COVID-19 Financial Relief Measures: Overview for Individuals
CIBC’s Jamie Golombek provides an overview of the top Federal Government relief takeaways.
Transcript: Individuals – Overview of COVID-19 Financial Relief Measures
[Onscreen Text: Jamie Golombek Managing Director, Tax and Estate Planning CIBC Financial Planning and advice]
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Jamie: As a result of COVID-19 pandemic, the government has introduced a number of measures to help individuals through this very difficult time. The biggest one is the Canada Emergency Response Benefit. That's the one everyone is talking about. That's that five hundred dollars a week that you might be entitled to, if you've lost your job because of COVID-19, or you are sick, or you have to stay home to take care of children. There's a number of other conditions that we discuss in our report.
[Onscreen Text: Personal tax measures: Canada’s COVID-19 response plan April 2, 2020 Jamie Golombek, Debbie Pearl-Weinberg & Tess Francis Tax and Estate Planning, CIBC Private Wealth Management On March 25, 2020, the Government of Canada passed legislation1 to put into place a variety of measures to help individual Canadians and businesses facing hardship as a result of the COVID-19 outbreak. Here’s a summary of the potential relief available to Canadians. Canada Emergency Response Benefit]
Jamie: That amount only applies if you've had employment or self-employment income, and you no longer have any income right now. Now, they may change the rules in terms of having a minimum amount of income, but this is the primary benefit. The way to apply for that is just go online to the CRA My Account site.
[Onscreen Text: canada.ca/my-cra-account]
Jamie: You register on My Account and you go in there and you certify that you meet the conditions. All the latest conditions will be online.
[Onscreen Text: My Account for Individuals
Continue to Sign-In Partner
CRA login CRA register]
Jamie: You certify if you meet that condition, and then you will get that payment starting the following week. It's $500 a week times four is $2,000 per-month. That goes for a number of months.
Jamie: The other programs may or may not apply depending on your personal situation. So, for example, we have a special GST/HST payment. There is a quarterly credit. If you're low- or middle-income family, they're going to increase that amount by about $400 for individuals and about $600 for couples. That starts in April. You don't have to do anything. If you're getting the GST/HST credit, you are going to get that additional amount.
Jamie: Similarly, if you've got children, you're getting the Canada Child Benefit, they've also increased the amount for May by $300 per child. Again, you don't have to do anything. You're automatically going to get that amount. Jamie: Finally, if you've got a RRIF, there's a minimum amount you must take out every year from the RRIF. That's based on the value on January 1st at the beginning of the year. In light of a dramatic drop in financial markets, the government has acknowledged that this could be a problem for many people that are forced to take money out of the RRIF if they don't actually need it. So, what the government has done for 2020 alone, is they're allowing any individual who wishes to take out 25% less than the normal required minimum amount from the RRIF.
[Onscreen Text: Lower RRIF minimum withdrawals for 2020: Canada's COVID-19 response plan
March 31, 2020 Jamie Golombek, Debbie Pearl-Weinberg & Tess Francis Tax and Estate Planning, CIBC Private Wealth Management On March 25, 2020, the government passed legislation that lowered the minimum amount that must be withdrawn from a Registered Retirement Income Fund (RRIF) in 2020 by 25%, “in recognition of volatile market conditions and their impact on many seniors’ retirement savings.” This is welcome relief for retirees who may have suffered a decline in the value of their RRIFs since January 1, 2020.
What's a RRIF?]
Jamie: This is all detailed, with some examples, in our report on the new RRIF minimums. This information is changing daily. So, we encourage you to visit our Web site, look at our reports for all the latest legislative changes as it relates to benefits for individuals as a result of COVID-19.
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[Onscreen Text: CIBC financial advisors provide general information on certain tax, investment and estate planning matters; they do not provide tax, accounting or legal advice. Please consult your personal tax advisor, accountant, licensed insurance professional and qualified legal advisor to obtain specialized advice tailored to your needs.
