CLIENT INSPIRED. COVID INFORMED.

Access our COVID-19 HUB for up-to-date information on economic support measures to help Canadians and businesses through the COVID-19 outbreak.

Understanding Canada’s COVID-19 Programs

Canada’s COVID-19 Economic Response Plan provides support to Canadians and businesses facing hardship as a result of the global COVID-19 outbreak through support programs for individuals, businesses, and specific sectors. Included in this plan is a series of financial measures to help combat the adverse financial effects of COVID-19 on businesses and individuals.

Our COVID-19 Information Hub is designed to help our clients and community understand the programs available by highlighting and summarizing select financial measures. The measures are rapidly changing and evolving to adapt to the current situation and needs of Canadians and businesses and to fill gaps that remain. The information in our COVID-19 HUB is kept up-to-date regularly.  

Canada Emergency Wage Subsidy

This economic support measure provides Canadian businesses who employ workers in Canada with a wage subsidy to cover their employee wages, if they have experienced a required revenue decline. This subsidy program was initially available for a period of twelve weeks from March 15, 2020 to June 6, 2020, followed by a series of extensions until September 25, 2021, and most recently, a newly proposed extension to October 23, 2021.

The Canada Emergency Wage Subsidy (CEWS) program provides a subsidy of up to 75% of eligible remuneration, paid by an eligible entity that qualifies, to each eligible employee —up to a maximum of $847 per week. The program was initially available for a period of twelve weeks (from March 15, 2020 to June 6, 2020), followed by a series of extensions, with the most recent extension until September 25, 2021, and a proposed further extension to October 23, 2021. The subsidy rate is being gradually decreased, beginning July 4, 2021, in order to ensure an orderly phase-out of the program.

The wage subsidy rules were modified substantially from its initial rules for the period beginning July 5 (claim period 5) and subsequent periods, with transitional rules available for the fifth and sixth periods. For claim periods 5 and onward, the wage subsidy calculation consists of two parts:

  • a base portion of wage subsidy (base subsidy) available to all eligible employers that are experiencing a decline in qualifying revenues (beginning in claim period 18, required revenue decline of over 10% to be eligible), with the wage subsidy amount varying depending on the scale of qualifying revenue decline; and
  • a top-up portion of wage subsidy (top-up subsidy) of up to an additional 35% (gradually declining – see below) for those eligible employers that have been most adversely affected by the COVID-19 crisis.  Top-up wage subsidy of up to an additional:
    • 25% for claim periods 5 to 10;
    • 35% for claim periods 11 to 17;
    • 25% for claim periods 18;
    • 15% for claim period 19;
    • 10% for claim period 20.

Subsidy Amount

For claim periods 1 to 4, the subsidy amount for an arm’s length eligible employee on eligible remuneration paid in respect of a claim period is the greater of:

  • 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
  • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s baseline remuneration, whichever is less.

For claim periods 5 and onward, the subsidy amount for an active, arm’s length eligible employee on eligible remuneration paid in respect of a week in the claim period is the amount of the employer’s base percentage for the claim period plus the top-up percentage for the claim period, multiplied by the least of:

  • the amount of eligible remuneration paid in respect of that week; and
  • $1,129.

(For claim periods 5 and 6 only, where the revenue drop for a claim period is 30% or more, the subsidy amount can be calculated using the old periods 1 to 4 calculation OR the new, period 5 and onward calculation, for active employees (the safe harbour rule). Where the revenue drop is less than 30%, the subsidy amount must be calculated using the new, period 5 and onward calculation.)

Special rules apply for non-arms length employees and non-active (on leave with pay) employees (see below).

Base subsidy

The base portion of the wage subsidy consists of a specified base percentage applicable to the amount of eligible remuneration paid to the employee by the employer for a claim period, on remuneration of up to $1,129 per week. The specified base percentage varies depending on the level of decline in qualifying revenue. The base percentage gradually reduces from a maximum of 60% in claim periods 5 and 6, to 40% in claim period 8 to 17, and finally to 35%, 25%, and 10% in periods 18, 19, and 20 respectively.

