Written by: Anastasia Rebro and Mansi Dangarwala
Happy 2022! We wholeheartedly wish everyone a healthy and prosperous year.
Sadly, our first blog of the year is brought to you by yet another lockdown. Although we are hoping this lockdown is short-lived, we thought it would be helpful to provide a reminder of the existing and new government support available to help weather the storm.
It seems nearly impossible to summarize these things in under a page these days, so to help focus your thinking, let’s start with the following:
Support is currently available if:
- Your business derives more than 50% of its revenue from one or a combination of eligible Tourism and Hospitality activities (list provided below) AND demonstrates a 40% or more decline in revenue in the current month vs the same month pre-pandemic AND demonstrates a 40% or more decline in the average of all revenue decline percentages from March 2020 to February 2021 vs the same months pre-pandemic (see Tourism and Hospitality Recovery Program (“THRP”) below); OR
- Your business demonstrates a 50% or more decline in revenue in the current month vs the same month pre-pandemic AND demonstrates a 50% or more decline in the average of all revenue decline percentages from March 2020 to February 2021 vs the same months pre-pandemic, irrespective of the industry you are in (see Hardest Hit Business Recovery Program (“HHBRP”) below); OR
- One or more of your locations (which contribute more that 25% of your revenue) are required to stop operating for 7 days or more, in a given claim period, as a result of public health restrictions AND you demonstrate a 40% or more decline in revenue for the month (see Local Lockdown Support below); OR
- You demonstrate a decline in revenue of more than 10%, which would have made you eligible for CEWS, and your total eligible remuneration increased when compared to the eligible remuneration paid between March 14 and April 10, 2021 (see our previous blog on the program at https://farnhamco.ca/blog/covid-19-extension-of-cews-cers-and-introduction-to-canada-recovery-hiring-program/); OR
- PROPOSED SUPPORT – One or more of your locations (which contribute more than 50% of your revenue) are required to restrict capacity by 50% or more AND you demonstrate a 25% decline in revenue for the month (see Expanding Eligibility for the Local Lockdown Program below).
With the attempt to summarize things out of the way, here are the details:
In our previous blog on Covid-related subsidies, we touched upon the Tourism and Hospitality Recovery Program (“THRP”) and the Hardest Hit Business Recovery Program (“HHBRP”) which were introduced to transition the CEWS and CERS from broad-based support to more targeted measures.
The proposed bill introducing the above programs received Royal Assent on December 17, 2021 and the government rolled out the calculation mechanism under the new programs on December 21, 2021. Currently, CEWS and CERS claims (under THRP and HHBRP) for Period 22 (October 24, 2021 to November 20, 2021) and Period 23 (November 21, 2021 to December 18, 2021) are open for submission. Claims for Period 24 (December 19, 2021 to January 15, 2022) will open for submission in February of 2022.
In addition to the calculation mechanism, the government has clarified certain provisions initially mentioned and has proposed to expand access to CEWS and CERS under the Lockdown Program which has been summarized below:
THRP – Activities Covered:
When the program was initially introduced, no clarity was provided as to the activities that would have been considered as a part of the tourism and hospitality sector. The government has now issued a list of eligible activities that would meet the definition of qualifying business within this category.
The following is a list of the 21 broad categories of activities that are included:
| Airports | Amusement and theme parks | Amusement arcades |
| Camping facilities | Casinos | Charter bus services |
| Cinemas | Cultural and artistic events | Duty-free retail stores |
| Hotels and short-term lodging | Hunting and fishing camps | Museums and cultural sites |
| Overnight recreational camps | Recreational facilities | Restaurant and food services |
| Sightseeing and scenic tours | Travel agencies and tour operators | Tourism promotion |
| Trade shows, festivals and weddings | Cruise ship passenger terminals | Eligible industry organizations or associations |
The detailed list of specific activities covered under each category can be accessed at: https://www.canada.ca/en/revenue-agency/services/wage-rent-subsidies/tourism-hospitality-recovery-program/trhp-activities-qualify.html
In addition to the above, the following activities are specifically excluded from the list of eligible activities:
- Mobile home sites under camping facilities;
- All golf-related activities;
- Professional sports clubs, teams or leagues;
- Facilities used primarily by professional sports clubs, teams or leagues; and
- Grocery stores and convenience stores
Local Lockdown Program:
As mentioned in our earlier blog, support in the form of CEWS and CERS was proposed to be available to all organizations, irrespective of the sector to which they belong, if they have been subject to a qualifying public health restriction requiring them to stop some or all regular activities at any location for at least 7 days. This proposal also received the Royal Assent on December 17, 2021.
