Covid virus CanadaIn pursuing its support for the economy, the federal government has released new measures to continue to support employed and self-employed individuals, businesses and nonprofit organizations including charities.

Support measures for Businesses

You may recall that during the past summer the government announced the discontinuance of the CEWS[1] and CERS[2] in favor of more industry targeted wage and rent support.

An employer in Canada who has seen a drop in revenue during the COVID-19 pandemic, may be eligible for a subsidy to cover part of the wages paid to employees. This subsidy will enable the affected business to re-hire workers, help prevent further job losses, and ease the business back into normal operations.

For each applicable claim period, eligible employers can claim one of the following newly introduced industry targeted wage and rent support, whichever gives the highest amount:

  • The Canada Emergency Business Account Program(CEBA)
  • Tourism and Hospitality Recovery Program (THRP) – Wage & Rent
  • Hardest-Hit Business Recovery Program (HHBRP) – Wage & Rent
  • Canada Recovery Hiring Program (CRHP) – Wage

The Canada Emergency Business Account Program(CEBA)

The Canada Emergency Business Account (CEBA) program has provided interest-free, partially forgivable loans to small businesses to help them navigate the pandemic and remain resilient. However, in recent weeks, the effects of the pandemic have delayed the recovery for businesses in many parts of the country.

On January 12, 2022, the Government of Canada, announced that the repayment deadline for CEBA loans to qualify for partial loan forgiveness is being extended from December 31, 2022, to December 31, 2023, for all eligible borrowers in good standing. Repayment on or before the new deadline of December 31, 2023, will result in loan forgiveness of up to a third of the value of the loans (meaning up to $20,000).

Outstanding loans would subsequently convert to two-year term loans with interest of 5 per cent per annum commencing on January 1, 2024, with the loans fully due by December 31, 2025.

Tourism and Hospitality Recovery Program (THRP) – Wage & Rent

Effective coverage period: ·        October 24, 2021, to May 7, 2022
General Eligibility Criteria:
  •  Must have a payroll account on March 15, 2020

OR

  • An associated business made wage remittances on behalf of the affected business

OR

  • The affected business has purchased all or almost all of the business assets of another business
Type of Employers:
  • Sole proprietors.
  • Corporations or trusts that are not exempt from tax under the income tax act
  • Partnerships where all members are eligible employers
  •  Chambers of Commerce and Boards of trade
  • Non-profit organizations and registered charities
  • Labour organizations and benevolent benefit organizations
  • Private schools and colleges
Industry specific employer:
  • More than 50% of the revenue comes from one or more of the following activities:
    • Tourism & hospitality[3]
    • Arts, entertainment and/or recreation[4]
  • Have a 12-month average revenue drop from March 2020 to February 2021 of at least 40%[5]
  • Have a claim period revenue drop of at least 40%[6]
Eligible Employees:
  • An individual employed by an employer who primarily performs their duties of an office or employment in Canada, i.e., where they are physically present
  • Both related and non-related employees are eligible although the subsidies are calculated differently

Hardest-Hit Business Recovery Program (HHBRP) – Wage & Rent

Effective coverage period: ·        October 24, 2021, to May 7, 2022
General Eligibility Criteria:
  • Must have a payroll account on March 15, 2020

OR

  •  An associated business made wage remittances on behalf of the affected business

OR

  • The affected business has purchased all or almost all of the business assets of another business
Type of Employers:
  • Sole proprietors.
  • Corporations or trusts that are not exempt from tax under the income tax act
  • Partnerships where all members are eligible employers
  •  Chambers of Commerce and Boards of trade
  • Non-profit organizations and registered charities
  • Labour organizations and benevolent benefit organizations
  • Private schools and colleges
Industry specific employer:
  • More than 50% of the revenue comes from any business sector or activities
  • Have a 12-month average revenue drop from March 2020 to February 2021 of at least 50%[7]
  • Have a claim period revenue drop of at least 50%[8]
Eligible Employees:
  • An individual employed by an employer who primarily performs their duties of an office or employment in Canada, i.e., where they are physically present
  • Both related and non-related employees are eligible although the subsidies are calculated differently

 

Canada Recovery Hiring Program (CRHP) – Wage

The CRHP is a hiring subsidy which will support employers with a subsidy of up to 50% on incremental remuneration paid to eligible working employees (I.e., the portion of remuneration exceeding the remuneration of the baseline period). It will be offered from June 6, 2021, to May 7, 2022, with further possible extension into July 2022 to qualifying employers who have seen a drop in revenue due to COVID-19.

The purpose of this subsidy is to assist employers in hiring employees, to re-hire furloughed workers or simply increase the current remuneration to help prevent job losses or to assist in salary increases.

