By Shawn Jeffords
THE CANADIAN PRESS
TORONTO _ Under pressure to address rising commercial insurance rates blamed on the pandemic, Premier Doug Ford promised this week to take action to stop what he called “gouging” by some companies in the sector.
Ford twice this week has told insurance firms to rein in what he described as “astronomical” rate increases to businesses or outright denial of coverage.
His comments followed calls this week from various municipal and opposition politicians for the province to clamp down on the insurance industry with further regulations.
Ford expressed anger Thursday, using banquet halls as an example of an industry hard-hit by the pandemic that now also faces sky-rocketing insurance premiums.
“They’re absolutely just refusing to insure people, we don’t play that game,” Ford said. “You guys don’t get to get all the cream and gravy … and just slough off everything else and think we aren’t going to insure it.”
When pressed for details of his action plan, Ford said he was working with Finance Minister Rod Phillips, who is expected to deliver the provincial budget next month, to address the issue.
“I’m on to these guys,” Ford said. “The people are the priority, not the big insurance companies making gazillions of dollars. So I’m coming.”
Phillips’ office said this week that while the province regulates the auto insurance sector, it currently does not oversee commercial insurance.
A spokeswoman for the minister said the government was watching the insurance companies and their handling of the needs of the hospitality sector during the pandemic.
Emily Hogeveen said Phillips had also had discussions with the head of the Financial Services Regulatory Authority of Ontario – the province’s fiscal regulator – on the issue.
“The minister’s message to insurance companies has been clear we expect you to treat your customers fairly. We will be closely monitoring the situation to ensure companies are adhering to a high standard of conduct,” she said in a statement. “All options are on the table.”
A spokesman for the Insurance Bureau of Canada said claims costs for commercial insurance were increasing across a number of sectors before COVID-19.
The pandemic has compounded “affordability and availability” of insurance, Steve Kee said in a statement.
“Insurance claims costs in general are on the rise, while Canada’s insurers have been working to keep rate increases to a minimum,” he said.
Kee said the commercial insurance market is competitive and it could be possible for businesses to find lower rates by shopping around.
“IBC continues to work with our members and other partners to find solutions to ensure that commercial insurance remains affordable,” he said.
Toronto Mayor John Tory has pressed the province to step in and protect restaurants and food delivery services, which are reporting dramatic insurance rate hikes.
“I fully support any action to be undertaken by the province to help address this, to support businesses who are simply trying to be good and continuing customers of these insurance companies,” he said.
Long-time Ontario legislator Jim Wilson, a former interim leader of the Progressive Conservative party who now sits as an independent, made a surprising call earlier this week for strict regulation of the insurance sector.
Wilson said he thought deeply before making the impassioned request during a session at Queen’s Park.
But after hearing from a number of condominium corporations in his riding north of Toronto about dramatic increases to their insurance rates he felt he had to act.
“What they’re hearing from brokers is that the industry blames that on COVID claims and severe weather claims,” he said. “That’s just bogus … I mean, they can’t be having COVID claims yet, it’s just too early. They need to justify the need for these exorbitant rates.”
Wilson, who has held a seat in the legislature since 1990, said governments of all political stripes have promised and failed to regulate insurance rates because the industry has a powerful lobby.
“I don’t know if we’ve ever truly had the Ministry of Finance or the regulator take an independent look at what their finances are and get to the bottom of why rates are doubling,” he said.
NDP Leader Andrea Horwath has been advocating for further regulation of the industry during the pandemic, pressing the government to protect businesses.
“The insurance industry has been running amok in this province for years now,” she said. “‘Mr. Phillips needs to step up to the plate and do something about it.”
Ford’s comments come after a group representing Ontario’s long-term care homes said the facilities are having trouble securing liability insurance for COVID-19, a situation which could force some of them to close.
OTTAWA ― The employment insurance system absorbed almost 1.3 million people in the last three weeks, new figures show, as a key COVID-19 benefit wound down.
A breakdown of applications for the simplified EI program shows that overall there had been more than 1.5 million claims as of late this past week, among them 1.15 million people who were automatically transferred when their emergency benefit ran out.
The figures are enormous for a system that in one day this month handled 246,000-plus claims. In the spring, officials worried the 87,000 applications on one March day would make the decades-old system burst its seams.
Figures obtained by The Canadian Press also show that more than 84 per cent of applications had been processed, which experts who reviewed the numbers noted was a positive sign for the transition off the Canada Emergency Response Benefit, better known as the CERB.
Couple that with the more than 300,000 people who turned to a suite of new benefits on the first day they were available, and the figures provide a hint at the ongoing need for income support even as employment has picked up.
Figures on claims can be “valuable in providing a partial, real-time assessment″ of the impact COVID-19 has on the labour force, officials wrote to Employment Minister Carla Qualtrough in April.
At the time, they were writing in a briefing note about providing regular updates on CERB recipients and payments as “the labour market landscape continues to evolve across the country.”
