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Canada to Maintain Rent and Wage Subsidy Levels to June 2021

Certain employers, qualifying tenants and property owners may continue to claim the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) through June 5, 2021. The government has announced it will maintain the current CEWS rate of up to a maximum of 75% of eligible wages until June 5, 2021, and also keep the rent subsidy rate and Lockdown Support at their existing levels until this date. As a result, the maximum CERS rate would remain at 65%, while the Lockdown Support would continue to be 25%.

As part of these measures, which are intended to help Canadian businesses meet financial challenges due to COVID-19, the government has proposed further adjustments to certain calculations required to claim this support.

Canada Emergency Wage Subsidy

The government will maintain the current CEWS to a maximum of 75% of eligible wages for the qualifying periods from March 14 to June 5, 2021 (i.e., periods 14 to 16). The maximum base subsidy would remain at 40% and the maximum top-up wage subsidy rate would continue to be 35%. As a result, the rates for these periods are the same as those currently in use from December 20, 2020, to March 13, 2021 (i.e., periods 11 to 13).

The government also outlines the proposed reference periods for determining an eligible employer’s decline in revenues from March 14 to June 5, 2021, and notes that applicants can continue to use a pre-pandemic 2019 reference month for these upcoming periods. The reference periods are as follows:

Reference Periods
Qualifying Periods General Approach Alternative Approach
March 14, 2020 –
April 10, 2021
(Period 14)
March 2021 over
March 2019 or February 2021 over
February 2020
March 2021 or February 2021 over
average of January and
February 2020
April 11, 2021 –
May 8, 2021
(Period 15)
April 2021 over
April 2019 or
March 2021 over
March 2019
April 2021 or
March 2021 over
average of January and
February 2020
May 9, 2021 –
June 5, 2021
(Period 16)
May 2021 over
May 2019 or
April 2021 over
April 2019 or
May 2021 or
April 2021 over
average of January and
February 2020

As a reminder, employers that chose to use the general approach for prior CEWS periods must continue to use that approach. Similarly, employers that chose to use the alternative approach must continue to use the alternative approach.

 

Elective alternative baseline remuneration computation

The government will allow eligible employers to use an additional elective alternative baseline remuneration computation for furloughed employees or active non-arm’s length employees for qualifying periods from March 14 to June 5, 2021. Under this change, an eligible employer can elect to use the period of March 1, 2019, to June 30, 2019, or July 1 to December 31, 2019 (the current alternative period), to calculate baseline remuneration for these periods, instead of the default January 1, 2020, to March 15, 2020 period. The CRA has indicated that it will administer this change on the basis of draft legislation released with the government’s announcement.

 

Furloughed employees

The government will continue to align the CEWS rate structure with the benefits provided through the Employment Insurance program from March 14 to June 5, 2021. As a result, eligible employers can continue to claim a weekly wage subsidy for furloughed workers equal to the lesser of:

  • The amount of eligible remuneration paid in respect of the week, and
  • The greater of:
    • $500, and
    • 55% of baseline remuneration in respect of the eligible employee determined for that week, up to a maximum subsidy amount of $595.

Canada Emergency Rent Subsidy

The government will maintain the current rate structure for the CERS until June 5, 2021, using the same reference periods as under the CEWS. As a result, the CERS will continue to allow employers to claim up to 65% of eligible expenses (subject to certain limits) as follows:

  • Revenue decline of 70% and over — 65%
  • Revenue decline of 50% to 69%— 40% + (revenue drop – 50%) x 1.25 (e.g., 40% + (60% revenue drop – 50%) x 1.25 = 52.5% subsidy rate)
  • Revenue decline of 1% to 49% — Revenue drop x 0.8 (e.g., 25% revenue drop x 0.8 = 20% subsidy rate)

Both the CEWS and the CERS use the same calculation to determine an organization’s revenue decline. Further, if an entity elects to use an alternative method for computing its revenue decline under the CEWS, it must use that alternate method for the CERS.

Lockdown Support Subsidy extension

The government will maintain the Lockdown Support subsidy until June 5, 2021. As a result, eligible organizations will be able to receive a 25% Lockdown Support subsidy on eligible expenses until this date.