This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed in this video are as of the date of publication unless otherwise indicated, and are subject to change. ®The CIBC logo is a registered trademark of Canadian Imperial Bank of Commerce (CIBC). The material and/or its contents may not be reproduced without the express written consent of CIBC.]
COVID-19 Impact: A medical view
Michal Marszal, Senior Global Healthcare Equity Analyst, CIBC Asset Management, uses his background as a Doctor of Medicine to review the range of potential outcomes and likely progress on a cure.
HOW COVID-19 PANDEMIC COULD EVOLVE: A MEDICAL TAKE
Just to begin, I think it will be useful for the audience to understand some basic facts as it relates to SARS-CoV-2 causing a disease called COVID-19. This virus belongs to a family of coronaviruses and just like all human relevant coronaviruses, it causes of upper respiratory tract infection, which can be just similar to a common cold or some more severe cases can cause severe case of pneumonia.
This specific virus has been fairly well characterised. It's genetically quite similar to the virus that also belong to the family of coronaviruses that cause SARS. We understand the mode of transmission quite well, which was through droplet transmission. It can spread from person to person when one individual coughs and droplets are being transmitted from the airways of one person to another. In this specific case, we do have a relatively good understanding of the actual rate of transmission, which ranges between 2 and 3. In other words, one individual, generally speaking, without any restrictions, will be in in the broader population infecting approximately 2 to 3 other individuals, causing a relatively logarithmic increase in the number of cases. The actual fatality rate, which is, of course, gravest of consequences of contracting this infection, is significantly lower than SARS. However, probably higher than the regular annual flu. And it is currently estimated at approximately 2%, but with the adjustments for the actual number of cases that are asymptomatic or mildly symptomatic is probably well under 1%.
We currently are seeing global pandemic, meaning that the vast majority of countries in the world have been affected by the virus. The number of cases are now exceeding 350,000 were over 15,000 people die of this specific condition. It's important to put these numbers in a specific context. These are reported numbers. The actual numbers out there have to be adjusted for various factors: like time to actual diagnostic testing, the number of cases that are not presenting, and you know, the annual flu, where different government agencies will adjust the reported numbers to have a better sense of the actual percentage of the population that's being affected. And, therefore, these numbers sometimes have will have to be magnified by a factor of approximately five to 10.
There have been a number of predictions published in the early stages of this outbreak, stating that up to 70% of populations in affected countries could eventually be infected over the course of mostly this year. These predictions are probably painting a relatively unrealistic scenario, given two major developments: one of which, is the broad-based quarantine measures that have been deployed in a majority of the countries affected; And number two is currently wide availability of testing.
In most of the Asian countries the spread of the virus has been slowed down quite dramatically. There are some concerns of the so-called second wave potentially coming back as it’s being recycled from the west back into Asia. But we don't yet have any evidence for that. So, that's a significant development that is material for how we're thinking of the evolution of this virus in the West, where we're either at early stages or have not yet seen a significant inflection in the number of new infections. And that is the fact that for the original epicenters of the coronavirus outbreak, we've seen quite a successful implementation of the quarantine measures and control of the virus that would currently indicate peak numbers in a single digit percentage range in the worst-case scenario, excluding, again, the second wave.
So, to put this in a context, I would say that over the next few weeks we will probably have a better sense of the evolution of new cases in both the United States and major European countries. I think that the number of new cases will give us a very good indication of the progression of the so-called curve of infections, including the peak, and the total number of infected patients. That curve will be evolving over a period of several months. By the fall, given the range of scenarios, we will most likely be done with the vast majority of newly infected cases. Again, assuming that there will be no second wave, the virus and the pandemic will be coming to an end.
The key question really is what the shape of the curve looks like. And I think that most authorities right now would agree that with the implemented policies in place, we will be looking at numbers in totality of the patient population that is infected in the United States and most of European countries, that is going to be substantially lower than 50% in the most dire-case scenario. Some of the most realistic estimates will be placing this type of an epidemic in a range of a relatively severe flu season, where typically up to 15 or 20 percent of the population is infected with the virus. And with the measures in place, the optimistic scenarios are placing those numbers substantially lower.
