Government Support Relief for COVID-19

Benefit

• The CEWS is a wage subsidy, calculated on a per-employee, per-week basis, based on a maximum weekly wage of $1,129. The maximum subsidy that can be received varies by qualifying period (claim period), with the periods beginning in March 2020. The maximum that can be received is:
• $847 for the first four qualifying periods of the program;
• $960 per week for the next two qualifying periods;
• $847 for the qualifying period that ended in September;
• $734 for the qualifying periods that ended in October, November, and December, 2020, and
• $847 for the qualifying periods that end in January, February, March , April, May, and June 2021.
• In many cases, the subsidy will be less than the maximum amount, because the employee's weekly wages are less than $1129 per week or, for periods from July 5 and onwards, the employer did not experience a revenue drop that results in the highest CEWS rate.
• The amount of subsidy that can be received is determined by the CEWS rate, which in turn is generally determined by the rate of revenue drop in a given month in 2020 or 2021 when compared to the same month in 2019 (or 2020 for some months) or average of revenue arising in January and February 2020.
• The concept of baseline remuneration is relevant in some cases when determining CEWS.
• It is particularly important for non-arm's length employees in benchmarking wages paid prior to the beginning of the CEWS period of March 15, 2020. Where a non-arm's length employee does not have remuneration in one of the baseline periods, no CEWS can be claimed for that individual.
• The July 17 legislation expanded the baseline periods from one, January 1 to March 15, 2020, to also include several periods in 2019. The expansion of the number of baseline remuneration periods particularly benefits CEWS claims for seasonal employees, as well as for non-arm length employees.
• The March 3, 2021 draft legislation further expanded the baseline periods to include a new baseline period from March 1, 2019 to June 30, 2019 for the last three CEWS qualifying periods that end in April, May and June 2021.
• Specific rules are provided in the legislation with respect to the computation of the employer's qualifying revenue

Who should apply?

• Employers that have had a downturn in gross revenues and need support to avoid laying off or looking to hire back employees.

Eligibility

• Eligible employers include: individuals, taxable corporations, partnerships consisting of eligible employers, taxable corporations, NPOs and registered charities.
• For qualifying revenues in March 2020, there must have been a comparative decline in revenue of at least 15% in order to be eligible for CEWS. This was increased to 30% for comparative revenue declines in each of April, May, and June of 2020. For these four periods, the CEWS rate was fixed at 75%. For the remainder of the qualifying periods, from July 2020 through June 2021, there is no minimum revenue decline required to qualify for CEWS, but the amount of CEWS is dependent on the comparative revenue decline in those qualifying periods.

Timeline

• The 2021 Federal Budget (released on April 19, 2021) announced changes the CEWS program, including:
• Extending the CEWS program by four more periods, to September 25, 2021
• Gradually decreasing the maximum subsidy rate from 75% to 20%, beginning July 4, 2021.
• Beginning July 4, 2021, only organizations that experience a revenue decline of more than 10% will be eligible for CEWS
• Imposing a new requirement for publicly traded companies to repay the wage subsidy received for qualifying periods that start after June 5, 2021, where the aggregate compensation for certain specified executives in the 2021 calendar year exceeds the aggregate compensation for such executives paid during the 2019 calendar year.
• These changes were enacted into law on June 29, 2021
• The Department of Finance announced on July 30, 2021 that they would be extending and altering CEWS as follows:
  • The eligibility period for the CEWS will be extended until October 23, 2021
  • The rate of CEWS support employers and organizations can receive during the period between August 29 and September 25, 2021 will be increased to 40% from the current maximum rate for that period of 20%. The rate for the new qualifying period (Period 21, September 26 – October 23), will be a maximum of 20%
  • Draft legislation was introduced on July 30 to limit the wage subsidy for furloughed employees such that it will no longer be available after August 28, 2021. The additional subsidy for the employer's portion of contributions under the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan in respect of furloughed employees will also stop as of August 28, 2021.
• The regular CEWS expired with Period 21, on October 23, 2021, however the new programs for Tourism and Hospitality Recovery, Hardest Hit Business Recovery and Local Lockdown Support (as explained below) build on the CEWS and CERS “platform” and are continuations of the CEWS program. As such, there are restrictions to claiming wage support by public companies that could affect CEWS claims in 2021 or claims under the new programs.
• Draft proposals in Bill C-19 contain a provision that will apply to allow wage and rent subsidies under CEWS, CERS, THRP, HHBRP, LLSP and CRHP to be filed after the fixed deadline at the discretion of the Minister of Revenue. These changes will apply retroactively to April 11, 2020, to coincide with the initial commencement date for the Canada Emergency Wage Subsidy.

