On October 21, 2021 the federal government announced changes to their COVID-19 support programs for businesses. It was announced that the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) programs will end with period 21 which ends on October 23, 2021—and that the Canada Recovery Hiring Program (CRHP) will be extended to May 7, 2022. The CEWS and CERS programs will be replaced by three new wage and rent programs which are more targeted and are intended to support those businesses that have been hardest hit by the pandemic.
Changes were also announced to individual support programs which includes plans for the Canada Recovery Benefit (CRB) to be discontinued. It will be replaced by the Canada Worker Lockdown Benefit which is targeted to support workers whose employment is interrupted by specific government imposed public health lockdowns. The government is also proposing to extend the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit until May 7, 2022.
These new benefits will not be available until legislation is presented in Parliament and passed into law through the normal process. Parliament is not scheduled to sit until November 22 of this year and it will be a few weeks before any of these changes can be finalized to become available to taxpayers.
Discontinuance of CEWS and CERS
The government announced on July 30, 2021 that the CEWS and CERS programs would be available until October 23, 2021. Although the government could have extended the existing programs for another four weeks, the announcement of October 21, 2021 confirmed that the programs in their current form would both end on October 23, 2021 in favour of more targeted wage and rent support. Wage and rent support will be available under either the Tourism and Hospitality Recovery Program or the Hardest-Hit Business Recovery Program. Whereas the CEWS and the CERS had a minimum revenue decline of more than 10% to qualify for benefits under the programs, these new programs have a much higher threshold and must have a sustained revenue decline for the first year of the pandemic.
Entities that previously qualified for CEWS or CERS may also qualify, on a periodic basis, for the new special lockdown support program.
Applications under both CEWS and CERS programs have a deadline of 180 days after the last day in the qualifying period, which means that the last applications under the CEWS and CERS programs must be made April 21, 2022.
Extension of the CRHP
This program was announced in the 2021 Federal Budget as a way to continue to provide wage support to businesses that are increasing their staffing levels as they recover from the pandemic. Please see our Tax Alert How the Canada Recovery Hiring Program supports jobs and growth for more details of this program. Without new legislation to extend it, this program will expire on November 20, 2021. The government has announced it will increase the subsidy rate in the period from October 24 to November 20, 2021 from the planned rate of 20% to a new rate of 50%. The government also plans to extend the program at this new rate of 50% until at least May 7, 2022 with provision for a further extension of this program to July 2022 if necessary.
Under the proposed extension, the existing baseline period of March 14 to April 10, 2021, will continue to be used to calculate incremental remuneration. The existing eligibility rules will also continue to apply—including the required revenue decline of more than 10%—and that if the entity applying is a for-profit corporation, it must be a Canadian controlled private corporation.