Wage and Rent Subsidy Update Periods 17-22

COVID-19 – Canadian Tax and Business News, release #35

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.

Program Update

On June 29th, Bill C-30 received Royal assent and was officially enacted as legislation. There are a number of updates to the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) programs, as well as the introduction of the Canada Recovery Hiring Program (CRHP).

CEWS Update

The CEWS filing periods which have been legislated to include periods 17 to 20 which cover from June 6, 2021 to September 25, 2021. Periods 21 to 22 have been announced, but are awaiting enactment as official legislation.

CEWS – Rates

The CEWS maximum base wage subsidy rate and top-up subsidy rate will remain at 40% and 35%, respectively for a total maximum subsidy rate of 75% in period 17. The total maximum subsidy rates decrease in period 18 to 60%, and further decrease to 40% and 20% in periods 19 and 20, respectively.

CEWS – Revenue Decline Reference Periods

Consistent with prior periods, the eligible subsidy rate for an eligible business will depend on its revenue decline compared to a specific reference period. There have been no changes to the general or alternative approach from the prior periods. Of note, for periods 18 and onward, Finance has implemented a 10% revenue decline requirement to qualify for the CEWS in any given period. Finance has indicated the below reference periods for periods 17 to 20. 

CEWS – Baseline Remuneration

For periods 17 to 20, Finance has confirmed the baseline remuneration periods available for non-arm’s length employees. The default baseline remuneration remains the weekly average remuneration paid from January 1, 2020 to March 15, 2020 excluding any period of seven or more consecutive days where the employee was not remunerated. There are two elective alternative baseline remuneration periods:

• March 1, 2019 to June 30, 2019 (Period 17 only);
• July 1, 2019 to December 31, 2019.

The employer must elect to use one of the alternative approaches.

Canada Recovery Hiring Program (CRHP)

The CRHP is a new program to encourage private corporations, sole-proprietors, Not-for-profit organizations and registered charities to expand workforces after June 6, 2021. The idea behind the program being to reward the hiring of staff by these organizations. The CRHP has been enacted by legislation for periods 17 to 22 which run between June 6, 2021 and November 20, 2021.

CRHP – Rates 

The CRHP is a subsidy of up to 50% on the incremental remuneration paid to eligible employees for each qualifying period as compared to a baseline period.  The total maximum subsidy rates decreases in period 20 to 40%, and further decreases to 30% and 20% in periods 21 and 22, respectively.

CRHP – Eligibility

To be eligible to claim the CRHP, the organization must meet the definition of a “Qualifying recovery entity” which includes sole proprietors, non-profit organizations, charities, certain partnerships and Canadian Controlled Private Corporations that have a revenue decline in periods 17 to 22. Note the revenue decline has to be more than 10% for periods 18 to 22 only so an eligible entity with any revenue decline in period 17 could qualify. The entity must also have a payroll account with the CRA on or before March 15, 2020 and file to claim the subsidy.

CRHP – Calculation

The CRHP subsidy is calculated using the formula: A x (B-C)

A is the recovery wage subsidy rate for the qualifying period;

B is the qualifying recovery entity’s total current period remuneration for the qualifying period; and

C is the qualifying recovery entity’s total base period remuneration.

As you will note from the calculation, there is no subsidy if the current period remuneration is not greater than the baseline remuneration. 

CRHP – Revenue Decline Reference Periods

The reference periods for the CRHP are the same as the CEWS reference periods, with the addition of period 21 and 22, as outlined below.

For CEWS periods 17 to 20, the greater of the CEWS and CRHP can be claimed. Both subsidies cannot be claimed within the same qualifying period.

CERS Update

The CERS filing periods which have been legislated include periods 10 to 13 which run from June 6, 2021 to September 25, 2021. Periods 14 to 15 have been announced, but are awaiting enactment as official legislation.

CERS – Rates and reference periods

The CERS maximum subsidy rate remains at 65% for period 10.  The total maximum subsidy rates decrease in period 11 to 60%, and further decrease to 40% and 20% in periods 12 and 13, respectively.  Of note, for periods 11 and onward, Finance has implemented a 10% revenue decline requirement to qualify for the CERS in any given period.  The reference periods for CERS are listed below.

Resources

Finance CRHP Technical Guide

CRA CRHP Calculator

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.

Get in touch by email: info@fazzaripartners.com or phone: 905.738.5758