Disaster Financial Assistance Arrangements (DFAA)

In the event of a large-scale natural disaster, the Government of Canada provides financial assistance to provincial and territorial governments through the Disaster Financial Assistance Arrangements (DFAA), administered by Public Safety Canada (PS).

New Guidelines for the DFAA came into effect on January 1, 2008. They will apply to natural disasters which occur on or after that date. The previous Guidelines still apply for events which occurred on or prior to December 31, 2007, and for which PS is currently working with provinces and territories on finalizing payments.

Overview

In the event of a large-scale natural disaster, the Government of Canada provides financial assistance to provincial and territorial governments through the DFAA, administered by PS. When response and recovery costs exceed what individual provinces or territories could reasonably be expected to bear on their own, the DFAA provide the Government of Canada with a fair and equitable means of assisting provincial and territorial governments.

Through the DFAA, assistance is paid to the province or territory – not directly to affected individuals, small businesses or communities. A request for reimbursement under the DFAA is processed immediately following receipt of the required documentation of provincial/territorial expenditures and a review by federal auditors.

Since the inception of the program in 1970, the Government of Canada has contributed more than $6 billion in post-disaster assistance to help provinces and territories with the costs of response and of returning infrastructure and personal property to pre-disaster condition.

DFAA Program Review

Disasters are growing in frequency and severity in Canada. Public Safety Canada is reviewing its program for post-disaster financial assistance to ensure there is an updated, comprehensive system available to provinces and territories for disaster recovery and to support the safety and well-being of Canadians.

The Honourable Bill Blair, President of the Queen’s Privy Council for Canada and Minister of Emergency Preparedness, has appointed an advisory panel to review and make recommendations to update the DFAA.

Mandate

On behalf of the President of the Queen’s Privy Council for Canada and Minister of Emergency Preparedness, the advisory panel on the DFAA will review Canada’s approach to post-disaster recovery and financing.

Membership

The advisory panel represents a diverse interdisciplinary group that:

Meet the advisory panel for the Disaster Financial Assistance Arrangements program review.

Timeframe

The advisory panel will meet virtually until September 2022 and submit its findings to the Minister in fall 2022. Its findings will inform the program’s policy review.

Roles and Responsibilities

The provincial or territorial governments design, develop and deliver disaster financial assistance, deciding the amounts and types of assistance that will be provided to those that have experienced losses. The DFAA place no restrictions on provincial or territorial governments in this regard - they are free to put in place the disaster financial assistance appropriate to the particular disaster and the circumstances, and the DFAA set out what costs will be eligible for cost-sharing with the federal government.

PS works closely with the province or territory to review provincial/territorial requests for reimbursement of eligible response and recovery costs.

Flow chart of the process of Disaster Financial Assistance Arrangements (DFAA)
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DFAA Process

In the event of a large-scale natural disaster, the Government of Canada provides financial assistance to provincial and territorial governments through the Disaster Financial Assistance Arrangements (DFAA).

When response and recovery costs exceed what individual provinces or territories could reasonably be expected to bear on their own, a province or territory may request Government of Canada disaster financial assistance. A request for reimbursement under the DFAA is processed immediately following receipt of the required documentation of provincial or territorial expenditures and a review by federal auditors.

The application process requires provincial or territorial action as well as federal action. Steps of the application process are outlined as follows:

Step 1 – Provincial or Territorial Action:

Following a natural disaster, the province or territory submits a request for assistance under the DFAA program through an Order-in-Council. As part of this request, the province or territory provides disaster information and financial estimates for approval and audit purposes.

Step 2 – Federal Action

The Order-in-Council is approved and financial cost-shared assistance under the DFAA is authorized.

Step 3 – Provincial or Territorial Action:

The province or territory may request advance interim payments by providing actual and estimated costs. This step is optional. Estimates and payment request timelines are revised every six months for the life of the Order-in-Council through a semi-annual exercise.

Step 4 – Federal Action:

The Government of Canada issues payment after completing a risk assessment of submitted costs. The Government of Canada assists the province or territory with early financial requirements.

Step 5 – Provincial or Territorial Action

The province or territory submits final audited costs. This is limited to a five year time period following the approval of the Order-in-Council.

Step 6 – Federal Action:

Final payment issued after completing a federal compliance audit. The file is then closed.

Cost-Sharing

A province or territory may request Government of Canada disaster financial assistance when eligible expenditures exceed an established initial threshold (based on provincial or territorial population). For more information, please consult Appendix A.

Eligible expenses include, but are not limited to, evacuation operations, restoring public works and infrastructure to their pre-disaster condition, as well as replacing or repairing basic, essential personal property of individuals, small businesses and farmsteads. For further information on eligible expenses, please consult Appendix B.

The Government of Canada may provide advance and interim payments to provincial and territorial governments as funds are expended under the provincial/territorial disaster assistance program. All provincial or territorial requests for DFAA cost-sharing are subject to federal audit to ensure that cost-sharing is provided according to the DFAA Guidelines.

Appendix A

Cost-Sharing Formula effective January 1, 2022

Effective January 1, 2022, the initial threshold for all new events is defined as $3.38 per capita of the provincial population (as estimated by Statistics Canada to exist on July 1st in the calendar year of the disaster). Once the threshold is exceeded, the federal share of eligible expenses is determined by the formula in Table 9.

Table 9 - Cost-sharing formula for January 1, 2022 to December 31, 2022
Eligible provincial expenses
(per capita of population)
Government of Canada share
(percentage)
First $3.38 0
Next $6.78 50
Next $6.78 75
Remainder 90

The formulas will be indexed to inflation annually based on the consumer price index published by Statistics Canada. For consistency purposes, national-level data will be used to calculate inflation.

The revised formula, adjusted for inflation, will take effect on January 1 of every subsequent year, starting in 2016. The DFAA Guidelines will be updated annually during the month of February to reflect the revised formula.

Please refer to Interpretation Bulletin 5 for more information regarding the changes to the cost-sharing formula.

Provincial and Territorial Thresholds effective January 1, 2022
Province/Territory Q4 2021* Threshold for DFAA
Newfoundland and Labrador 521,758 $1,763,542
Prince Edward Island 165,936 $560,864
Nova Scotia 998,832 $3,376,052
New Brunswick 794,300 $2,684,734
Quebec 8,631,147 $29,173,277
Ontario 14,915,270 $50,413,613
Manitoba 1,386,333 $4,685,806
Saskatchewan 1,180,867 $3,991,330
Alberta 4,464,170 $15,088,895
British Columbia 5,249,635 $17,743,766
Yukon 43,095 $145,661
Northwest Territories 45,515 $153,841
Nunavut 39,589 $133,811

*Population estimates will be revised quarterly as new data is made available by Statistics Canada.

Example: For a disaster in a province with a population of 1 million where the total eligible expenses for responding to and recovering from a disaster are $20 million, the table below shows how eligible expenditures would be cost-shared through the DFAA.

Example for a disaster in a province with a population of 1 million
Eligible Expenses Provincial or Territorial Government Government of Canada
First $3.38 per capita (100% provincial/territorial) $3,380,000 Nil
Next $6.78 per capita (50%) $3,390,000 $3,390,000
Next $6.78 per capita (75%) $1,695,000 $5,085,000
Remainder (90%) $306,000 $2,754,000
Total $8,771,000 $11,229,000

Appendix B

Examples of provincial/territorial expenses that may be eligible for cost-sharing under the DFAA:

Examples of expenses that would NOT be eligible for cost-sharing:

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