The key point here, is that the currently estimated numbers of people being infected in the West, as well as in Asia, are probably higher or what we would consider to be in the range of realistic scenarios. Beyond just a natural evolution of the infection, in light of these developments and policy measures, I think it's also worth talking about a number of different developments on the pharma front, mostly related to novel therapeutics that may be getting into the clinic quite shortly, or vaccines. And what this really means for the treatment of, of affected patients or more importantly, from our perspective on the actual evolution of the disease.
So, I would say that the vaccine development, maybe starting from the end, is something that will take quite a long time, and it's unlikely to be really materially relevant for the current pandemic. Most of these vaccines will be available at the earliest next year. By then or we are projecting that the pandemic--without subsequent waves of infections for which we don't have any evidence right now--are going to be mostly prophylaxis that is highly hypothetical.
In the area of therapeutics, we have so far had mostly a number of misses, despite some excitement with several unique agents that are in development for COVID-19. There has been a study of a repurposed formulation of two drugs being used for the treatment of HIV. Those studies have so far been negative. In late stage clinical trials, we’re mostly looking at two specific agents. One is an old anti-malarial drug called chloroquine or hydroxychloroquine, which is a related molecule which has some anecdotal evidence of activity, mostly in China. I would say that a high degree of skepticism has to be applied as to whether this specific drug is going to be effective. We are seeing some pent-up demand in the United States, both with negative data potentially coming out of randomised trials, the utilisation of this product would very quickly diminish.
The second agent that it is worth mentioning is called the Remdesivir, which has been developed by Gilead Sciences, and it's currently in Phase 3 clinical trials testing. The data on whether the drug is efficacious or will be coming out very shortly in the month of April 2020.
This product is somewhat more promising them chloroquine because of its relatively early efficacy against the specific strain of coronavirus as studied in animal models. However, the chances of success in actual real-life clinical trials are in the range of 50% or slightly higher.
An interesting development is the use of human derived plasma from patients that are recovered from the disease. That can be used very quickly and effectively in the most severe of the cases. And potentially, some of these products will be rolling out over the next few weeks to months. Additional clinical development is mostly targeting the actual clinical management of the complications of the virus and therefore will unlikely have any impact on the actual evolution of the disease, and the spread and clinical resolution from that perspective.
Hopefully, that covers the very high-level of both the epidemiology of the virus, and some of the developments that are happening right now in the biopharmaceutical industry and within government agencies, that potentially would be addressing the current pandemic on a global basis.
[Onscreen Text: The views expressed in this video are the personal views Michal Marszal and should not be taken as the views of CIBC Asset Management Inc. This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. All opinions and estimates expressed in this document are as of the date of publication unless otherwise indicated, and are subject to change.
®The CIBC logo is a registered trademark of the Canadian Imperial Bank of Commerce (CIBC), used under license. The material and/or its contents may not be reproduced without the express written consent of CIBC Asset Management Inc.
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COVID-19 – What could soften the economic blow?
Avery Shenfeld, CIBC Chief Economist, provides insights on factors that could ease the oncoming downturn, including lessons learned in the 2008 financial crisis.
Transcript: COVID-19 – What Could Soften the Economic Blow?
March 17, 2020
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[Onscreen Title: COVID-19 – What Could Soften the Economic Blow?]
[Onscreen Text: Avery Shenfeld, Chief Economist, CIBC World Markets]
AVERY: This will be a recession in the sense that if you simply add up all the economic sectors that are either directly to government edict or indirectly due to consumer behavior,
[Onscreen Images: An aerial view of Parliament in Ottawa. A shopping cart moving through a supermarket. Empty escalators. An empty restaurant.]
AVERY: seeing massive falls in activity, that accounts for enough of GDP to send the US, Canada, Europe, the global economy into a recession for a quarter or two.
