Regulations Amending the Interest and Administrative Charges Regulations: SOR/2020-164
Canada Gazette, Part II, Volume 154, Number 15
SOR/2020-164 July 6, 2020
FINANCIAL ADMINISTRATION ACT
The Treasury Board, pursuant to subsection 155.1(6) footnote a of the Financial Administration Act footnote b, makes the annexed Regulations Amending the Interest and Administrative Charges Regulations.
Regulations Amending the Interest and Administrative Charges Regulations
1 Subsection 9(1) of the Interest and Administrative Charges Regulations footnote 1 is amended by striking out “or” at the end of paragraph (c), by adding “or” at the end of paragraph (d) and by adding the following after paragraph (d):
- (e) the interest is payable for a period during which there exists an urgent and critical situation of a temporary nature that
- (i) is so serious as to be a national or provincial emergency,
- (ii) causes substantial financial hardship,
- (iii) is caused by an actual or imminent fire, flood, drought, storm, earthquake or other natural phenomenon, a disease in human beings, animals or plants, an accident, pollution or an act of sabotage or terrorism, and
- (iv) results, or may result, in danger to the lives, health or safety of individuals, danger to property, social disruption or a breakdown in the flow of essential goods, services or resources.
2 Section 12 of the Regulations is amended by adding the following after subsection (1):
(1.1) The appropriate Minister of a department or any public officer authorized in writing by that Minister may waive or reduce an administrative charge if the administrative charge is payable for a period during which there exists an urgent and critical situation of a temporary nature that
- (a) is so serious as to be a national or provincial emergency;
- (b) causes substantial financial hardship;
- (c) is caused by an actual or imminent fire, flood, drought, storm, earthquake or other natural phenomenon, a disease in human beings, animals or plants, an accident, pollution or an act of sabotage or terrorism; and
- (d) results, or may result, in danger to the lives, health or safety of individuals, danger to property, social disruption or a breakdown in the flow of essential goods, services or resources.
Coming into Force
3 These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
The Interest and Administrative Charges Regulations (the Regulations) prescribe the rates and the general conditions under which departments charge interest on overdue non-tax receivables and charge administrative fees where any instrument payable by any individual or business to the Government of Canada (the Government) is dishonoured (e.g. bounced cheque). The Regulations apply when no other act, regulation, order, contract or arrangement is in place covering the payment of interest to the Crown. When an instrument is silent on the payment of interest on overdue accounts or for late payments, the Regulations automatically apply.
Non-tax receivables are debts owed to the Government that can occur for a variety of reasons, such as a service provided by the Government, a repayable contribution in accordance with terms and conditions, or the recovery of an erroneous payment.
It is anticipated that because of the economic impact related to the COVID-19 pandemic (i.e. potential job losses), many debtors will be unable to pay the Government, which would lead to interest charges and potentially administrative charges, in cases where the Regulations apply. The Regulations currently only allow for interest or administrative charges to be waived in situations beyond the debtor’s control. The current COVID-19 pandemic in general does not qualify as a situation beyond the debtor’s control that would allow ministers to waive interest.
To provide relief to businesses and individuals in situations such as a pandemic, natural disaster, or other emergency.
Description and rationale
The Regulations Amending the Interest and Administrative Charges Regulations (the amendments) amend the Regulations to allow ministers to waive interest or administrative charges, in line with the Government’s priority to support businesses and individuals during the COVID-19 pandemic. It will also allow ministers to waive interest or administrative charges in future situations, such as another pandemic, a natural disaster, or other emergency.
The analytical requirements for cost-benefit analysis have been adjusted as it relates to the response to COVID-19.
While the Regulations apply to all departments and agencies across the federal government, interest revenues may be generated from other sources, such as from contracts or statutory authorities with specific interest provisions that would supersede the Regulations. It is therefore challenging to reliably assess the amount of foregone revenues that would result from the amendments, as the official account that records interest revenues collected does not differentiate between the various sources of interest.
Given the reporting limitations, the Treasury Board of Canada Secretariat (TBS) has estimated the foregone revenue could potentially reach approximately $2.5 million across the Government for a period of six and a half months (March 15, 2020, to October 3, 2020). This estimate could change if the pandemic lasts for a shorter period, if more accounts become overdue as a result of the economic impact of the pandemic, or if some of the accounts included in the analysis accrue interest based on other contractual agreements. It is also important to note that this revenue will not be foregone on an ongoing basis, since the waiver will only apply as a result of an extraordinary set of circumstances, such as a pandemic or a similar type of emergency.
In both the immediate situation of responding to the COVID-19 pandemic and for other emergency situations, foregone revenues to the Government would equal savings to those owing interest and/or administrative charges. The economic benefits of providing financial relief to debtors outweigh the potential foregone revenues to the Government.
Small business lens
Analysis under the small business lens determined that the proposal will have a positive impact on small-sized businesses in Canada, as interest or administrative charges may be waived in the immediate term as a response to the COVID-19 pandemic, as well as in future situations, such as another pandemic, a natural disaster, or other emergency.
The one-for-one rule does not apply, as there is no incremental change in administrative burden on businesses.
A minister may retrospectively waive interest or administrative charges that accrued before the amendment came into force if the charges meet the new conditions for a waiver. However, the waiver of interest or administrative charges would not apply to any funds previously charged and collected.
The amendments will be communicated to federal government departments to inform them of the new authority extended to ministers that allows them to waive interest and/or administrative charges in situations, such as a pandemic, natural disaster, or other emergency.
Financial Management Policy
Financial Management Sector
Treasury Board of Canada Secretariat