Useful links

• Tax alert: COVID-19 Wage Subsidy Programs
• Tax alert: Final details announced for the Canada Emergency Wage Subsidy Program
• Government announces enhanced benefit and extension of the Canada emergency wage subsidt program
• Government of Canada – COVID-19 wage and hiring support for businesses
• Government of Canada – Wage and Rent Subsidy Amounts to Remain Unchanged Through to June
• Government of Canada – Frequently asked questions - Canada emergency wage subsidy (CEWS)
• BDO Budget 2021
• Government of Canada – Draft Legislative Proposal Related to the Income Tax Act (Canada Emergency Wage Subsidy)
• Government of Canada – Extending Business Support Measures Through the Pandemic
• Government of Canada – Frequently asked questions - Canada emergency wage subsidy (CEWS)

Benefit

• Proposed as part of the 2021 Federal Budget (on April 19, 2021), the Canada Recovery Hiring Program (CRHP) is a new wage subsidy program that was enacted into law on June 29, 2021 and
• Provides a subsidy to employers who add to their remuneration expense by adding employees or increasing what existing employees are paid
• Special rules restrict this subsidy for non-arm's length wages, and for furloughed employees

Who should apply?

• Employers who have increased their remuneration expenses since the four-week period March 14 to April 10, 2021 and have also experienced a decline in revenue compared to pre-COVID revenue.

Eligibility

• The increase to compensation can be for full-time or part-time employees. The increase in remuneration is measured from the four-week period March 14 to April 10, 2021 and is compared to the period in respect of which a claim is made. Claim periods will start on June 6, 2021, and are currently planned to run until November 20, 2021
• Must be a "qualifying recovery entit", which includes entities that qualify for CEWS except that for-profit corporations must be CCPCs (or would be CCPC's if not for S.136(1), which deems cooperatives to not be private corporations)
• The restriction on non-CCPCs also applies to partnerships where 50% or more of their fair market value is held by non-qualifying entities
• Must have experienced a revenue decline in the qualifying period, or the immediately previous qualifying period of:
  • More than 0% in the first qualifying period for the CRHP (June 6 – July 3), or
  • More than 10% for any qualifying period starting after July 3, 2021
• Entities must claim the higher CRHP and CEWS if they qualify for the CRHP.

Timeline

• The same four-week periods that apply for CEWS and CERS apply for the CRHP, except that it is anticipated that the CRHP program will run until November 2021, while the CEWS and CERS programs are scheduled to end by September 25, 2021.
• On October 21, 2021, the Department of Finance proposed extending the CRHP until May 7, 2022, for eligible employers with current revenue losses above 10% and increased the subsidy rate to 50% effective October 24, 2021.
• Draft proposals in Bill C-19 contain a provision that will apply to allow wage and rent subsidies under CEWS, CERS, THRP, HHBRP, LLSP and CRHP to be filed after the fixed deadline at the discretion of the Minister of Revenue.

Useful links

• BDO Budget 2021
• Government of Canada - Government announces targeted COVID-19 support measures to create jobs and growth
• BDO Tax Alert: How the Canada Recovery Hiring Program supports jobs and growth

Benefit

• This program to provide wage and rent support was enacted into law on December 17, 2021.
• The program uses existing definitions for CEWS and CERS and effectively expands these programs for entities who qualify for the THRP.
• Organizations in Who should apply?selected sectors of the tourism and hospitality industry that have been deeply affected since the outset of the pandemic and that continue to struggle.
• 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.

Eligibility

• Eligible organizations would be required to meet two additional conditions to qualify for this program:
  • The entity must be covered by the definition of qualifying tourism or hospitality entity, and
  • The entity must have an average monthly revenue reduction of at least 40% 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%. The 12-month revenue decline would be calculated as the average of all revenue decline percentages for eligible organizations from March 2020 to February 2021 (claim periods 1-13 of the CEWS, 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 would continue to apply for the purposes of calculating the current-month revenue decline.
• A qualifying tourism or hospital entity is defined by regulation to include an organization that primarily earns revenue from one or more of the following activities (a full list is in Regulation 8901.1):
  • Hotel, restaurants, bars
  • Festivals, convention centres, convention and trade show organizers
  • Travel agencies, tour operators
  • Live performance venues, museum
  • Movie theatre, casinos
  • Sightseeing tours, charter fishing services, amusement parks
  • Fitness and recreational sports centres
  • Ski hills
  • Docking and storage of pleasure craft
  • Camping, excluding mobile home sites
  • Overnight recreational camp
  • BUT NOT
    • Golf, country clubs
    • Professional sports clubs or facilities used by such teams
• An additional rent subsidy is available where an entity claiming the THRP has a location that is operating at reduced capacity due to a public health restriction for at least 7 days. This support would be available at a fixed rate of 25% and pro-rated based on the number of days a particular location was affected by a lockdown.

