The federal government today announced that it will extend the rate structures for three COVID-19 relief benefits—the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Rent Subsidy (CERS) and the Lockdown Support—until June 5th, 2021. The rates for each of the programs were set to expire on March 13th, 2021.
The maximum CEWS wage subsidy would remain at 75 per cent (wage subsidy rate for active employees plus the maximum top-up wage subsidy), while the maximum CERS rent subsidy would continue to top out at 65 per cent. The Lockdown Support—which is offered to businesses that have been subject to a lockdown and have been forced close or significantly reduce activities due to a public health order—is a top-up to CERS designed to cover a qualifying organization’s eligible expenses for a maximum rent subsidy of 90 per cent. The rate structure for that program would remain at 25 per cent.
As noted previously, the CEWS program provides a wage subsidy for qualifying businesses that have been heavily impacted by the coronavirus pandemic. The measure is designed to encourage organizations to retain or rehire workers.
The CERS benefit replaced the much-maligned Canadian Emergency Commercial Rent Assistance (CECRA) program. It delivers direct relief payments to qualifying businesses and commercial property owners that have experienced a significant decline in revenue due to COVID-19. The goal is to help cover a portion of their commercial rent or property expenses.
Qualifying applicants may claim eligible expenses to a maximum of $75,000 per business location (including base subsidy and top up) for each claim period, for a total of $300,000 for all qualifying locations (including amounts claimed by affiliated businesses). Eligible expenses are amounts paid or payable to an arm’s-length party, and must be paid or incurred during the claim period.
Ottawa also announced today that revenue decline reference periods for CEWS and CERS for the period through June, 2021 would be based on the same calendar months from 2019, effective as of the qualifying period from March 14 to April 10, 2021. Organizations may also choose to use the alternative method to calculate revenue decline, comparing the change in monthly revenue “relative to the average of its January 2020 and February 2020 revenues.” As the Department of Finance notes, “A deeming rule provides that an organization’s decline in revenues for any particular qualifying period is the greater of its decline in revenues for the particular qualifying period and the immediately preceding qualifying period.”
As such, the CEWS and CERS reference periods for periods 14 to 16 (March 14th to June 5th, 2021) would be as follows:
March 14 – April 10
April 11 – May 8
May 9 – June 5
|General approach||March 2021 over March 2019 or February 2021 over February 2020||April 2021 over April 2019 or March 2021 over March 2019||May 2021 over May 2019 or April 2021 over April 2019|
|Alternative approach||March 2021 or February 2021 over average of January and February 2020||April 2021 or March 2021 over average of January and February 2020||May 2021 or April 2021 over average of January and February 2020|
The additional business supports announced today have, not surprisingly, been welcomed by the pandemic-weary business community. But they serve as a reminder that the federal government still sees the potential for stormy economic waters ahead as the threat of variant-fuelled lockdowns—which could put even greater financial pressure on struggling businesses—remain a possibility.
As always, if you require assistance accessing or processing COVID-19 relief benefits, please contact a member of our team.
Armando Iannuzzi, Co-Managing Partner