globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

09 July 2020

Canada: Federal Government delivers its 2020 Economic and Fiscal Snapshot

On 8 July 2020, Canada’s Finance Minister Bill Morneau delivered a 2020 Economic and Fiscal Snapshot, taking into account the more than CA$230 billion1 in economic measures introduced to support individuals and businesses impacted by the COVID-19 crisis. The snapshot, which outlines Canada’s current economic situation, does not include any new tax measures affecting individuals or corporations.

The snapshot forecasts a budgetary deficit of $343.2b for 2020–21, up from a deficit of $34.4b reported for the 2019–20 fiscal year. In addition, the Government anticipates that the federal debt to GDP ratio will increase from 31.1% in fiscal 2019–20 to 49.1% for fiscal 2020–21, with the debt expected to reach $1.2t by March 2021. As stated in the snapshot, “The toll on the broader economy in 2020 is expected to be the largest and most sudden economic contraction since the Great Depression.”

The following table summarizes the fiscal projections included in the 2020 Economic and Fiscal Snapshot.

Table A

Changes to the Fiscal Outlook since the 2019 Economic and Fiscal Update (EFU 2019)

 

2019–20

2020–21

$b

$b

EFU 2019 budgetary balance

(26.6)

(28.1)

Adjustment for risk

1.5

3.0

EFU 2019 budgetary balance (without risk adjustment)

(25.1)

(25.1)

Economic and fiscal developments since EFU 2019

0.1

(81.3)

Revised budgetary balance before policy actions and investments

(25.0)

(106.4)

COVID-19 Economic Response Plan

(8.1)

(227.9)

Policy actions since EFU 2019

(1.3)

(9.0)

Final budgetary balance (i.e., deficit)

(34.4)

(343.2)

Federal debt (percent of GDP)

31.1%

49.1%

Note: Totals may not add due to rounding.

Although the 2020 Economic and Fiscal Snapshot sets out next steps in terms of planned support to the provinces and territories (currently estimated at $14b), there are no details on the Government’s plan to pay down the debt or reduce the deficit in the future or on how to further spur economic recovery.

Endnote

1. Currency references in this Alert are to the CA$.

___________________________________________________________________________________________________________________________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (Canada), Toronto
Ernst & Young LLP (Canada), Montréal
Ernst & Young LLP (Canada), Calgary
Ernst & Young LLP (Canada), Vancouver
Ernst & Young LLP (United States), Canadian Tax Desk, New York

ATTACHMENT

Document ID: 2020-5959

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more