READ MORE HERE:
Source: Huffington Post
Unlike the CERB, new benefits will be subject to 10% tax at source
The excerpted article was written By Rudy Mezzetta
The Canada Revenue Agency (CRA) will withhold 10% tax at source from amounts distributed through three new Covid-19 recovery benefits announced by the federal government in September.
Amounts received through the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB) are taxable, meaning they must be included in income for the year when recipients file their tax returns.
“The 10% tax withheld at source may not be all the tax you need to pay,” indicates the CRA in its guidance for the three programs. “When you complete your personal income tax return, you may need to pay more (or less), depending on how much income you earned.”
Applications for the caregiving and sickness benefits open today, while applications for the CRB begin Oct. 12.
The three new programs were introduced to replace the Canada Emergency Response Benefit (CERB), which came to an end last month. Amounts received through CERB are taxable, but the CRA did not withhold tax at source for the program.
The government’s decision to withhold tax from the new benefits makes sense, says Jamie Golombek, managing director, tax and estate planning with CIBC Private Wealth Management in Toronto.
“This is consistent with most employment income, which these benefits are supposed to replace, wherein tax is paid when funds are paid to recipients,” he said.
The CRB provides income support to employed and self-employed individuals who are directly affected by Covid-19, but are not entitled to employment insurance benefits. Canadians eligible for the CRB can receive $1,000 — $900 after tax withheld — for a two-week period. Canadians can apply up to a total of 13 eligibility periods, or 26 weeks, between Sept. 27, 2020 and Sept. 25, 2021.
Canadians who receive CRB may also earn employment or self-employment income while doing so, but will have to reimburse $0.50 of the CRB for every dollar of net income above $38,000 earned in the calendar year.
The CRSB provides income support to employed and self-employed individuals who are unable to work because they’re sick or need to self-isolate due to Covid-19, or have an underlying health condition that puts them at greater risk of getting Covid-19. Canadians eligible for the CRSB can receive $500 ($450 after tax withheld) for a one-week period. Canadians may apply up to a total of two weeks between Sept. 27, 2020 and Sept. 25, 2021.
The CRCB provides income support to employed and self-employed individuals who are unable to work because they must care for their child under 12 years old or a family member who needs supervised care. If a Canadian is eligible for the CRCB, their household can receive $500 ($450 after taxes withheld) for each one-week period. Canadians may apply up to a total of 26 weeks between Sept. 27, 2020 and Sept. 25, 2021.
Source: advisor’s edge
Canada’s next finance minister faces a serious challenge as the country charts its way through the most difficult economic circumstances since the Great Depression.
Chrystia Freeland, who will be sworn in later today after Bill Morneau resigned Monday night, will have to manage a COVID-19 recovery that is still very much underway, with more than 40 per cent of the three million workers who lost jobs due to the COVID-19 pandemic still unemployed as of mid-July.
Fewer than one-third of the 4.7 million Canadians who were receiving the $2,000-per-month Canada Emergency Response Benefit at the beginning of August would qualify for Employment Insurance when the CERB ends on Sept. 26, making the transition to EI another hurdle.
Meanwhile the spectre of protectionism continues to loom large after U.S. President Donald Trump reimposed tariffs on Canadian aluminum earlier this month _ Democratic presidential nominee Joe Biden also harbours protectionist sentiments _ further complicating trade relationships.
Bank of Montreal chief economist Douglas Porter says the longer-term issue is whether the surge in spending linked to the coronavirus will morph into a more permanent trend, with attendant tax and debt implications.
Ottawa has been pumping money into the economy since March, resulting in a projected debt of $343 billion, an increase of more than 1,000 per cent from the previous year.
This report by The Canadian Press was first published Aug. 18, 2020
TORONTO _ A Bank of Canada economist says the current economic recovery could be different than the recovery from the financial crisis of 2008.
Bank of Canada Director of Financial Stability Mikael Khan said that while the employment rate has fallen due to the pandemic, house prices are recovering and keeping homeowners from filing for insolvency.
Khan said breaks from mortgage payments have bought home owners some time to get back to work amid the COVID-19 pandemic and economic downturn.
“The fact that these deferrals have been available is really, really important,” said Khan. “Ultimately what matters most when it comes to defaults is people having a job, having their incomes. What the deferrals are doing is they’re essentially buying time for that process to unfold.”
Khan, who spoke at the Move Smartly Toronto Real Estate Summit on Monday, has been studying mortgage defaults. He compared the COVID-19 pandemic to a natural disaster, such as the 2016 wildfires in Fort McMurray, Alta., which also involved a mortgage deferral recovery plan.
Bank of Canada research found that while the wildfires caused a bigger spike in employment insurance filings than the 2008 recession, the EI trend reversed much faster after the fires than in 2008.
The 2008 conditions set off a lengthy recession due to “an underlying fragility in the global financial system,” the research suggested. But the wildfires, like the COVID-19 pandemic, were a sudden shock.
