From: Department of Finance Canada
Backgrounder
To support Canadians and Canadian businesses through the pandemic, the government introduced a comprehensive set of support measures, including the Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support. These programs have supported millions of workers and continue to adapt as the pandemic evolves.
In this context, the Government of Canada is proposing to extend these measures until October 23, 2021, and increase the wage and rent subsidy rates between August 29 and September 25, 2021.
The government is also proposing technical changes and clarifications to increase flexibility and certainty for organizations using these programs and the Canada Recovery Hiring Program introduced in Budget 2021.
Extending the Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support
The wage subsidy, rent subsidy and Lockdown Support were set to expire in June 2021. Budget 2021 extended these measures until September 25, 2021 and provided the government with the authority to further extend the programs through regulations should the economic and public health situation warrant it.
Today, the government is proposing to use this authority to further extend these measures until October 23, 2021, and increase the wage and rent subsidy rates between August 29 and September 25, 2021.
Specifically, the maximum rate for the wage and rent subsidies would be set at 40 per cent in Period 20 (August 29 to September 25) instead of being reduced to 20 per cent, as announced in Budget 2021. These programs would also be extended by one additional period, with a maximum rate of 20 per cent in Period 21 (September 26 to October 23). The Lockdown Support would also be extended until October 23, 2021, at its set rate of 25 per cent.
Eligible employers would still also be able to apply for the new Canada Recovery Hiring Program instead of the wage subsidy if they so choose. The hiring program provides alternative support for businesses affected by the pandemic and helps them hire workers, and increase workers’ hours or wages, as the economy reopens. The hiring program is available from June 6, 2021 until November 20, 2021, allowing employers to shift from the Canada Emergency Wage Subsidy to this new support, at a pace that works for them.
Tables 1 and 2, below, detail the proposed wage and rent subsidy rate structures from August 1, 2021 to October 23, 2021. Only employers experiencing a decline in revenues of more than 10 per cent are eligible for this support.
| Period 19 August 1 – August 28 | Period 20 August 29 – September 25 | Period 21 September 26 – October 23 | |
|---|---|---|---|
| Maximum weekly benefit per employee* | $452 | $452 | $226 |
| Revenue decline: | |||
| 70% and over | 40% (i.e., Base: 25% + Top-up: 15%) | 40% (i.e., Base: 25% + Top-up: 15%) | 20% (i.e., Base: 10% + Top-up: 10%) |
| 50%-69% | Base: 25% + Top-up: (revenue decline – 50%) x 0.75 (e.g., 25% + (60% revenue decline – 50%) x 0.75 = 32.5% subsidy rate) | Base: 25% + Top-up: (revenue decline – 50%) x 0.75 (e.g., 25% + (60% revenue decline – 50%) x 0.75 = 32.5% subsidy rate) | Base: 10% + Top-up: (revenue decline – 50%) x 0.5 (e.g., 10% + (60% revenue decline – 50%) x 0.5 = 15% subsidy rate) |
| >10%-50% | Base: (revenue decline – 10%) x 0.625 (e.g., (30% revenue decline – 10%) x 0.625 = 12.5% subsidy rate) | Base: (revenue decline – 10%) x 0.625 (e.g., (30% revenue decline – 10%) x 0.625 = 12.5% subsidy rate) | Base: (revenue decline – 10%) x 0.25 (e.g., (30% revenue decline – 10%) x 0.25 = 5% subsidy rate) |
| * The maximum weekly benefit per employee is equal to the maximum combined base subsidy and top-up wage subsidy for the qualifying period applied to the amount of eligible remuneration paid to the employee for the qualifying period, on remuneration of up to $1,129 per week. |
| Period 19 August 1 – August 28 | Period 20 August 29 – September 25 | Period 21 September 26 – October 23 | |
|---|---|---|---|
| Revenue decline: | |||
| 70% and over | 40% | 40% | 20% |
| 50-69% | 25% + (revenue decline – 50%) x 0.75 (e.g., 25% + (60% revenue decline – 50%) x 0.75 = 32.5% subsidy rate) | 25% + (revenue decline – 50%) x 0.75 (e.g., 25% + (60% revenue decline – 50%) x 0.75 = 32.5% subsidy rate) | 10% + (revenue decline – 50%) x 0.5 (e.g., 10% + (60% revenue decline – 50%) x 0.5 = 15% subsidy rate) |
