COVID-19 Emergency Business Supports – Extensions and a new program

With the release of Budget 2021 amid the global COVID-19 pandemic, it was expected that the federal government would expand some of the federal relief programs, as well as introduce new ones. The 2021 budget accomplished both the extension of existing business support programs and the introduction of a new benefit.

The Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) have both been extended to September 2021 with a possible further extension of CEWS to November 20, 2021, if necessary. Additionally, the Canada Recovery Hiring Program (CRHP) has been introduced to help transition employees back to work as the CEWS is phased out.

These extensions continue the government support into September 2021, though subsidy rates gradually decrease over the July 2021 to September 2021 period. The specifics of these changes are as follows:

Canada Emergency Wage Subsidy (CEWS):

• Extended from June 6, 2021 through to September 25, 2021
• Benefit phased out starting July 4, 2021 as outlined below:

• As of July 4, 2021 employer must have revenue decline of more than 10% to be eligible for the wage subsidy.
• Publicly listed corporations are required to repay wage subsidy amounts received after June 5, 2021 if aggregate compensation for specified executives during the 2021 calendar year exceeds its aggregate compensation for specified executives during the 2019 calendar year.
• The subsidy structure for furloughed employees for the period of June 6, 2021 to August 28, 2021 will be the lessor of:
  • the amount of eligible remuneration paid in respect of the week; and
  • the greater of:
  • $500; and;
  • 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595.

The subsidy for furloughed employees will be available to eligible employers that qualify for the wage subsidy for active employees for the relevant period until August 28, 2021.

• Revenue decline reference periods for periods from June 6, 2021 to September 25, 2021 are defined as follows:

*** Employers are required to continue to choose the approach (general vs. alternative) used in prior period.

• To ensure that the alternative baseline remuneration periods for a particular qualifying period continue to generally reflect the corresponding calendar months covered by the qualifying period, Budget 2021 proposes to allow an eligible employer to elect to use the following alternative baseline remuneration periods:
  • March 1 to June 30, 2019 or July 1 to December 31, 2019, for the qualifying period between June 6, 2021 and July 3, 2021; and
  • July 1 to December 31, 2019, for qualifying periods beginning after July 3, 2021.

Canada Emergency Rent Subsidy (CERS):

• Extended from June 6, 2021 through to September 25, 2021.
• Benefit phased out starting July 4, 2021 as outlined below:

• CERS utilizes the same calculation to determine an organization’s revenue decline as the CEWS program. Refer to the CEWS reference periods and further election regarding the general and alternative approach for computing revenue decline. 
• Budget 2021 introduces a deeming rule (in certain situations) that allows a corporation that acquired the assets of a business to meet the CERS business number requirement.
• 25% Lockdown support available to those who qualify for the base rent subsidy extended from June 6, 2021 to September 25, 2021. Support available to locations that must cease operations or significantly limit their activities under a public health order under the laws of Canada, a province, or territory.

Canada Recovery Hiring Program (CRHP):

• Introduction of new program to provide eligible employers with a subsidy of up to 50% on the incremental remuneration paid to eligible employees between June 6, 2021 and November 20, 2021.
• Eligible employer must choose between a CRHP or a CEWS claim and cannot claim both for a particular qualifying period.
• Eligible employers for CRHP would generally be those eligible for CEWS, however a for-profit corporations must be a Canadian-controlled private corporation (including a cooperative corporation that is eligible for the small business deduction).
• Eligible employers (or their payroll service provider) would be required to have had a payroll account open with the CRA on March 15, 2020.
• An eligible employee must be employed primarily in Canada by an eligible employer throughout a qualifying period (or the portion of the qualifying period throughout which the individual was employed by the eligible employer).
• Excludes furloughed employees.
• Eligible remuneration generally includes salary, wages, and other remuneration for which employers are required to withhold or deduct amounts on account of the employee’s income tax obligations. Excludes:
  • Severance pay; and
  • Other items such as:
  • Stock option benefits; and
  • Personal use of corporate vehicle.

• Incremental remuneration for a qualifying period means the difference between an employer’s total eligible remuneration paid to eligible employees for the qualifying period and its total eligible remuneration paid to eligible employees for the baseline period. In both the qualifying period and the baseline period, eligible remuneration for each eligible employee would be subject to a maximum of $1,129 per week.
• Limitation for non-arm’s length employees is the same limitation that applies for CEWS and can not exceed their baseline remuneration determined for that week.
• Applicable dates or the calculation of the incremental remuneration are outlined below:

• To qualify for the program, an eligible employer would have to experience a revenue decline more than:
  • 0 per cent, for the qualifying period between June 6, 2021 and July 3, 2021; and
  • 10 per cent, for qualifying periods between July 4, 2021 and November 20, 2021.

Revenue decline is calculated in the same manner as required under CEWS. Employer can elect to use either the general or alternative approach but must continue with the selected determination and cannot change.

General Approach – Comparing employer’s revenue from the current month to that of the same calendar month (pre-pandemic)

Alternative Method – Comparing employer’s revenue from the current month to the average of its January 2020 and February 2020 revenue.

Deeming rule provides that an employer’s decline in revenues for any particular qualifying period is the greater of its decline in revenues for the particular qualifying period and the immediately preceding qualifying period.

Qualifying periods for the periods from June 6, 2021 to November 20, 2021 are as outlined below:

• An eligible employer with a revenue decline meeting the requirement above, is eligible for a subsidy in that qualifying period based on the table below.

The hiring subsidy rate is multiplied by the employer’s incremental remuneration for the period.