Business Emergency Subsidies (CEWS, CERS, and CHRP)
The Federal Government announced changes to the Canada Emergency Wage Subsidy (“CEWS”) and Canada Emergency Rent Subsidy (“CERS”) programs and established the new Canada Recovery Hiring Program (“CRHP”).
Canada Emergency Wage Subsidy (“CEWS”)
The Covid-19 pandemic took the world by storm and placed many businesses, especially small ones, in a precarious position of both losing revenue and potential long-term closures. To alleviate some of the pressure on businesses, the government introduced the CEWS to help businesses by covering part of their employee’s wages due to drops in business revenue. The subsidy was designed to help employers re-hire workers, prevent further job loss, and ease their business back into normal operations.
As of July 2021, changes have been introduced to the CEWS. These changes include:
- Extending the eligibility period for the Canada Emergency Wage Subsidy until October 23, 2021, and increasing the rate of support employers and organizations can receive during the period between August 29 and September 25, 2021.
- The rate of CEWS will now remain the same for claim period 20 as for period 19, declining in period 21.
- Eligible employers that were not operating on March 1, 2019, may now choose to use the alternative approach to calculate their revenue drop for claim periods 14 to 17.
The next deadline to apply for CEWS is October 7, 2021.
Canada Emergency Rent Subsidy (“CERS”)
CERS provides support directly to qualifying commercial Tenants and Property owners who are adversely impacted by the Covid-19 pandemic. The subsidy will cover part of qualifying entity’s commercial rent or property expenses, starting on September 27, 2020, until October 23, 2021.
The amount you can claim of your expenses (your rent subsidy rate) is based on the revenue drop you experienced between the claim period you are applying for and a prior reference period. You have options for choosing which prior reference period you will use.
The rate of the subsidy will be calculated as set out in the table below.
|Calculate your rent subsidy rate for periods 1 to 10|
|Revenue Decline (%)||Base Subsidy rate|
|70% or more||65% subsidy rate|
|50 to 69.99%||(Your revenue drop – 50%) x 1.25 + 40%|
|Less than 50%||0.8 x your revenue drop|
Eligible expenses to be subsidized under the program include:
- Gross rent;
- Percentage rent;
- Minimum rent and other amounts required to be paid under a new lease to the Landlord or a third party such as operating expenses; and
- Property taxes.
Eligible entities include individuals, taxable corporations, trusts, non-profit organizations, registered charities, and partnerships that are up to 50% owed by non-eligible members.
Eligible entitles must have a payroll account as of March 15, 2020, or have a CRA business number as of September 27, 2020, and satisfy the Canada Revenue Agency that it is a bona fide rent subsidy claim. The deadline to apply is October 7, 2021.
Similarly, the government is extending the eligibility period for the CERS until October 23, 2021, and increasing the rate of support employers and organizations can receive during the period between August 29 and September 25, 2021.
Canada Recovery Hiring Program (“CRHP”)
This new program is designed to help businesses grow and recover through the hiring of more employees by providing a subsidy. The subsidy will help offset a portion of reopening costs for businesses caused by increased employee wages and hours.
To qualify for the CRHP, there needs to be a revenue decline of more than 0 percent in period 17 and more than 10 percent between periods 18 to 22. Most of the eligibility criteria for the CRHP and CEWS are similar. The maximum eligible remuneration per employee that qualifies for the CRHP is $1,129 per week. The next deadline to apply for CRHP is December 30, 2021.
If you have any questions or concerns, speak with a tax lawyer or tax specialist to discuss if these benefits apply to your particular circumstances. Contact us today!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer.
- Canada Recovery Benefits
- The Canada Emergency Wage Subsidy
- COVID-19 and Taxpayer Relief
- Canada Emergency Wage Subsidy Audits
- CRA Audits of Covid-19 Benefit Programs