“One thing that’s always very important when you’re facing a large negative shock is the initial conditions,” said Khan.
“In Fort McMurray, when the wildfires hit, that’s an area that had already been struggling for some time with the decline in oil prices that had occurred about a year or so prior, so financial stress was quite high . . . Now, at the national level, what we’ve been concerned about for many, many years is the high level of household debt. That’s the number one pre-existing condition that was there when the pandemic struck.”
While there are some parallels, the rebuilding process from a pandemic remains more uncertain compared to a wildfire, the research said. Khan cited increased savings rates as an example of a fundamental shift with potential to affect how quickly the economy recovers from COVID-19.
Over the past few months, some have warned that it could lead to a deferral cliff once benefits such as Canada Emergency Response Benefit and mortgage deferrals _ run out.
“When it comes to bumpiness in the recovery . . . . this question that has been in the background of most of our discussions is, `To what extent will we see defaults or insolvencies?”’ said Khan. “I think it’s reasonable to expect some sort of increase. What we’d be concerned about, there, is a very large-scale increase.”
Khan said that when a mortgage is in default, it can be caused by a “dual trigger” of both unemployment and a large decline in house prices. Home prices in many areas have recovered since the start of the pandemic, Khan said. The job market’s recovery will be key to determining the impact of mortgage deferrals, said Bank of Canada research cited by Khan.
Softening population growth from immigration could start to weaken house prices in the future. But for now, Khan said, it wouldn’t make sense for homeowners with healthy home equity to file for insolvency.
“Even in cases where a homeowner simply can’t make their mortgage payments anymore as long as they have equity in their homes and the housing market is relatively stable _ there’s always the option to simply sell without kind of resorting to those sorts of measures,” said Khan.
By Dean Bennett
THE CANADIAN PRESS
EDMONTON _ Alberta is cutting business taxes, pumping billions into infrastructure and making a full-court press to lure jobs from Toronto, Montreal and elsewhere to rebound from the COVID-19 pandemic.
“We’re going to be placing a huge emphasis on finance and financial technology,” Kenney said Monday in Calgary.
“All of those banks and insurance companies down on Bay Street that are paying way more taxes. Their workers are paying way more taxes. They are paying way more for rent. They’re fighting Toronto traffic.
“We’re going to be telling them that they can save money for their shareholders, for their workers, for their operations by relocating financial and fin-tech jobs to places like downtown Calgary, downtown Edmonton.”
Kenney said they will also target companies in other locations such as Montreal, Houston and New York as his province works to dig out of a cratered provincial economy caused by the pandemic and by a global oil price war that sent profits into a tailspin.
Alberta has flattened the curve on COVID-19 and has reopened much of its economy, albeit with health safety conditions, and Kenney said now is the time to get the economy back on its feet.
This year’s budget deficit is expected to balloon from $7 billion to $20 billion.
Kenney announced an immediate $10 billion will be spent on a range of infrastructure projects, including roads, health-care facilities, and schools to create construction jobs, with spinoff benefits to other service providers.
Kenney cut the corporate income tax rate to 10 per cent from 12 per cent after taking office last year. That figure was to go down to eight per cent in the coming years, but Kenney announced it will be done this week. That makes it four percentage points lower than key competitors such as British Columbia.
Albertans already have the lowest tax regime in Canada and pay no sales tax.
There will also be an Innovation Employment grant to encourage high-tech companies and investment. The grant replaces tax incentives put in place by the previous NDP government, which Kenney scrapped on the grounds the incentives were too narrowly focused.
Details on this fund, and other sector-specific initiatives are expected in the coming days.
NDP Opposition Leader Rachel Notley said the $10 billion will help as a short term “shock absorber” but called Kenney’s other ideas unimaginative, adding the corporate income tax cut didn’t bring back jobs before the pandemic, and won’t bring them back after.
“There’s very little new that is in here and it proves that this government is already out of ideas,” said Notley.
Ken Kobly, head of the Alberta Chambers of Commerce, said the announcement delivers critical aid.
“The measures announced today will help business operators get back on their feet so they can begin rebuilding our economy,” he said.
The plan is a marked departure from the laissez-faire economic platform Kenney championed and won on in the election. Kenney chastised then-premier Notley’s NDP at the time for heavy spending on infrastructure and on day-to-day operations, saying it would cripple future generations with unsustainable debt.
Since then, as the oil and gas economy has been slow to recover, Kenney assumed a more direct interventionist approach.
In March, his government agreed to provide $1.5-billion, plus a $6-billion loan guarantee, to Calgary-based TC Energy Corporation, enabling the completion of the KXL pipeline.
Finance Minister Travis Toews said Monday that “there’s good debt and bad debt.” Bad debt, he said, is borrowed money for operations while good debt invests in infrastructure that in turn lures businesses to the province.
“This is an incredible ditch that we have to get through, and so it warrants a significant investment,” said Toews.