[Onscreen Images: The White House. Ottawa at night. A European skyscraper.]
AVERY: What financial markets are particularly struggling with is... the great unknown is not the recession, but how long this recession lasts.
AVERY: We don't really have any clarity on when we will be able to go back to normal living again. So that's one issue. There are some hopeful signs in terms of countries like China and South Korea having stabilized their caseloads and taking the first steps to get back to normal activity.
[Onscreen Images: Time-lapse of downtown Shanghai. Time-lapse of downtown Seoul.]
AVERY: But as yet, we don't know whether that turn can almost see will also lead to another spike in cases that have to be wrestled down. So, that's one of the big fear factors in financial markets.
[Onscreen Images: Wall St. street sign. An aerial view of a suburban neighbourhood. An aerial view of Parliament in Ottawa.]
AVERY: The second very important issue is that while the economy is hibernating, it will be critical to keep corporate health and personal financial health intact, which means that governments and central banks are going to have to be creative in making sure that we don't end up with a wave of defaults during periods where some companies have dropped to zero or near zero. So that we have an economy that's still intact to emerge when the dust clears on the virus issue itself. So, I think we're gonna be watching closely to see as governments around the world bring forward measures, whether they are lending schemes from the government to the central bank to support credit markets, because that's going to be critical to ensuring that the business sector stays strong enough, the household sector stays well-funded while people are at home, are unemployed, so that the economy can, in fact, bounce back. Whether that is in the fourth quarter of this year or next year or sooner, if you want to be optimistic on treatments for the virus. But whenever it is, we need a healthy economy.
AVERY: The direction of financial markets in the near term is likely to remain highly volatile. Certainly, a period of elevated risk in many assets such as equities, but corporate bonds as well. A time when advisers have to make sure that client portfolios have an appropriate degree of risk, not excessive given the potential volatility. But also, a time when as we get through the virus, there may be business opportunities and investor opportunities that will be worth watching for. So, for the time being, we're certainly staying a bit cautious in terms of making bold predictions until we really get a sense from the epidemiologists, from the experts on the fight against COVID-19. It's not really worth listening to too many experts on the financial markets because it's really a case of the disease and the course of that disease that's going to determine how the economy ends up doing in terms of how long this recession lasts.
AVERY: One lesson we learned from the financial crisis, even though that was a very different recession with a very different cause, was that there are a number of tools that can be used to, in fact, make sure that not only do we have low interest rates on government bonds, that but we don't have soaring interest rates or the lack of credit availability for the business sector or the household sector.
[Onscreen Images: Time-lapse of downtown Toronto at night. An aerial view of a suburban neighbourhood. The U.S. Federal Reserve.]
AVERY: We've already seen the Federal Reserve, for example, take a number of steps to ensure that commercial paper financing continues to flow. We've seen the Bank of Canada, for example, doing the same thing in the market for B.A.'s.
[Onscreen Images: The Bank of Canada crest on a building]
AVERY: The federal government in Canada has announced a program to buy insured mortgages off of the banks, that will give the banks effectively some low-cost funding, enable them to stay engaged in the market, in serving their clients.
[Onscreen Images: Time-lapse of a CIBC skyscraper at night. A stock ticker screen.]
AVERY: All of these things are key instruments that will be used to make sure that certainly viable businesses, viable households won't be cut off from much needed credit just because the financial market is in a state of worry or panic. And the additional steps I think we're looking for here and now, are to ensure that individuals and corporates, that may not look that viable in terms of financing in the near term, get some special assistance from the helping hand of government. So, we took a while to learn some of those lessons during the financial crisis that we went through a decade ago. And the fact of that experience being on hand has helped deliver some of those tools faster this time around, which is certainly an encouraging sign.
[Onscreen Text: This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed in this video are as of the date of publication unless otherwise indicated, and are subject to change.
®The CIBC logo is a registered trademark of Canadian Imperial Bank of Commerce (CIBC).]
The material and/or its contents may not be reproduced without the express written consent of CIBC.]