives will be proposing amendments to the federal budget, citing extensive spending and no stimulus plan to balance the budget. He added the budget “abandons” the natural resources sector and doesn’t offer a “real plan” for small businesses or students affected by the pandemic.

O’Toole says Conservatives to propose amendments to federal budget which if passed could trigger a Spring election.

Bloc leader says seniors ‘completely left aside’ in federal budget

Bloc Québécois Yves-François Blanchet said on Monday in reaction to the 2021 federal budget release that “there are some good things” addressed in it, but seniors and elder people have been “completely left aside” and left without “significant support” in his opinion, especially after long-term care homes have been hard hit by the pandemic.

Jagmeet Singh says Justin Trudeau chose the ultra-rich’

Jagmeet Singh, the leader of the federal New Democrats says that, “The pandemic has left many Canadians unemployed and struggling to make ends meet. Over the course of the pandemic, inequalities have increased: with the ultra-rich becoming richer than ever while people needing help are still struggling to get by. The crisis has highlighted the many holes in our social safety net that need to be fixed to make life easier for Canadians. But instead, with today’s budget, Justin Trudeau continues to give a free ride to the ultra-rich and leaves everyday people behind”.

The NDP has already signalled that they are going to support the budget which significantly reduces the likelihood of a Spring election.

Canadian Chamber of Commerce

“One of the things that is very clear is that in the medium term, we are going to see the economy bouncing back. We’ve had the economy over the last year in a medically-induced coma, when we take those restrictions off there’s an enormous amount of pent up demand in the economy. The real question is can we sustain the sort of growth that we’re going to need to have to be able to bring the level of the deficit down.” – Perrin Beatty, President of the Canadian Chamber of Commerce

Detailed Analysis from the Canadian Chamber of Commerce

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COVID-19's impact on the world is creating waves across all sectors and industries.

Every member of the CFA community is dealing with an issue that is affecting the world, our industries, our communities, our businesses, and our people.

We would like to hear from you if you have any topics, issues or questions to navigate turbulent times in order to support you further: 


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