Timeline

• The maximum subsidy rate is based on a set subsidy rate structure.
  • The maximum subsidy rate for the wage and rent subsidies would be set at 75% from October 24, 2021 to March 12, 2022 (claim periods 22 to 26 of the CEWS)
  • The maximum subsidy rate requires a 75% revenue decline
  • The maximum subsidy rate would be reduced by half (i.e. to 37.5%) from March 13 to May 7, 2022 (claim periods 27 and 28 of the CEWS)
• Draft proposals in Bill C-19 contain a provision that will apply to allow wage and rent subsidies under CEWS, CERS, THRP, HHBRP, LLSP and CRHP to be filed after the fixed deadline at the discretion of the Minister of Revenue.

Useful links

• Government announces new more targeted COVID-19 programs to support businesses
• Government of Canada - Targeting COVID-19 Support Measures
• Government of Canada - Government introduces legislation to create jobs and implement targeted COVID-19 support
• BILL C-2

Benefit

• This is a program to provide wage and rent support was enacted into law on December 17, 2021.
• The program uses existing definitions for CEWS and CERS and effectively expands these programs for entities who qualify for the HHBRP.

Who should apply?

• Hard-hit organizations that do not qualify for the Tourism and Hospitality Recovery Program and that have been deeply affected since the outset of the pandemic.

Eligibility

• Hard-hit organizations that do not qualify for the Tourism and Hospitality Recovery Program and that have been deeply affected since the outset of the pandemic would qualify for rent and wage support under the 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. The existing rules would continue to apply for the purposes of calculating the current-month revenue decline
• An additional rent subsidy is available where an entity claiming the HHBRP has a location that is operating at reduced capacity due to a public health restriction for at least 7 days. This support would be available at a fixed rate of 25% and pro-rated based on the number of days a particular location was affected by a lockdown.

Timeline

• The maximum subsidy rate is based on a set subsidy rate structure.
  • The maximum subsidy rate for the wage and rent subsidies would be set at 50% for eligible entities from October 24, 2021, to March 12, 2022 (claim periods 22 to 26 of the CEWS).
  • The maximum subsidy rate requires a 75% revenue decline
  • The maximum subsidy rate would be reduced by half (i.e. 25%) from March 13 to May 7, 2022 (claim periods 27 and 28 of the CEWS).
• Draft proposals in Bill C-19 contain a provision that will apply to allow wage and rent subsidies under CEWS, CERS, THRP, HHBRP, LLSP and CRHP to be filed after the fixed deadline at the discretion of the Minister of Revenue.

Useful links

• Government announces new more targeted COVID-19 programs to support businesses
• Government of Canada - Targeting COVID-19 Support Measures
• Government of Canada - Government introduces legislation to create jobs and implement targeted COVID-19 support
• BILL C-2

Benefit

• This is a support that was passed into law on December 17, 2021.
• This program will use existing definitions for CEWS and CERS and effectively expands these programs for entities who do not qualify for the THRP or HHBRP but who have a temporary need for support due to a qualified public health restriction.

Who should apply?

• Organizations subject to a qualifying public health restriction, regardless of sector

Eligibility

• Organizations, regardless of sector, that are subject to a qualifying public health restriction would be eligible for support at the subsidy rates provided for under the THRP (above)
• Must have at least one location subject to a public health restriction lasting for at least seven days in the current claim period
• It must be reasonable to conclude that at least approximately 25% of the qualifying revenues of the eligible entity — together with the qualifying revenues of any specified tenants of the eligible entity — for the prior reference period were derived from activities restricted by public health lockdown
• Applicants will not need to demonstrate a 12-month revenue decline, only a current-month decline of at least 40%
• This program would not be applicable to entities claiming either the THRP or the HHBRP as both programs have separate provisions for additional lockdown support
• There are three main changes that will be made by regulation:
  • Applicants will have to demonstrate a current month revenue decline of 25% (down from 40% as passed in Bill C-2)
  • A public health restriction will include a capacity restriction for activity of 50% or more (rather than a total restriction on activity as passed in Bill C-2)
  • At least 50% of the entity's qualifying revenues for the prior period must be derived from activities restricted by the public health lockdown (up from 25% as passed in Bill C-2)
• Changes to the regulations will need to be published before determining if any further changes will be made to the current law due to this announcement

Timeline

• The government announced further COVID support relief by relaxing the conditions to obtain CEWS and CERS support under the Local Lockdown Support Program for periods 24 to 26 (December 19, 2021 – March 12, 2022).
• Draft proposals in Bill C-19 contain a provision that will apply to allow wage and rent subsidies under CEWS, CERS, THRP, HHBRP, LLSP and CRHP to be filed after the fixed deadline at the discretion of the Minister of Revenue.

