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July 27, 2021

Your CFA Update on COVID-19

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Canadian Chamber: Think Growth Project

A year ago this week, we launched our Think Growth project — a business-led review of Canada’s tax system to prepare it for economic growth and prosperity.

After engaging over 700 members, businesses and tax practitioners, we identified 30 actionable tax reform options to prepare Canada’s tax system for economic growth and prosperity. The Think Growth project enabled us to advance a number of tax reform opportunities with government officials this past year. From changes to simplifying home office deductions to making it easier to pass along a family business to another generation, we worked hard to demonstrate what tax reform looks like and that tax reform is indeed possible in Canada.

The charging of GST/HST on digital economy services and products was another significant change we called for in 2019 to competitively broaden Canada’s tax base.

Canada has enough vaccines for eligible population

Canada has enough COVID-19 vaccine doses to fully vaccinate everyone eligible in the country "two months ahead of schedule," Prime Minister Justin Trudeau said at a Moncton, N.B., vaccine clinic this morning. The arrival of five million doses this week will bring the total to more than 66 million — enough for all 33.2 million Canadians 12 and older. Children under 12 are not yet eligible to receive a vaccine. 

Quebec offers extra dose to travellers whose vaccination status isn't recognized

In Quebec, the province is offering an extra dose of mRNA vaccine to people who want to travel to countries that don't recognize their mixed vaccination status. But health officials are warning it's up to the recipient to seek advice and weigh the risks before getting a third shot. There is currently no international consensus on what constitutes a "fully vaccinated" person, the province's health department noted.

U.S. CDC calls for masks in areas of high COVID-19 transmission, even for fully vaccinated

Americans fully vaccinated against COVID-19 should go back to wearing masks in indoor public places in regions where the coronavirus and especially the delta variant are spreading rapidly, U.S. health authorities said on Tuesday.

The U.S. Centers for Disease Control and Prevention (CDC) also recommended all teachers and students in kindergarten through Grade 12 wear masks in schools regardless of vaccination status. The CDC said children should return to full-time, in-person learning in the fall with proper prevention strategies.

The CDC said that 63 per cent of U.S. counties had high transmission rates that warranted mask wearing. It's a figure that follows the rise of the highly transmissible delta variant, which now makes up more than eight in 10 cases across the country.

In May, the agency advised that fully vaccinated people do not need to wear masks outdoors and can avoid wearing them indoors in most places, guidance the agency said would allow life to begin to return to normal.

StatsCan: Update on retail trade, May 2021

Retail sales declined 2.1% to $53.8 billion in May. The largest declines occurred at building material and garden equipment and supplies dealers (-11.3%) and motor vehicle and parts dealers (-2.4%). During the month of May, many retailers continued to face closures due to the third wave of the COVID-19 pandemic.

Sales decreased in 8 of 11 subsectors, representing 65.6% of retail trade.

Core retail sales—which exclude gasoline stations and motor vehicle and parts dealers—decreased 2.4%.

In volume terms, retail sales decreased 2.7% in May.

Amid the ongoing COVID-19 pandemic in Canada, provincial governments continued to enact public health measures in several regions across the country, which directly affected the retail sector. In light of continuing restrictions, both retailers and consumers have adapted to these business conditions.

Based on respondent feedback, 5.6% of retailers were closed at some point in May, compared with approximately 5.0% of retailers being closed the month prior. The average length of the shutdown was one day in both May and April.

Click here for the full report

StatsCan: Trends in Canadian business debt financing: Before and during COVID-19, 2020

The outstanding credit debt of private non-financial corporations doubled from the height of the financial crisis in 2008 to early 2020. At the onset of the pandemic in March 2020, businesses added a record $52.1 billion in credit debt to their balance sheets. However, according to a new study, as other sources of financing became available and businesses adapted to the pandemic, outstanding loan balances with banks declined for eight consecutive months.

