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November 2, 2021
Canada announces targeted COVID-19 support measures
The Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) (including the lockdown support) expired on 23 October 2021 (end of period 21). In their place, the Government announced new targeted COVID-19 support measures in addition to an extension of the Canada Recovery Hiring Program (CRHP).
The introduction of the new targeted COVID-19 support measures represents a shift away from the broad-based assistance that was previously available to eligible entities affected by the pandemic, and toward an approach that focuses primarily on eligible entities that have been deeply affected since the outset of the pandemic and are continuing to face significant challenges.
Although the CEWS and the CERS expired on 23 October 2021, eligible entities can continue to make an application for these subsidies until 180 days after the end of the applicable qualifying period.
Business support measures
The following is a summary of the business support measures announced:
Tourism and Hospitality Recovery Program (THRP)
Hardest-Hit Business Recovery Program (HHBRP)
Public health lockdown support
Canada Recovery Hiring Program
The THRP, HHBRP and public health lockdown support would be available from 24 October 2021 to 7 May 2022, with the possibility of further extension to 2 July 2022.
The table below provides a high-level comparison of the business support measures summarized above, based on the Minister’s announcement:
**The subsidy rates for the THRP, the HHBRP and the public health lockdown support would be reduced by half for qualifying periods from 13 March 2022 to 7 May 2022 (periods 27 and 28).
**Calculated as the average of all revenue decline percentages from March 2020 to February 2021 (periods 1 to 13, excluding period 10 or 11), and excluding any periods in which the entity was not carrying on its ordinary operations for reasons other than a public health restriction, such as in the case of seasonal operations.
The THRP and the HHBRP will function differently than the CEWS, in that eligibility for the CEWS was determined on a period-by-period basis even though the eligible entity might not have experienced a revenue decline when a longer measurement period is used.
While it remains to be seen, it is likely reasonable to anticipate that the executive remuneration repayment rule that applied to certain entities under the CEWS for qualifying periods 17 to 21 will be extended to the THRP, the HHBRP and possibly the public health lockdown support, as the same policy rationale would be applicable under these new targeted support measures.
No update on Minister’s report on the CEWS
Enacted Bill C-30, Budget Implementation Act, 2021, No. 1, contains a provision that requires the Minister of Finance to prepare a report on proposed measures to:
It is important to recognize that this requirement does not necessarily equate to or guarantee any future changes to the CEWS provisions of the Income Tax Act. Parliament would have to decide based on the report whether to implement the proposed measures.
This report is required to be presented within 15 days of when the House of Commons next sits (i.e., by 10 December 2021).
Notably, the Minister’s announcement did not provide an update on the status of the Minister’s report, including the date the report will be presented and what proposed measures the report might include.
Although the Government is proposing to use the authority given under Bill C-30 to provide hard-hit organizations with support under the THRP and the HHBRP until 20 November 2021, it indicated that legislation will be introduced in Parliament after it reconvenes on 22 November 2021 for the extensions and support after 20 November 2021.
For further information on the announcement, refer to the Department of Finance news release, Government announces targeted COVID-19 support measures to create jobs and growth, and the accompanying backgrounders.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (Canada), Toronto
Ernst & Young LLP (Canada), Montreal