It has been a while since our last blog on pandemic support programs available. What changed since then? A lot, it turns out. Waves two and three of lockdowns came and went, vaccination efforts appear to be well on their way, and we survived another virtual personal tax season. It seems things are moving in the right direction. Is it too early to start planning a return to our “old” normal? We hope not.
Recently, the federal government provided further details on the extensions of the CEWS and CERS programs, as well as the new Canada Recovery Hiring Program (“CRHP”). These changes are included in Bill-30, which is currently awaiting Royal Assent.
Extension of CEWS and CERS
The wage and rent subsidies have been the cornerstone of the pandemic response program offered by the federal government. Businesses experiencing monthly revenue declines (relative to pre-pandemic results) are eligible to apply. These programs were scheduled to expire in June of 2021. Bill-30 proposed the support to be extended until September 25, 2021 (with claim periods 17 to 20 being added). The current support for furloughed employees, which is designed to align with the benefits provided from the EI program, is extended to August 28, 2021.
During these additional periods, subsidy rates are scheduled to gradually decrease. In addition, from July to September, companies would need to have monthly revenue declines of more than 10% to qualify.
We put together the following chart to illustrate the subsidy rates that apply for each claim period. Note that for CEWS, the subsidy rate is applied to the lower of the actual weekly amount paid and $1,129. For CERS, the rates are applied to eligible expenses incurred (subject to maximums).
|Period 17||Period 18||Period 19||Period 20|
|June 6 – July 3||July 4 – July 31||August 1 – August 28||August 29 – September 25|
|Maximum weekly benefit per employee||$847||$677||$452||$226|
|70% and over||75%||65%||60%||40%||20%|
|>50-69%||40% + (revenue decline – 50%) x 1.75||40% + (revenue decline – 50%) x 1.25||35% + (revenue decline – 50%) x 1.25||25% + (revenue decline – 50%) x 0.75||10% + (revenue decline – 50%) x 0.5|
|>10-50%||Revenue decline x 0.8||(Revenue decline – 10%) x 0.875||(Revenue decline – 10%) x 0.625||(Revenue decline – 10%) x 0.25|
|0-10%||Revenue decline x 0.8||0%||0%||0%|
Introduction to Canada Recovery Hiring Program
This program is being introduced to offset the extra costs incurred by businesses as they re-open, either by increasing wages or hours worked, or hiring more staff. It will be available from June 6 to November 20, 2021. Similar to CEWS, it will be administered by CRA.
Employers eligible for CEWS would generally be eligible for CRHP. There is no double-dipping – either CEWS or CRHP support can be claimed in a given period.
The mechanics of the subsidy are fairly straight-forward. The subsidy rate (see table below) is applied to the incremental eligible remuneration paid to active (i.e. non-furloughed) employees during the claim period.
Incremental remuneration is the difference between total eligible remuneration paid to eligible employees during the qualifying period and total eligible remuneration paid between March 14 and April 10, 2021 (subject to a maximum of $1,129 per week/per employee).
|Period 17||Period 18||Period 19||Period 20||Period 21||Period 22|
|June 6 – July 3||July 4 – July 31||August 1 – August 28||August 29 – September 25||September 26 – October 23||October 24 – November 20|
|Hiring subsidy rate||50%||50%||50%||40%||30%||20%|
For example, a restaurant had eligible payroll of $20,000 from March 14 to April 10, 2021, and in the month of July experienced a revenue decline which made it eligible for CEWS. Its eligible remuneration from July 4 to July 31, 2021 is $30,000. The incremental remuneration is $10,000 ($30,000 less $20,000). The hiring subsidy rate for period 18 is 50%. The restaurant would be eligible for $5,000 of hiring subsidy. The amount of CEWS claim for the same period should be calculated and compared to CRHP to determine which subsidy is more beneficial.
As always, if you have any questions on the programs available, don’t hesitate to reach out.
The Farnham Team