The maximum base wage subsidy applies to eligible employers with a revenue reduction percentage of 50% or more, with a phase-out measure when the decline in revenue is between a 50% revenue drop and no decline of revenue. The base percentage is determined for each claim period from claim period 5 and onward by multiplying the revenue reduction percentage by a factor that declines during each claim period, as described below:

Periods 5 and 6

  • 60%, if the employer’s revenue reduction percentage is greater than or equal to 50%; and
  • in any other case, 1.2 multiplied by the revenue reduction percentage;

Period 7

  • 50%, if the employer’s revenue reduction percentage is greater than or equal to 50%; and
  • in any other case, 1 multiplied by the revenue reduction percentage;

Periods 8 to 17 inclusive

  • 40%, if the employer’s revenue reduction percentage is greater than or equal to 50%; and
  • in any other case, 0.8 multiplied by the revenue reduction percentage;

Period 18

  • 35%, if the employer’s revenue reduction percentage is greater than or equal to 50%;
  • 0.875 multiplied by the difference between the revenue reduction percentage and 10%, if the employer’s revenue reduction percentage is greater than 10% but less than 50%; and
  • in any other case, nil;

Period 19

  • 25%, if the employer’s revenue reduction percentage is greater than or equal to 50%;
  • 0.625 multiplied by the difference between the revenue reduction percentage and 10%, if the employer’s revenue reduction percentage is greater than 10% but less than 50%; and
  • in any other case, nil;

Period 20

  • 10%, if the employer’s revenue reduction percentage is greater than or equal to 50%;
  • 0.25 multiplied by the difference between the revenue reduction percentage and 10%, if the employer’s revenue reduction percentage is greater than 10% but less than 50%; and
  • in any other case, nil.

The following tables shows the structure and calculation of the base portion of the wage subsidy:

tha 50%1.2 x RR (e.g., 1.2 x 20% RR = 24%)1.2 x RR (e.g., 1.2 x 20% RR = 24%)1.0 x RR (e.g., 1.0 x 20% RR = 20%)0.8 x RR (e.g., 0.8 x 20% RR = 16%).
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Top-up subsidy

The top-up portion of the wage subsidy consists of a specified top-up percentage applicable to the amount of eligible remuneration paid to the employee by the employer for a claim period, on remuneration of up to $1,129 per week. If the revenue reduction percentage of the eligible employer is equal to or less than 50%, the employer will not be eligible for the top-up wage subsidy.

For periods 5 to 7, the specified top-up percentage varies depending on either the level of decline in qualifying revenue in the preceding 3 months when compared to the same 3 months in the prior year (general method) OR the level of decline in qualifying revenue when comparing average monthly revenue in the preceding 3 months to the average monthly revenue in January and February 2020 (alternate method).

For periods 8 to 20, the revenue decline test changed to a harmonization of the revenue decline test for the base subsidy and the top-up subsidy. Both revenue decline tests are now determined by the change in monthly revenues, year-over-year, for either the current or previous calendar month. For those using the alternate revenue-decline test, both revenue decline tests are determined by the change in monthly revenues relative to the average of January 2020 and February 2020 revenues. (To ensure this change in the revenue-decline test does not lead to a less generous wage subsidy, the wage subsidy program includes a “safe harbour” rule applicable for claim periods 8 to 10. This rule entitles an eligible employer to a top-up subsidy rate that is no less than it would have received under the three‑month revenue-decline test.)

  • For claim periods 5 to 10: the top-up percentage for a claim period is calculated as: 1.25 × (employer’s top-up revenue reduction percentage for the claim period − 50%), up to a maximum top-up percentage of 25%.
  • For claim periods 11 to 17: the lesser of 35% and the percentage determined by the formula: 1.75 × (employer’s top-up revenue reduction percentage for the claim period − 50%)
  • For claim period 18: the lesser of 25% and the percentage determined by the formula: 1.25 × (employer’s top-up revenue reduction percentage for the claim period − 50%)
  • For claim period 19: the lesser of 15% and the percentage determined by the formula:0.75 × (employer’s top-up revenue reduction percentage for the claim period − 50%)
  • For claim period 20: the lesser of 10% and the percentage determined by the formula: 0.5 × (employer’s top-up revenue reduction percentage for the claim period − 50%)

The following tables shows the top-up percentage for selected levels of top-up revenue reduction percentage:

The overall wage subsidy percentage is equal to the top-up percentage plus the base percentage. The following tables shows the maximum combined base portion (BP) and top-up portion of the wage subsidy percentages.

Note: Transition rules (see Q5-04)- Under the safe harbour rule for claim periods 5 and 6, if the eligible employer has a revenue reduction of 30% or more, then the employer is entitled to a wage subsidy not lower than the amount calculated under the rules that were in place for periods 1 to 4 in respect of an eligible employee who is not on leave with pay (see Q20-03) for that week.