The study "Trends in Canadian business debt financing: Before and during COVID-19" looks at the types of credit debt private non-financial corporations incurred prior to and during the COVID-19 pandemic, and examines how they used that liquidity to weather the economic turbulence during this period.

Businesses took on a record amount of credit debt at the onset of the pandemic, but the sources of funds have shifted dramatically

In March 2020, businesses added a record $52.1 billion in credit debt to their balance sheets. This financing was mainly in the form of bank loans, as businesses likely drew upon existing credit facilities with financial institutions to cover current and anticipated expenses in light of the high levels of uncertainty at the beginning of the pandemic.

The spike in non-mortgage borrowing from chartered banks of $50.1 billion in March 2020 shattered the previous record of $15.0 billion set the previous year. At the same time, currency and deposit assets rose $49.1 billion to $600.9 billion at the end of the first quarter, indicating that much of this cash may not have been spent immediately, and instead accumulated as a buffer in response to the emerging crisis.

However, as other sources of financing became available, outstanding non-mortgage loan balances with banks began eight consecutive months of decline, including record paybacks in May ($15.5 billion) and June ($20.2 billion). Government programs and other borrowing facilities filled the need for financing in the months following the initial stay-at-home orders, and in many cases, did so with attractive terms, including zero-interest rates and future loan forgiveness.

On a cumulative basis, from the start of the pandemic up to December 2020, business's non-mortgage loan liabilities with banks decreased $14.3 billion overall, despite the strong March borrowing, while total debt financing rose $89.3 billion over the same period. This was the result of increasing non-mortgage loan balances with government and the net issuance of debt securities.

Ottawa, P.E.I. strike new child-care deal aiming for $10 daily fees within 3 years

The federal government and Prince Edward Island have agreed to a new funding deal that aims to reduce child-care fees on the island to $10 per day by the end of 2024.

The funding will also cut child-care fees in half by the end of 2022 for children under six who attend regulated child-care facilities, according to the federal government.

Ottawa is committing $121.3 million over the next five years to P.E.I.'s child-care system, including a one-time investment of about $3.6 million earmarked for the province's early childhood education workforce. The funding is expected to create 450 new child-care spaces on the island within two years.

The deal makes P.E.I. the third province to sign on for new child-care funding from the federal government, bringing the concept of a national child-care system closer to reality.

Earlier this month, Trudeau announced similar child-care agreements with British Columbia and Nova Scotia intended to set an average cost for child care of roughly $10 per day.

Mary Simon officially becomes Canada's Governor General

On Monday, Mary Simon was sworn in officially today as Canada's 30th Governor General — the first Indigenous person ever to hold the position. She promised to use her new position at Rideau Hall to work against climate change, advocate for mental health and work toward reconciliation.

In a lighter moment she said that "I was born Mary Jeannie May in Arctic Quebec, now known as Nunavik. My Inuk name is Ningiukudluk. And prime minister, it means 'bossy little old lady,'"

Some concerns have been raised about Simon's ability to speak French. While she is fully fluent in English and Inuktitut, Simon is not fluent in French. She reiterated her commitment to learning French in her address.

Quebec political journalist Michel C. Auger recalled in a Facebook post how then-premier René Lévesque, during a first ministers' conference following the repatriation of the Constitution, ceded Quebec's time to leaders from different Indigenous communities. "Mary Simon is a great Quebecer, who was made an Officer of l'Ordre national du Québec, the highest distinction awarded by the Quebec government," Auger said. "If she was good enough for René Lévesque to speak in Quebec's name, she is certainly good enough for me — and for many others."

Relaunch, Reset & Recover On-Demand Videos are Available for Purchase!

CFA's Relaunch, Reset & Recover examined changes in consumer trends and the ways business are conducted to help franchisees, franchisors, and suppliers of all sizes and sectors be better equipped with the knowledge and strategies to be best positioned to successfully relaunch their business in a post-COVID world. View On-Demand Video Library

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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.

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