Throughout the pandemic, the federal government has provided businesses with a number of support programs, some of which operated to subsidize the wage and rental costs of those businesses. Some of those programs were scheduled to expire on November 20, 2021; however, in its most recent announcement made October 21, 2021, the federal government indicated that one program — the Canada Recovery Hiring Program (CRHP) — would be extended, possibly until July 2, 2022. In addition, two new programs will be implemented to address the needs of businesses in sectors particularly hard hit by the pandemic. The affected programs are as follows.
Canada Recovery Hiring Program
The CRHP, which was scheduled to expire on November 20, 2021, provides qualifying employers with a wage subsidy. Generally, qualifying employers are those who have experienced a revenue loss of at least 10%, as measured against a baseline period of March 14 to April 10, 2021. The subsidy rate for the October 24 to November 20, 2021 period was set at 20%.
The latest government announcement proposes some changes to the CRHP. First, the subsidy rate for the October 24 to November 20, 2021 period is to be increased to 50%. Second, the CRHP will be extended (at the new subsidy rate of 50%) until at least May 7, 2022. The federal government may opt to further extend the program until July 2, 2022.
Under the proposed extension, the existing baseline period of March 14 to April 10, 2021, would continue to be used in calculating the benefit. The existing eligibility rules would also continue to apply, including the required revenue decline of more than 10%.
Tourism and Hospitality Recovery Program
Few sectors of the economy have been hit harder by the pandemic than tourism and hospitality. In light of that reality, the federal government will be introducing the Tourism and Hospitality Recovery Program. That program will provide support to hotels, tour operators, travel agencies, and restaurants, by providing wage and rent subsidy programs.
Hardest-Hit Business Recovery Program
The second new program to be introduced is not sector-specific but instead focuses on any business which has experienced and continues to experience significant revenue loss.
In order to be eligible for the Tourism and Hospitality Recovery Program, a business must demonstrate an average monthly 40% revenue reduction between March 2020 and February 2021, as well as a current-month revenue loss of at least 40%. For purposes of the Hardest-Hit Businesses Recovery Program, revenue reductions for the comparable periods must be at least 50%.
The benefit rate which may received under each program is also different. Under the Tourism and Hospitality Recovery Program, the maximum subsidy rate is 75%. That maximum rate under the Hardest-Hit Businesses Recovery Program is 50%.
In addition, businesses which are affected by temporary new local lockdowns may be eligible for support at the same subsidy rates which are available through the Tourism and Hospitality Recovery Program. Those subsidy rates will be provided throughout the period of the lockdown, regardless of whether the business has previously experienced revenue losses during the pandemic.
Businesses which are eligible for either of the Tourism and Hospitality Recovery Program or the Hardest-Hit Businesses Recovery Program will also both be eligible for the Canada Emergency Rent Subsidy at an enhanced rate. Under current rules, there is a monthly cap on eligible expenses that can be claimed under the Canada Emergency Rent Subsidy of $75,000 per business location and $300,000 in total for all locations. As part of the October 21 announcement, the federal government indicated that the monthly cap would (for businesses eligible for benefits under either the Tourism and Hospitality Recovery Program or the Hardest-Hit Businesses Recovery Program) be increased from $300,000 to $1 million, starting on October 24, 2021.
Both the Tourism and Hospitality Recovery Program and the Hardest-Hit Businesses Recovery Program will be available until May 7, 2022, with the proposed 75% and 50% subsidy rates, respectively, available through to March 12, 2022. From March 13, 2022, to May 7, 2022, the subsidy rates will decrease by half.
Details of the two new programs, including benefit periods and applicable subsidy rates, can be found on the federal government website at https://www.canada.ca/en/department-finance/news/2021/10/targeting-covid-19-support-measures.html. Details of the Canada Recovery Hiring Program are available on the same website at https://www.canada.ca/en/revenue-agency/services/subsidy/recovery-hiring-program.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.