In order to be eligible to apply for CEWS and CERS for a period, such organizations are required to demonstrate the following:
- One or more qualifying locations were affected by a public health restriction for at least 7 days in the claim period;
- The activities that were stopped due to a public health restriction accounted for at least 25% of the total eligible revenue during the prior reference period for the claim period; and
- A current-month revenue loss of at least 40% (revenue loss is calculated by comparing the month’s revenue to the same month in the year before the Covid-19 pandemic – i.e. March 2019 to February 2020).
For all qualifying organizations, the subsidy rate will be the same as mentioned under the THRP. Please see our earlier blog posted on November 3, 2021 for details on the subsidy rates at various levels of revenue decline.
Proposal to Temporarily Expand Eligibility for the Local Lockdown Program and the Canada Worker Lockdown Benefit:
- Expanding Eligibility for the Local Lockdown Program:
In an attempt to slow the spread of the Omicron variant, new regional public health restrictions have been put in place to limit capacity. Under the current rules, organizations must face a lockdown to be eligible to apply for CEWS and CERS under the Local Lockdown Program. This seemed unfair to organizations facing a partial lockdown in the form of capacity restrictions.
In order to extend support to such organizations, the government has proposed to temporarily expand the eligibility criteria under the Local Lockdown Program to include the following:
- Organizations with one or more locations being subject to a public health order that has the effect of reducing the entity’s capacity at the location by 50% or more, and
- Activities restricted by the public health order accounted for at least 50% of the entity’s total qualifying revenues during the prior reference period.
In addition to expanding the eligibility criteria, it is also proposed to temporarily lower the current- month revenue loss threshold from 40% to 25%. The wage and rent subsidy rate structure under the proposed reduced threshold will be as follows:
| Current-month revenue decline | Wage and rent subsidy rate |
| 75% and over | 75% |
| 25-74% | Subsidy rate = revenue decline (e.g., if revenue decline is 60%, subsidy rate is 60%) |
| 0-24% | 0% |
The expansion of the eligibility criteria and the reduction of the current-month revenue loss threshold is proposed to be in effect for Period 24 (December 19, 2021 to January 15, 2022) and Period 25 (January 16, 2022 to February 12, 2022) only.
- Expanding Eligibility for the Canada Worker Lockdown Benefit:
Initially, the program was set to provide a benefit of $300 per week to those workers whose work interruption was a direct result of the lockdown.
In light of the fast-spreading new Omicron variant and to better support individual workers, the government has proposed to temporarily expand the definition of a public health lockdown for the purpose of the benefit.
Earlier, a lockdown was defined as an order made due to Covid-19 that requires premises where commercial activities or services are carried out to be closed to the public for at least 14 consecutive days in a region. Under the proposed temporary expansion, the definition will also include provincial and territorial orders involving capacity restrictions of 50% or more. In addition to this, the minimum number of days a lockdown order needs to be in place has been reduced to 7 consecutive days from the current 14 consecutive days.
The definition expansion and the reduction in the minimum number of days has been proposed only for the period of December 19, 2021 to February 12, 2022.
Some Reminders
Just a friendly reminder – if your entity was eligible to apply for CEWS and CERS under the legacy programs, CEWS filings for Periods 18 to 21 and CERS filings for Periods 11 to 14 are still open for submission.
No changes have been made to the existing Canada Recovery Hiring Program (“CRHP”). If you are eligible to apply for both – CRHP and CEWS, you can apply for the subsidy that gives you the higher amount.
We are happy to assist you if you have any questions relating to these programs.