CLIENT UPDATE – October 28, 2021 COVID RELIEF PROGRAMS

On October 21, 2021, the federal government announced the next phase of COVID relief programs for both individuals and businesses. 

For individuals, the Canada Recovery Benefit (CRB) ended October 23, 2021 and is being replaced with the Canada Worker Lockdown Benefit (CWLB) focused on those out of work due to a government-imposed lockdown.  The existing Canada Recovery Caregiving Benefit (CRCB) and the Canada Recovery Sickness Benefit (CRSB) have also been extended until May 7, 2022.

For businesses and Non-Profit Organizations, the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) programs were scheduled to end October 23, 2021.  The government has extended these programs only for those hardest hit by the pandemic through the new Tourism and Hospitality Recovery Program (THRP) and the Hardest-Hit Business Recovery Program (HHBRP).

The new measures include an extension of the Canada Recovery Hiring Program (CRHP) until May 7, 2022 as well.  We expect that those entities also able to qualify under the THRP or HHBRP will be able to receive higher wage subsidies under those programs.

Read further to see our discussion about the transition from the previous programs to the new programs.

The full news release can be found HERE. 

BUSINESS SUPPORT PROGRAMS

Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS)

The CEWS and CERS programs currently provide a subsidy for wages and property costs for organizations that have experienced a decline in their revenues.  The rate of the subsidies for each four-week period is set at a maximum and is reduced to the extent the business’s revenue declines were less than 70%.  

There is a base subsidy rate for any business that experiences a revenue decline and a top up rate for businesses that have revenue reductions of more than 50% or, in the case of CERS, were under a lockdown order or other government-imposed restriction.

The CEWS program ran from March 15, 2020 until October 23, 2021 and CERS ran from September 27, 2020 until October 23, 2021.  Applications must be filed within 180 days of the end of the last period, so you can still apply for the 4-week period ended May 8, 2021 until November 4, 2021.  The last period available to all businesses ended October 23, 2021 such that the last application will be due no later than April 21, 2022.

The calculations to determine the applicable revenue decrease, property costs and wages can be very complicated. We are happy to assist you with them to ensure the correct amount is claimed.

More information on the existing programs can be found HERE for CEWS and HERE for CERS.

The programs are extended for the new THRP and the HHBRP programs from November 20, 2021 until May 7, 2022, with authority for further amendments through regulations until July 2, 2022.

For the CERS program there is currently a monthly cap on eligible expenses that can be claimed of $75,000 per business location and $300,000 in total for all locations.  The government is proposing to increase the aggregate monthly cap from $300,000 to $1 million starting on October 24, 2021 for claims under the THRP and HHBRP.

New Tourism and Hospitality Recovery Program (THRP)

The THRP would be available to organizations in the tourism and hospitality industry that have seen significant revenue declines throughout the pandemic.  Examples of eligible organizations in the tourism and hospitality industry include hotels, restaurants, bars, festivals, travel agencies, tour operators, convention centres, convention and trade show organizers, and others.

Eligible organizations would be required to meet the following two conditions to qualify for this program:

• An average monthly revenue reduction of at least 40 percent over the first 13 qualifying periods for the Canada Emergency Wage Subsidy (12-month revenue decline); and
• A current-month revenue loss of at least 40 percent.

The 12-month revenue decline would be calculated as the average of all revenue decline percentages from March 2020 to February 2021 (claim periods 1-13, excluding claim period 10 or 11). Any periods in which an entity was not carrying on its ordinary operations for reasons other than a public health restriction (for example, because it is a seasonal business) would be excluded from this calculation.  The existing rules for the CEWS program would continue to apply for the purposes of calculating the current-month revenue decline.

Under this program, the maximum subsidy rate for the wage and rent subsidies would be set at 75 percent from October 24, 2021 to March 12, 2022.  The subsidy rates start at 40% for organizations with a 40% current-month revenue decline, increasing thereafter in proportion to current-month revenue loss up to a maximum rate of 75% for those with a current-month revenue decline of 75% or higher.

The wage and rent subsidy rates would be reduced by half from March 13 to May 7, 2022.

An additional subsidy of 25% is available for those affected by a lockdown.

New Hardest-Hit Business Recovery Program (HHBRP)

Organizations that do not qualify for the THRP may qualify for CEWS and CERS under HHBRP, provided they meet the following two eligibility requirements:

• An average monthly revenue reduction of at least 50% over the first 13 qualifying periods for the Canada Emergency Wage Subsidy (12-month revenue decline); and
• A current-month revenue loss of at least 50%.

The calculation of the 12-month revenue decline would follow the same rules as under the Tourism and Hospitality Recovery Program, as detailed above. 

Under this program, the maximum subsidy rate for the wage and rent subsidies would be set at 50% for from October 24, 2021, to March 12, 2022.

The subsidy rates will start at 10% for a 50% current-month revenue decline up to a maximum rate of 50% where the revenue decline is 75% or higher.

The rent and subsidy rates would be reduced by half from March 13 to May 7, 2022.

Lockdown Support would be available at the current fixed rate of 25 percent and pro-rated based on the number of days a particular location was affected by a lockdown, as under existing rules.

Canada Recovery Hiring Program (CRHP)

The CRHP was an alternative wage subsidy program introduced in the 2021 Budget.  For a given period, employers may apply for either this subsidy, or the Canada Emergency Wage Subsidy (CEWS), whichever is preferable. Originally scheduled to end November 20, 2021, the program will now be in effect for remuneration paid to eligible employees until May 7, 2022, with the ability to extend the program until July 2, 2022.

