In response to the continued financial distress that the COVID-19 global pandemic has caused on businesses, the federal government recently outlined extensions for the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) to September 25, 2021. A new wage subsidy program called the Canada Recovery Hiring Program (CRHP) was also announced in the April 21, 2021 budget and will extend until November 20, 2021.
CEWS
The CEWS will now extend for periods 17, 18, 19 and 20. Period 17 starts on June 6, 2021 with the maximum weekly benefit per employee being $847. Over the subsequent four periods, the maximum subsidy rate declines from 75% in period 17 to 20% in period 20.
While more recent claiming periods for the CEWS allowed for a subsidy rate with any revenue decline, starting in period 18 (July 4, 2021 – July 31, 2021), there must be a minimum revenue decline of at least 10% before you are eligible to make a CEWS claim.
CERS
The CERS was introduced in October 2020 to provide financial support for businesses that rent or incur costs for property that is owned. The budget proposes to extend claiming periods for the CERS in line with the CEWS to September 25, 2021. The maximum subsidy rate for the CERS stands at 65% of qualifying expenses. This maximum subsidy rate will gradually decline to 20% by September 25, 2021. The existing 25% lockdown support will remain in place for this period.
Because the revenue reduction test for CERS eligibility mirrors that for the CEWS, starting with period 18, you will need a revenue reduction of at least 10% to qualify for the CERS.
CRHP
The budget proposes to introduce the new CRHP that will allow employers access to a subsidy of up to 50% of incremental remuneration that is paid to employees between June 6, 2021 and November 20, 2021. The program is designed to help alleviate the additional salary costs that may be associated with hiring new staff, or paying staff for more hours worked as employers re-open their businesses.
Eligible employers will be able to make claims under the CEWS or the CRHP, but not both. To be eligible to make a claim, you must meet the same revenue tests that apply to the CERS.
The amount of the claim available will be equal to the employer’s incremental remuneration multiplied by the applicable recovery wage subsidy rate for that period. The subsidy rate starts at 50% for the period beginning June 6 and gradually reduces to 20% by period 22 which ends on November 20, 2021.
Incremental remuneration for any claiming period is the difference between eligible remuneration paid, compared to eligible remuneration for the baseline period, defined as March 14 to April 10, 2021. The idea of the program is to incentivize hiring and additional payroll costs incurred after April 10, 2021.
Please contact us if you would like more information or to discuss your situation.
Secker Ross & Perry LLP