At the beginning of the pandemic, when states of emergency were declared across Canada, the federal government introduced a number of programs to provide financial relief and assistance to individuals and to businesses.
As the pandemic has worn on, those programs have been extended and revisions have been made to accommodate changing social and economic circumstances. In the recent federal Budget, additional changes like these were made, and an entirely new program was announced.
The major federal wage support program for employers was the Canada Emergency Wage Subsidy (CEWS), which had been scheduled to end as of June 5, 2021. Instead the CEWS has been extended by the budget to last until September 25, 2021, including a phase-out period. In addition, the federal government will be launching a new program — the Canada Recovery Hiring Program.
Canada Recovery Hiring Program
The new Canada Recovery Hiring Program (CRHP) announced in the 2021 federal Budget will provide eligible employers with a subsidy of up to 50% on incremental remuneration paid to eligible employees between June 6 and November 20, 2021. That incremental remuneration will be calculated using a baseline period of March 14 to April 10, 2021.
The CRHP is complementary to the existing CEWS, and eligible employers will be able to claim benefits under either program for a particular period, but not both.
Eligibility requirements for both programs are generally the same, in that the benefit may be claimed by eligible individuals, corporations (with the restriction that for-profit corporations must be Canadian-controlled private corporations), non-profit organizations, and registered charities. In all cases, an eligible employer must have had a payroll account open with the Canada Revenue Agency on March 15, 2020.
Like the Canada Emergency Wage Subsidy, the CRHP operates on the basis of qualifying periods, with the eligibility criteria and the percentage benefit changing in successive periods. For each period, the employer must demonstrate a revenue decline of at least a specified percentage, when compared to revenue from the applicable baseline period. That required revenue decline percentage will be 0% for the qualifying period of June 6 to July 3, 2021, and 10% for the qualifying period of July 4 to November 20, 2021. Subsidy rates will be as follows:
- 50% for qualifying periods from June 6 to August 28;
- 40% for the qualifying period from August 29 to September 25;
- 30% for the qualifying period from September 26 to October 23; and
- 20% for the qualifying period from October 24 to November 20.
Eligible remuneration for purposes of the CHRP will generally encompass salary and wages, together with any other remuneration for which employers are required to withhold income tax amounts. In all cases, eligible remuneration per employee will be subject to a weekly maximum of $1,129.
Extension of the Canada Emergency Wage Subsidy
The Canada Emergency Wage Subsidy (CEWS) program was created to provide the means by which employer could re-hire employees who had been laid off for pandemic related reasons.
The wage subsidy under CEWS includes a base subsidy for employers who experienced revenue declines of a minimum specified percentage, as well as a top-up subsidy where that decline amounts to at least 50% of revenue. The combined subsidies receivable through the base and top-up subsidies is, through the qualifying period ending on June 5, 2021, 75% of wages.
As with the CHRP, the maximum weekly remuneration on which the percentage benefit is calculated is $1,129.
The Budget proposals extend the CEWS through to September 25, 2021. However, the subsidy rates will be gradually phased out beginning on July 4, 2021 and, as of that date, only employers with a decline in revenue of more than 10% will be eligible for the CEWS.
Finally, while no CEWS benefit is available for pay periods beginning after September 25, the Budget papers note that, should circumstances warrant, the federal government will have the authority to extend the CEWS program to be available until November 20, 2021.
Detailed information on both the CEWS and the new CHRP can be found in the 2021 federal Budget papers, which are available at https://www.budget.gc.ca/2021/report-rapport/anx6-en.html#emergency-business-supports and at https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