Eligibility:

• Most employers other than public institutions are eligible for the subsidy. Public institutions include municipalities and local governments, Crown corporations, public universities, colleges and schools, and hospitals.
• Employers who have experienced a revenue decline when compared to the same period in 2019 (or the average of January and February 2020) would generally be eligible for this hiring subsidy except that for periods starting on or after July 4, 2021 the revenue decline must exceed 10%;
• Employees must be employed primarily in Canada by an eligible employer throughout the qualifying period. The employee must not be a furloughed employee (that is, on leave with pay, except for paid absences such as vacation, sick leave or sabbatical).
• Eligible remuneration generally includes salary and wages, but does not include amounts such as severance pay, stock options, or personal use of a corporate vehicle. The remuneration must relate to the qualifying period.

The subsidy available is equal to the increase in remuneration paid compared to a baseline period, namely March 14 to April 10, 2021, times a subsidy rate.  The subsidy is capped at $1,129 per week per employee.  Special rules apply to non-arm’s length employees where the pay is instead compared to their pre-crisis baseline wages.

The subsidy rates under this program were originally going to decline from 50% of the wage increase to 20% over the course of the program.  Instead, the government proposes to maintain the 50% subsidy rate until the end of the program.

The previously announced periods are shown in the following chart and will continue in 4-week periods until the expiration of the program.  The same baseline period will apply for periods after November 20, 2021.

PROGRAMS FOR INDIVIDUALS

Canada Recovery Benefit (CRB)

The now expired CRB gave income support to employed and self-employed individuals who were not employed or self-employed or had a 50% reduction in their average weekly income compared to the previous year due to COVID-19, and who were not entitled to Employment Insurance (EI) benefits. The CRB was administered by the Canada Revenue Agency (CRA). It ran from September 27, 2020 to October 23, 2021.

There is an income test much like the previous CERB program. The claimant must have earned employment, self-employment or EI parental benefits of at least $5,000 in 2019, 2020, or in the 12 months prior to the application.

Applications can be made for up to 60 days from the end of a period, so it is still possible to receive payments from CRB.

The CRB is paid for two-week periods, and you must apply for each period.  You can receive $1,000 for the first 21 periods and $600 for any additional periods.  Income tax of 10% is withheld from each payment.

More information can be found HERE.

New Canada Worker Lockdown Benefit (CWLB)

The Government of Canada is proposing to introduce legislation for the new CWLB, which would provide income support to workers whose employment is interrupted by specific government-imposed public health lockdown scenarios and who are unable to work due to such restrictions.

The new benefit would be: 

• $300 per week.
• Strictly available to workers whose work interruption is a direct result of a government-imposed public health lockdown.
• Available until May 7, 2022, with retroactive application to October 24, 2021, should the situation warrant it.
• Accessible for the entire duration of a government-imposed public health lockdown (up until May 7, 2022).
• Available to workers who are ineligible for Employment Insurance (EI) and those who are eligible for EI, as long as they are not paid benefits through EI for the same period. 

Individuals whose loss of income or employment is due to their refusal to adhere to a vaccine mandate would not be able to access the benefit.

Further details on this proposed benefit will be released in the coming weeks.  The limitation of this benefit to those workers not earning income due to a government-imposed lockdown should mean that fewer people will be receiving COVID support payments.

Canada Recovery Caregiving Benefit (CRCB)

The Canada Recovery Caregiving Benefit (CRCB) gives income support to employed and self-employed individuals who are unable to work at least 50% of their scheduled work week because they must care for their child under 12 years old or a family member who needs supervised care. This applies if their school, regular program or facility is closed or unavailable to them due to COVID-19, or because they are sick, self-isolating, or at risk of serious health complications due to COVID-19. 

There is an income test much like the previous CERB program. The claimant must have earned employment, self-employment or EI parental benefits of at least $5,000 in 2019, 2020, or in the 12 months before the application.

The CRCB was originally available from September 2020 to October 23, 2021 but has been extended until May 7, 2022.  This benefit originally provided $500 per week for up to 42 weeks, which has now been extended to 46 weeks.  The benefit paid out for each week will be $500, less withholding tax of $50, or $450.

More information can be found HERE.

Canada Recovery Sickness Benefit (CRSB)

The Canada Recovery Sickness Benefit (CRSB) gives income support to employed and self-employed individuals who are unable to work at least 50% of their scheduled work week because they are sick or need to self-isolate due to COVID-19, or who have an underlying health condition which puts them at greater risk of contracting COVID-19. 

There is an income test much like the previous CERB program.  The claimant must have earned employment, self-employment or EI parental benefits of at least $5,000 in 2019, 2020, or in the 12 months prior to the application.

The CRSB was originally available from September 2020 to October 23, 2021 but has been extended until May 7, 2022.  This benefit originally provided $500 per week for up to 4 weeks, which has now been extended to 6 weeks. The benefit paid out for each week will be $500, less withholding tax of $50, or $450.

More information can be found HERE.

If you have any questions concerning the above, do not hesitate to contact your trusted advisor at Wilkinson & Company LLP.

This summary deals with proposed matters that are complex and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect laws and practices which are subject to change. For these reasons, this material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter.

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