Useful links

• Government announces new more targeted COVID-19 programs to support businesses
• Government of Canada - Targeting COVID-19 Support Measures
• Government of Canada - Government introduces legislation to create jobs and implement targeted COVID-19 support
• BILL C-2

Benefit

• Open to large for-profit businesses – except for those in the financial sector – as well as certain not-for-profit businesses, such as airports, with annual revenues generally in the order of $300 million or higher.
• Delivered by the Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada (ISED) and the Department of Finance.
• Program provides bridge financing to Canada's largest employers, whose needs during the pandemic are not being met through conventional financing, to keep their operations going.

Who should apply?

• Canadian employers who (a) have a significant impact on Canada's economy, as demonstrated by (i) having significant operations in Canada or (ii) supporting a significant workforce in Canada, ; (b) can generally demonstrate approximately $300 million or more in annual revenues; and (c) require a minimum loan size of about $60 million.

Eligibility

• The loan size for each applicant will be assessed on a case-by-case basis based on demonstrated need
• LEEFF will be open while the economic situation persists

Benefit

• This program ended on December 31, 2021

Who should apply?

• This program has ended

Useful links

• Export Development Canada

Benefit

• This $25 billion program provided interest-free loans of up to $60,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.

Who should apply?

• Small businesses and NPO's that need help covering operating costs. This program is now closed to new applications.

Eligibility

• If the conditions of the CEBA program were met, up to $20,000 of the loans would be forgiven. However, if the loan is not repaid by December 31, 2022, it can be converted to a three-year term loan with a 5% interest rate
• The funds obtained from the CEBA cannot be used for prepayment or refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation

Timeline

• The June 30, 2021, deadline to complete an application has passed
• On January 12, 2022 the Department of Finance announced that the repayment deadline for CEBA loans to qualify for partial loan forgiveness is being extended from December 31, 2022 to December 31, 2023, for all eligible borrowers in good standing
• Outstanding loans would subsequently convert to two-year term loans with interest of 5% per annum commencing on January 1, 2024 with the loans fully due by December 21, 2025

Useful links

• Government Increases loans available under the Canada Emergency Business Account (CEBA)

Who should apply?

• This program has ended

Eligibility

• This program ended on December 31, 2021

Useful links

• Business Development Bank of Canada

Who should apply?

• This program has ended.

Eligibility

• This program closed to applications on March 31, 2022

Useful links

• Business Development Bank of Canada

Benefit

• The RRRF provided over $1.5 billion of funding nationally. As part of the Economic Statement, the federal government is proposing to add an additional $500 million of funding

Who should apply?

• Businesses and communities that are unable to access other federal relief measures, or that may require additional support during the pandemic
• The application period for this program is now closed

Eligibility

• The funds are administered and delivered by Canada's regional development agencies:
  • Atlantic Canada Opportunities Agency (ACOA)
  • Canada Economic Development for Quebec Regions (CED)
  • Federal Economic Development Agency for Southern Ontario (FedDev Ontario)
  • Federal Economic Development Agency for Northern Ontario (FedNor)
  • Western Economic Diversification Canada (WD)
  • Canadian Norther Economic Development Agency (CanNor)
• The application period for the RRRF is now closed

Timeline

• The Government of Canada announced on January 12, 2022, that the repayment deadline to qualify for partial forgiveness for CEBA-equivalent lending through the RRRF is extended to December 31, 2023 (from December 31, 2022)
• The ACOA will communicate directly with funding recipients who are eligible for this extension

Useful links

• Government of Canada: Regional Relief and Recovery Fund: Overview

Benefit

• Work sharing is an adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer.
• Employees on a Work-Sharing agreement must agree to a reduced schedule of work and to share the available work over a specified period.

Who should apply?

• Work-Sharing is a three-party agreement involving employers, employees and Service Canada.
• Employees on a Work-Sharing agreement must agree to a reduced schedule of work and to share the available work over a specified period of time.