For each applicable claim period, the eligible employer can claim the highest amount of either of the above 3 programs.

The Highly Affected Sectors Credit Availability Program (HASCAP)

This program provides heavily impacted businesses access to guaranteed, low interest commercial loans of up to $1 Million to help finance day-to-day business operating costs.

Effective Program Dates: ·        From June 6, 2021, to March 31, 2022
General Eligibility Criteria:
  • Must have been financially stable and viable before March 15, 2020

AND

  • Must have received payments from either the CEWS or the CERS

AND

  • Must demonstrate a minimum 50% revenue decline for at least 3 months (not necessarily consecutive) within the 8-month period prior to the date of the HASCAP loan application
Type of Employers:
  • Sole proprietors.
  • Corporations or trusts that are not exempt from tax under the income tax act
  • Partnerships where all members are eligible employers
  • Chambers of Commerce and Boards of trade
  • Non-profit organizations and registered charities
  • Labour organizations and benevolent benefit organizations
  • Private schools and colleges
Industry specific employer:
  • More than 50% of the revenue comes from any business sector or activities or activity that earns active business income
Program details:
  • The program is administered by the Business Development Bank of Canada (BDC)
  • The loan is 100% guaranteed by the Government of Canada
  • Loans ranging from $25,000 to $1 Million
  • Interest rate of up to 4%
  • Repayment terms of up to 10 years
  • 12-month postponement on principal repayments at the start of the loan

 

Support measures for self-employed workers, individuals and their families

Canada Worker Lockdown Benefit (CWLB)

On October 23, 2021, the Government ended the Canada Recovery Benefit (CRB) for employed and self-employed individuals. The CRB has been replaced the CWLB. The CWLB is intended to support eligible workers and employees who are unable to work due to a local lockdown anytime between October 24, 2021, and May 7, 2022.

Effective Program Dates: ·        From October 24, 2021, to May 7, 2022
General Eligibility Criteria:
  • Being a Canadian resident for tax purposes and be physically present in Canada
  • Be 15 years of age and have a Social Insurance Number
  • Not attending to secondary and post-secondary studies
  • Have not received:
    • Employment Insurance Benefit[9]
    • Canada Recovery Sickness Benefit
    • Canada Recovery Caregiving Benefit
    • Parental Insurance Benefit
    • Short term disability Benefit
  • Must have earned at $5,000 in either 2020, 2021 or in the 12 months before the application date[10]
  • Must have filed a 2020 tax return
  • Must live in a region that is subject to a lockdown
  • Have received the COVID-19 vaccine
  • Will be filing a 2021 and 2022 tax returns
Coverage and amount:
  • Application is for any week the region an employee is living in is under lockdown
  • Eligible individuals can receive $300 per week ($270 after taxes are withheld)

Canada Recovery Sickness and Caregiving Benefits (CRSB & CRCB)

Originally, these 2 programs were supposed to sunset on October 23, 2021, but the Government announced that these 2 programs will be extended until May 7, 2022.

RSW can assist you

RSW staff and partners recognize and acknowledge the looming uncertainties and challenges that you and/or your business may face during the COVID-19 recovery periods, and we encourage you to reach out to anyone of us to assist you assess the different relief program and how they affect you or your organization and guide you in determining the following steps.

 

[1] Canada Emergency Wage Subsidy
[2] Canada Emergency Rent Subsidy
[3] The CRA website contains a list of 21 eligible activities as tourism and hospitality https://www.canada.ca/en/revenue-agency/services/wage-rent-subsidies/tourism-hospitality-recovery-program/trhp-activities-qualify.html
[4] ibid
[5] For the THRP, the affected business needs to determine the average of all of the applicable revenue drops and increases experienced from March 2020 to February 2021 (CEWS claim periods 1 to 13, excluding the revenue drop for either period 10 or 11). This is a one-time calculation.
[6] Each claim period, you will need to know how much your eligible revenue has dropped since before the pandemic. The drop in revenues calculation parameter is the same as the one previously used for the CEWS and CERS
[7] For the THRP, the affected business needs to determine the average of all of the applicable revenue drops and increases experienced from March 2020 to February 2021 (CEWS claim periods 1 to 13, excluding the revenue drop for either period 10 or 11). This is a one-time calculation.
[8] Each claim period, you will need to know how much your eligible revenue has dropped since before the pandemic. The drop in revenues calculation parameter is the same as the one previously used for the CEWS and CERS
[9] Employees who are eligible to receive EI benefits
[10] The income sources are employment, self-employment, maternity/parental, employment insurance and COVID-19 Benefit