Covid-19 – CEWS + CERS – Moving from Broad Based Support to More Targeted Measures, Changes to Existing Programs and Introduction to The Canada Worker Lockdown Benefit

It has been a busy few weeks for our resident Blog writers. Nonetheless, we could not miss the opportunity to touch on the Covid-19 support changes which were announced in the recent weeks. The federal government is now shifting its focus from providing broad based support to providing targeted support to businesses that are still facing significant pandemic-related challenges. Some of the measures are industry-specific, some are applicable more widely. If you don’t find yourself in the one of the industries singled out by the recent measures, consider whether the extended Canada Recovery Hiring Program may be helpful.

As always, we are here to help!

CEWS + CERS – MOVING FROM BROAD BASED SUPPORT TO MORE TARGETED MEASURES

With wage subsidy and rent subsidy programs providing extensive support to multiple businesses over 21 Periods and 14 Periods respectively, both the programs are now set to provide support through the following two streams until November 20, 2021. A legislation is also proposed to be introduced to extend these programs past November 20, 2021, until May 07, 2022.

(A) Tourism and Hospitality Recovery Program:

Eligible Organizations:

The federal government is yet to come up with a detailed definition of qualifying businesses within this category. At a broad level, organizations in the tourism and hospitality industry for example hotels, restaurants, bars, festivals, travel agencies, tour operators, convention centres, convention and trade shows organizers, and others will be eligible to obtain support through the wage and rent subsidy programs subject to fulfilling the qualifying conditions.

Qualifying Conditions:

The following two conditions should be fulfilled by the eligible organizations to qualify for the program:

(i) 12 month revenue decline of at least 40% calculated based on the average of all revenue decline percentages from March 2020 to February 2021 (revenue decline to be calculated by comparing the revenue to the same month in the prior year); and

(ii) A current month revenue loss of at least 40% (revenue loss calculated by comparing the revenue to the same month in the year before the Covid-19 pandemic i.e. March 2019 to February 2020)

Subsidy rates and calculation mechanism:

For claim periods 22 to 26 (October 24, 2021 to March 12, 2022), the base wage and rent subsidy rate is set at 40% for eligible organizations facing a 40% revenue decline in the current month; increasing in proportion to the increase in the revenue decline percentage up to a maximum rate of 75%.

For claim periods 27 and 28 (March 13, 2022 to May 07, 2022) the aforementioned wage and rent subsidy rates would be reduced to half.

To simplify, we have summarized the wage and rent subsidy rates at various levels of revenue decline in the table below:

  Claim Periods 22 to 26 Claim Periods 27 and 28
Current month revenue decline percentage Subsidy rate Subsidy rate
75% and over 75% 37.5%
40-74% Subsidy rate = revenue decline (if revenue decline is 60%, subsidy rate is 60%) Subsidy rate = half of revenue decline (if revenue decline is 60%, subsidy rate is 30%)
0-39% 0% 0%

No changes have been notified to the revenue decline and wage and rent subsidy calculation. Lockdown support will continue to be available under the rent subsidy program.

(B) Hardest-Hit Business Recovery Program

Similar to the Tourism and Hospitality Recovery Program discussed above, this program would focus on organizations that are not part of the tourism and hospitality industry but have been massively impacted due to the pandemic.

The qualifying conditions are the same as under the Tourism and Hospitality Recovery Program (mentioned above) except that the organization should have faced a 12 month revenue decline and a current month revenue loss of at least 50%.

Subsidy rates and calculation mechanism:

As mentioned above, the calculation mechanism remains the same and the lockdown subsidy is still available under the rent subsidy program. However, the subsidy rates are not the same as mentioned under the Tourism and Hospitality Recovery Program.

For claim periods 22 to 26 (October 24, 2021 to March 12, 2022), the base wage and rent subsidy rate is set at 10% for eligible organizations facing a 50% revenue decline in the current month; thereafter increasing on a straight-line basis to a maximum rate of 50% for organizations facing a revenue decline of 75% or more.

For claim periods 27 and 28 (March 13, 2022 to May 07, 2022) the aforementioned wage and rent subsidy rates would be reduced to half.

For simplicity, we have summarized the subsidy rates at various levels of revenue decline in the table below:

  Claim Periods 22 to 26 Claim Periods 27 and 28
Current month revenue decline percentage Subsidy rate Subsidy rate
75% and over 50% 25%
50-74% 10% + (revenue decline less 50%) X 1.6

(if revenue decline is 60%, subsidy rate is calculated as 10% + (60%-50%) X 1.6 = 26%)

5% + (revenue decline less 50%) X 0.8

(if revenue decline is 60%, subsidy rate is calculated as 5% + (60%-50%) X 0.8 = 13%)

0-49% 0% 0%

Canada Emergency Rent Subsidy:

For businesses eligible for the rent subsidy under the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program, for claim periods commencing from October 24, 2021, the government has proposed to make a legislative amendment to increase this aggregate monthly cap to $1 million (from the previous cap of $300,000) (including any amounts claimed by affiliated entities). The monthly cap on eligible expenses per business location remains unchanged at $75,000.

Other Organizations that may be eligible to apply for CEWS and CERS  

In addition to the Tourism and Hospitality Recovery Program and Hardest-Hit Business Recovery Program, the government has decided to extend the wage subsidy and rent subsidy programs to organizations that may subsequently be subject to a public health restriction lasting for at least 7 days, but do not qualify under either of the programs.

The organization could qualify for a claim period where one or more locations are required to cease activities and such activities constitute at least 25% of the organization’s revenues in the same month in the year before the Covid-19 pandemic began.

For the qualifying organizations, the subsidy rate will be the same as mentioned under the Tourism and Hospitality Recovery Program (depending on the revenue decline in the current month) and will be exempt from demonstrating a 12 month revenue decline of 40%.

 

OTHER CHANGES TO EXISTING PROGRAMS

Canada Recovery Hiring Program:

When initially introduced, the program was set to expire on November 20, 2021 and the proposed hiring subsidy rate for Period 22 (October 24 – November 20, 2021) was set at 20%.

The government has now proposed to introduce a legislation to extend the hiring program until May 07, 2022 with an increased hiring subsidy rate of 50%. The hiring subsidy rate for Period 22 (October 24 – November 20, 2021) has also been increased from 20% to 50%.

The existing eligibility rules would continue to apply, including the required revenue decline of more than 10 percent.

Canada Recovery Caregiver Benefit and Canada Recovery Sickness Benefit:

Both these benefit programs have been extended until May 07, 2022 with an increase in the maximum duration. The caregiver benefit can now be claimed for up to 44 weeks and the sickness benefit for up to 6 weeks.

 

INTRODUCTION TO THE CANADA WORKER LOCKDOWN BENEFIT

With the massive vaccination campaign and the spread under control for now, we hope not to see another series of lockdowns. But should the spread become uncontrollable again and local government imposes a temporary lockdown, there is some relief for workers whose employment is interrupted by such temporary lockdowns.

The new Canada Worker Lockdown Benefit is set to provide benefit of $300 a week to those workers whose work interruption is a direct result of the lockdown and are ineligible for Employment Insurance. The benefit will be available from October 24, 2021 to May 07, 2022 for the entire duration of a government imposed public health lockdown during this period.

Should you have any questions regarding the changes made to the various subsidy programs, please feel free to get in touch.

 

The Farnham Team