Eligibility

• The employer and the employees (and the union, if applicable) must agree to participate in a Work-Sharing agreement and must apply together.

Timeline

• Reduction in hours by employee can be from half day to 3 days
• Employers can benefit from an initial 76-week agreement if their Work-Sharing agreement:
  • is signed between March 15, 2020 and September 24, 2022, with an agreement start date no later than September 25, 2022
  • begins, or ends between March 15, 2020 and September 25, 2022
• Employers can benefit from a 76-week agreement under COVID-19 temporary special measures once
• Businesses that completed a 76-week agreement under COVID-19 temporary special measures by September 24, 2022 can begin a new subsequent 26-week agreement immediately after or anytime during the 26-week period following the end of their agreement (without serving a mandatory cooling off period)
  • Agreement length and extension: A Work-Sharing agreement must be at least 6 consecutive weeks long
  • The latest date employers can start a subsequent 26-week agreement is September 25, 2022
• An application for a Work-Sharing agreement must be submitted a minimum of 10 days prior to the requested start date

Useful links

• Government of Canada - Application details
• Work-Share during COVID-19 – Your questions answered

Benefit

• The CERS replaces the Canada Emergency Commercial Rent Assistance for small business program (which closed to new applications on September 30) as a means of providing commercial rent relief
• CERS is provided directly to tenants, and property owners
• CERS amount is comprised of a base amount plus a top-up:
  • Base rent subsidy: The base amount will cover, on a sliding scale, up to a max. of 65% of qualifying rent expenses. The max. 65% will be available to businesses that demonstrate a revenue decline of 70% or more (for businesses with less than a 70% decline, the subsidy will decrease in line with the decline in revenues)
  • Lockdown Support: A top-up amount of 25% of qualifying expense will be available to businesses subject to additional lock-down restrictions.
• There is a limit of $75,000 on the total amount of qualifying rent expenses allowed per location per qualifying period and an overall cap of $300,000 of eligible expense per qualifying period. This overall cap only applies for the purposes of calculating the amount of base rent subsidy and does not affect the calculation of the Lockdown Support, if applicable.
• The 2021 Federal Budget (released on April 19, 2021) announced changes the CERS program, including:
  • Extending the CERS program by four more periods, to September 25,2021.
  • Gradually decreasing the maximum subsidy base rate from 65% to 20%, beginning July 4, 2021. Lockdown Support will remain at the current 25% rate.
  • Beginning July 4, 2021, only organizations that experience a revenue decline of more than 10% will be eligible for CERS
• On July 30, 2021 the government announced additional changes to the CERS program:
  • Increasing the maximum base subsidy rate for Period 13 (August 29 to September 25) to 40% instead of 20% as announced in Budget 2021
  • Extending the program by one additional period, with a maximum rate of 20% in Period 14 (September 26 to October 23)
• The CRA is administering the CERS. Applications are made through My Business Account.

Who should apply?

• Eligible entities, including businesses, charities, and non-profits that experience a drop in revenue requiring assistance with rent and/or mortgage interest payments.

Eligibility

• Qualifying rent expense for eligible commercial tenants generally includes:
  • Rent, including gross rent, and rent based on percentage of sales, profit or similar criteria;
  • Amounts required to be paid under a net lease (either to the lessor or a third party) including base rent, operating expenses such as insurance, utilities and common area maintenance expenses;
  • Property taxes, including school and municipal taxes; and
  • Other amounts paid for ancillary services customarily supplied or rendered in connection with commercial rent
• Qualifying rent expense for property owners generally includes:
  • Mortgage interest (determined within defined limits);
  • Insurance on the real property; and
  • Property taxes, including school and municipal taxes
• Expenses incurred by property owners who use the real property, whether directly or indirectly, to earn rental income from an arm's length entity will not be eligible expenses for the CERS.
• Eligible expenses must be paid or payable to an arm's length party, by written agreement in place before October 9, 2020. If unpaid, applicants must attest that amounts will be paid within 60 days following the receipt of their CERS support payment. If not paid within this timeframe, expenses will not be eligible for CERS.

Timeline

• CERS will be available retroactively, beginning on September 27 and until June 2021
• The regular CERS expired on October 23, 2021
• Draft proposals in Bill C-19 contain a provision that will apply to allow wage and rent subsidies under CEWS, CERS, THRP, HHBRP, LLSP and CRHP to be filed after the fixed deadline at the discretion of the Minister of Revenue.

Useful links

• Government of Canada - Extending Business Support Measures Through the Pandemic
• BDO Tax Alert