Canada’s New COVID-19 Benefits for Businesses

Benefits-for-business

On October 21,2021, the Department of Finance Canada announced the new COVID-19 Benefits for Businesses, as the existing business support programs (i.e. CEWS and CERS) are set to end on October 23, 2021. While the existing support programs have been taking a broad-based approach, the new programs will be more targeted to provide help where it is needed the most.

Highlights from the October 21 Government announcement include:

  • Extending the CRHP to May 7, 2022
  • Implementing two new programs:
    • Tourism and Hospitality Recovery Program (THRP), and
    • Hardest-hit Business Recovery Program (HBRP)
  • Providing support in the event of a public health lockdown

CRHP Extension

The Canada Recovery Hiring Program (CRHP) has been available to eligible employers since June 6, 2021.

For claim periods 17 to 21 (i.e. from June 6, 2021 to October 23, 2021), an eligible employer would use the same method to determine the revenue decline percentage for both the CEWS and CRHP. An eligible claim can be made to either the CEWS or the CRHP. Starting Period 22, it will be only CRHP.

The CRHP is calculated based on the effective subsidy rate multiplied by an eligible employer’s incremental remuneration. The incremental remuneration is the increase in an eligible employer’s total eligible remuneration paid in the claim period compared to the total eligible remuneration paid in the base period of March 14 to April 10, 2021 (i.e. CEWS period 14). This will continue to be used as the baseline remuneration to calculate the increments under the proposed extension.

Eligibility

The CRHP and CEWS share many of the same eligibility criteria, including payroll account requirements and required revenue decline. The key differences from the eligibility perspective are:

Periods 18 and onwards, the current month’s revenue drop must exceed 10% to qualify for either CEWS or CRHP;

Certain types of CEWS eligible businesses are ineligible for CRHP. They are:

  • Any for-profit corporations that are not Canadian Controlled Private Corporations (CCPC) and not cooperatives eligible for the small business deduction
  • Partnerships where more than 50% of the partnership’s interests are held directly or indirectly by employers not eligible for the CRHP

 

Tourism and Hospitality Recovery Program (THRP)

The Program is targeted to organizations in selected sectors of the tourism and hospitality industry. It provides both wage and rent subsidies. Examples of eligible organizations are:  hotels, restaurants, bars, festivals, travel agencies, tour operators, convention centres, convention and trade show organizers, and others.

Eligibility

Both conditions must be met to qualify:

  • Having realized an average monthly revenue reduction of greater than 40% over the course of the pandemic, which is from March 2020 to February 2021; and
  • Experience a greater than 40% revenue decline in the current month’s revenue.  

Hardest-Hit Business Recovery Program (HBRP)

This Program provides both wage and rent subsidies as well and it is available to eligible organizations in all sectors.

Eligibility

Both conditions must be met to qualify:

  • Having realized an average monthly revenue reduction of greater than 50% over the course of the pandemic, which is from March 2020 to February 2021; and
  • Experience a greater than 50% revenue decline in the current month’s revenue. 

Support in the event of a Public Health Lockdown

This Program is available to all sectors. If there is a resurgence of the pandemic in the future and it results in one or more locations of an eligible business to cease activities due to a public health restriction, the business may qualify for the lockdown support when all the conditions are met. The public health lockdown has to last for at least seven days in the current claim period.

Specific details on the definition of qualifying businesses and all other aspects of the new COVID-19 Benefits programs are yet to be released by the Government.

If you have any questions or if you would like assistance in preparing the applications, please contact your Welch LLP advisor.

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