| >10-50% | (Revenue decline – 10%) x 0.625 (e.g., (30% revenue decline – 10%) x 0.625 = 12.5% subsidy rate) | (Revenue decline – 10%) x 0.625 (e.g., (30% revenue decline – 10%) x 0.625 = 12.5% subsidy rate) | (Revenue decline – 10%) x 0.25 (e.g., (30% revenue decline – 10%) x 0.25 = 5% subsidy rate) |
| * Expenses for each qualifying period are capped at $75,000 per location and are subject to an overall cap of $300,000 that is shared among affiliated entities. ** Period 19 of the Canada Emergency Wage Subsidy would be the twelfth period of the Canada Emergency Rent Subsidy. Period identifiers have been aligned for ease of reference. |
Revenue Decline Calculation
For the purposes of the wage subsidy, rent subsidy, and the Canada Recovery Hiring Program, an employer’s decline in revenues is generally determined by comparing the employer’s revenues in a current calendar month with its revenues in the same calendar month, pre-pandemic (this is known as the general approach). An employer may also elect to use an alternative approach, which compares the employer’s monthly revenues relative to the average of its January 2020 and February 2020 revenues.
An eligible employer that was not carrying on a business, or otherwise not carrying on its ordinary activities, on March 1, 2019 can only use the alternative approach for Periods 1 to 4 (March 15 to July 4, 2020). For Period 5 and beyond (i.e., as of July 5, 2020), these employers can either continue using the alternative approach or switch to the general approach. However, once an approach is chosen, the employer is required to use the same approach for all qualifying periods as of Period 5.
As of Period 14 (March 14 to April 10, 2021), the prior reference periods used under the general approach reverted to calendar months from 2019, ensuring that organizations continue to calculate their decline in revenues relative to a pre-pandemic month. However, this change may lead to unintended consequences for certain organizations that were not operating on March 1, 2019. For example, a business that began operating in May 2019 that switched from the alternative approach to the general approach from Period 5 onwards would be required to use April 2019 as its prior reference period for Period 15, even though it would have had no revenue during this month. This would make it ineligible for the subsidy support during this qualifying period as it would be unable to demonstrate a decline in revenues.
To provide greater flexibility to organizations in these circumstances, the government proposes to allow an eligible organization to elect to use the alternative approach to calculate its revenue decline for Periods 14 to 17 (March 14 to July 3, 2021) if it was not carrying on a business or otherwise carrying on ordinary activities on March 1, 2019. Subject to approval by the Governor in Council, these changes would align the rules for Periods 14 to 17 (March 14 to July 3, 2021) with those for Periods 1 to 4 (March 15 to July 4, 2020) for organizations that began operating between March 1, 2019 and the onset of the pandemic, making them eligible for continued support under these programs.
Wage Subsidy Support for Furloughed Employees
To ensure that the wage subsidy for furloughed employees remains aligned with benefits available under the Employment Insurance (EI) program, Budget 2021 extended the wage subsidy for furloughed employees so that the weekly wage subsidy for a furloughed employee from June 6, 2021 to August 28, 2021 (Periods 17 to 19) is the lesser of:
- the amount of eligible remuneration paid in respect of the week; and
- the greater of:
- $500; and
- 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595.
The wage subsidy for furloughed employees continues to be available to eligible employers that qualify for the wage subsidy for active employees for the relevant period until August 28, 2021. Employers also continue to be entitled to claim under the wage subsidy their portion of contributions in respect of the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan for furloughed employees.
As announced in Budget 2021 and to provide certainty to employers and employees, the government intends to introduce legislative proposals to clarify that the wage subsidy for furloughed employees would no longer be available after August 28, 2021, including the subsidy for the employer’s portion of contributions under the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan in respect of furloughed employees. Draft legislative proposals to this effect are being released today.
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