Le programme d’embauche pour la relance économique du Canada (en anglais)

Canada-Recovery-Hiring-Program

Introduced in the federal government’s 2021 budget, legislation applicable to the new Canada Recovery Hiring Program (“CRHP” or “the Program”) received Royal Assent on June 29, 2021. The Program is intended to provide continuing support to businesses hit hard by the COVID-19 pandemic to enable them to recover and grow. 

While the Department of Finance announced on July 30, 2021 the extension of the CEWS and the CERS programs to October 23, 2021 or Period 21, CRHP has retained its original program dates as passed on June 29, 2021. The CRHP is available to eligible employers in respect of eligible remuneration paid between June 6, 2021 and November 20, 2021 or Periods 17 to 22. Like the CEWS, the CRHP will be administered by the CRA.

The CRHP provides eligible employers with a fixed subsidy rate of 50% for claim periods 17 to 19 and then it gradually decreases by 10% until it reaches 20% in claim period 22. The subsidy would be equal to the incremental remuneration for a qualifying period multiplied by the effective rate for the period. 

Eligibility

The CRHP and CEWS share many of the same eligibility criteria, including payroll account requirements and required revenue decline.

Revenue Reduction and Deeming Rule

Eligible revenue shares the same meaning for both CRHP and CEWS.

For claim periods 17 to 21, an eligible employer would use the same method to determine the revenue decline percentage for both the CEWS and CRHP.

For period 22, where currently only the CRHP program is available, an eligible employer is required to use the same method (the general year-over-year or the alternative method), that was previously used for the CEWS.

The deeming rule, which deems an entity to qualify for the CEWS (and now the CRHP) in a subsequent period if it qualified in the immediately preceding period will continue to apply until Period 22.

Eligible Employer

Most types of employers that are eligible for the CEWS will be eligible for the CRHP. There are some exceptions to corporations and partnerships:

CRHP eligible corporations and partnerships

  • Canadian-controlled private corporations (CCPCs)
  • Cooperative corporations that are eligible for the small business deduction
  • Partnerships where at least 50% of the partnership’s interests are held (directly or indirectly) by employers eligible for the CRHP

CRHP ineligible corporations and partnerships

  • Any for-profit corporations that are not CCPCs 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 

Incremental and Base Period Pay

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 (or the CEWS claim period 14).

Time Periods

The CRHP and CEWS are both based on four-week claim periods. For claim periods 17 to 21, if an eligible employer qualifies for both subsidies, the employer can apply for the program which results in the higher subsidy.

An eligible employer can claim the CEWS for a claim period if they claimed the CRHP in a previous claim period or vice versa.

Claim period

Apply for

 

1 to 16 (March 15, 2020 to June 5, 2021)

Only CEWS

17 to 21 (June 6 to October 23, 2021)

Either CEWS or CRHP

 
22 (October 24 to November 20, 2021) Only CRHP  

Eligible Employee

Generally, employees (arm’s length and non-arm’s length), who are eligible for the CEWS are eligible for the CRHP. However, amounts paid to employees on leave with pay are not eligible remuneration in computing CRHP. Here is a comparison of employees’ pay under each program.

Type of employee

CEWS

CRHP

Eligible employees who actively worked that week

  • Amount paid for each week in the claim period
  • Pre-crisis pay (if non-arm’s length)
  • Amount paid for each week in the claim period
  • Amount paid for each week in the base period
  • Pre-crisis pay (if non-arm’s length)

Eligible employees who were on leave with pay that week

  • Amount paid for each week in the claim period, except for period 20
  • Pre-crisis pay, except for period 20
  • Not included in the calculation

Weekly Maximum CRHP

The eligible remuneration for each employee is subject to a maximum of $1,129 per week. For non-arm’s length employees, their eligible remuneration used in computing the CRHP for a week cannot exceed their baseline remuneration for that week. The same restriction exists in the CEWS.

Penalties for Non-Compliance

The legislation contains an anti-avoidance rule to deter employers from making false applications.

Where this anti-avoidance rule applies, the employer will be liable to a penalty equal to 25% of the amount of the CRHP claimed in its application, and will have to pay back any CRHP received.

Tax Implications

The CRHP subsidy is taxable income to the recipient. Like the CEWS, the CRHP subsidy is deemed to be received at the end of the qualifying period to which it relates. Since the qualifying periods are unlikely to match up with the employer’s fiscal year, any accrual made at the end of the year should be removed from income for that year and added back to the next year. If the related return has been filed, changes to CRHP claims would require an amendment to corresponding income tax filings.

How to apply:

All applications are processed through the CRA.  Applications can be done online through “My Business Account” or “Represent a Client”.

CRHP Technical Guidance

For more information, the CRA CRHP Technical Guidance can be found at the following link:

https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/budget-2021-recovery-plan-for-jobs-growth-resilience/canada-recovery-hiring-program.html

(Canada.ca Canada Recovery Hiring Program)

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