COVID-19 # 40 – COVID-19 Support Program Update
Our COVID-19 Canadian Tax and Business News updates are our way of informing our clients, friends and business associates with recent information that may help businesses and individuals while coping with the outcomes from the COVID-19 pandemic.
Our goal is to monitor the news and release relevant information as it becomes available.
The summary below is based on our understanding and interpretation of the announcements made by the government. The information below is in summary form and subject to change until the proposals are passed as legislation. Contact one of our professionals to discuss these matters in the context of your situation before acting upon such information.
Applications Portal Open for Various Subsidy Programs
Finance announced the application portals for the Canada Recovery Hiring Program, the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program are now open. Calculators and spreadsheets are available online.
THRP Spreadsheet Error
Since the portals have been open, there has been an error with one of the CRA provided spreadsheets regarding the THRP. A previous version of the spreadsheet may have shown an employer as not being eligible when they may have been. The error may affect the following:
- You were applying for period 22 (October 24 to November 20, 2021)
- You used a version of the spreadsheet for wage and hiring (version 2021-1) that was available between Tuesday, December 21, 2021 at 6:00 am ET and Friday, December 24, 2021 at 12:00 pm ET
- You indicated you are a qualifying tourism or hospitality entity and had both a current-month revenue drop and 12-month average revenue drop over 40%
- Step 5 in the spreadsheet showed a zero-dollar amount and gave the message that you were not eligible for the THRP
If you did not apply for Period 22, simply download the latest version of the spreadsheet from the CRA website and submit an application with the correct spreadsheet. For entities that have already applied, you will need to contact the Business Enquiries line at 1-800-959-5525 to make your THRP – Wage application
Relief for Employee Benefits
The CRA has updated their website with information regarding the extension of the relief on certain employer-provided benefits during the pandemic that were initially introduced in 2020. The relief is being extended to December 31, 2021 and applies to commuting costs, employer-providing parking, meal costs, cell phone/internet plans and computer and home office equipment.
The relief measures allow employers to reimburse employees up to $500 for the cost of computer and home office equipment. The CRA has clarified that up to $500 in total can be reimbursed for the period March 15, 2020 and December 31, 2021. If an employer reimburses more than $500 during this timeframe, the excess is a taxable benefit that must be included in the employee’s income.
Bill C-2 Receives Royal Assent
Finance announced Bill C-2 An Act relating to economic recovery in response to COVID-19 received Royal Assent. The Bill contained several extensions and updates to various COVID-19 subsidies. These were discussed in our previous publications Government Introduces New COVID Support Programs and Tourism and Hospitality Support Program Update. Some notable changes are discussed below. Finance also announced that using the authority in Bill C-2, the government intends on expanding access to the Local Lockdown Program and Canada Worker Lockdown Benefit.
Local Lockdown Program
The program will be expanded to include employers who are subject to a capacity restriction of 50% or more. Previously, the program was only available to employers who faced a lockdown. This proposed change will help expand accessibility of the program. These changes will only apply to periods 24 and 25 which covers the period December 19, 2021 to February 12, 2022.
In order to qualify, both the following conditions need to be met:
- One or more of its locations is 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.
Revenue Decline & Subsidy Percentage
Finance intends on lowering the revenue decline threshold to 25% (previously 40%). Employers only need to demonstrate a current month loss without the requirement for a historical 12-month revenue decline.
The subsidy rate is equal to the percentage of revenue decline (on a 1 for 1 basis). The subsidy rate starts at 25% for eligible businesses and is capped at 75%. An eligible business with a 65% revenue decline for example would be entitled to a subsidy rate of 65%.
Canada Worker Lockdown Benefit (CWLB)
Bill C-2 also included a CWLB to provide income support to workers who had their employment interrupted due to government-imposed lockdowns. The benefit provides employees $300 per week who have lost 50% or more of their income due to a COVID-19 related lockdown.
Similar to the expansion of the lockdown support, the CWLB will also be expanded to change the definition of a lockdown order to include capacity restrictions of 50% or more from December 19, 2021 to February 12, 2022. Finance is also reducing the minimum number of days a lockdown order needs to be in place to 7 consecutive days (previously 14 consecutive days). After February 12, 2022, the definition will revert back to the original definition which requires a closure for at least 14 consecutive days for non-essential services.
As we all try to stay safe, we need to remind ourselves business will get back to normal but in the meantime let’s all do our part to get to normal as soon as we can. If you have any questions or require further information, don’t hesitate to reach out to us.