Eligible employee

An eligible employee is an individual employed in Canada by the eligible employer in the claim period. In addition, for claim periods 1 to 4, in order to qualify as an eligible employee, the employee cannot have been without remuneration from the eligible employer for a period of 14 or more consecutive days in the claim period. This 14 day requirement is eliminated for claim periods 5 and onward.

Eligible remuneration

Eligible remuneration is the amount paid to an employee as salary, wages, and other remuneration, certain taxable benefits (provided such amounts are actually paid), and fees, commissions or other amounts paid for services. These are amounts for which an eligible employer would generally be required to make payroll deductions to be remitted to the CRA. Eligible remuneration excludes retiring allowances, stock option benefits, and amounts that can be reasonably expected to be repaid as part of an arrangement to increase the CEWS subsidy.

Baseline remuneration

Baseline remuneration is the average weekly remuneration paid between January 1 and March 15, 2020 inclusively, excluding any seven-day periods in respect of which the employee did not receive remuneration. However, the employer may elect for each claim period in respect of an employee, a different period to calculate the average weekly eligible remuneration, as described below:

  • Claim periods 1 to 3: March 1, 2019 to May 31, 2019;
  • Claim period 4: March 1, 2019 to May 31, 209 OR March 1, 2019 to June 30, 2019;
  • Claim periods 5 to 13: July 1, 2019 to December 31, 2019;
  • Claim periods 14 to 17: March 1, 2019 to June 30, 2109 OR July 1, 2019 to December 31, 2019;
  • Claim periods 18 to 20: July 1, 2019 to December 31, 2109.

Employers can choose which period to use for the baseline calculation on an employee-by-employee basis.

Claim period

This is the period for which an employer can claim the wage subsidy for remuneration paid to eligible employees. An employer may be able to claim the wage subsidy for one or more of the following claim periods:

  • Period 1 – begins on March 15, 2020 and ends on April 11, 2020;
  • Period 2 – begins on April 12, 2020 and ends on May 9, 2020; and
  • Period 3 – begins on May 10, 2020 and ends on June 6, 2020;
  • Period 4 – begins on June 7, 2020 and ends on July 4, 2020;
  • Period 5 – begins on July 5, 2020 and ends on August 1, 2020;
  • Period 6 – begins on August 2, 2020 and ends on August 29, 2020;
  • Period 7- begins on August 30, 2020 and ends on September 26, 2020;
  • Period 8- begins on September 27, 2020 and ends on October 24, 2020;
  • Period 9- begins on October 25, 2020 and ends on November 21, 2020;
  • Period 10 – begins November 22, 2020 and ends December 19, 2020;
  • Period 11 – begins December 20, 2020 and ends January 16, 2021;
  • Period 12 – begins January 17,2021 and ends February 13, 2021;
  • Period 13 – begins February 14, 2021 and ends March 13, 2021;
  • Period 14 – begins March 14 and ends April 10, 2021;
  • Period 15 – begins April 11 and ends May 8, 2021;
  • Period 16 – begins May 8 and ends June 5, 2021;
  • Period 17 – begins June 6 and ends July 3, 2021;
  • Period 18 – begins July 4 and ends July 31, 2021;
  • Period 19 – begins August 1 and ends August 28, 2021; and
  • Period 20 – begins August 29 and ends September 25, 2021.
New employees

An employer may be able to claim the wage subsidy for arm’s length eligible employees hired after March 15, 2020.

Employees Retroactively Hired Back

An employer may hire back eligible employees and pay them retroactively in respect of a claim period, to be able to qualify for the wage subsidy. The employee must be hired back and paid for the claim period before applying for the wage subsidy. If such an employee has received a Canada Emergency Response Benefit (CERB) payment from the CRA for a claim period, and it is later determined that they are no longer eligible for the CERB, the employee must return or repay the CERB amount.

Special Rule for Non-arm’s Length Employee

A special rule applies to employees that do not deal at arm’s length with the employer. Non-arm’s length employees must have baseline remuneration in order to be eligible for the subsidy.

For claim periods 1 to 4, the subsidy amount for such employees is limited to the eligible remuneration paid, up to a maximum benefit of the lesser of $847 per week and 75% of the employee’s baseline remuneration.

For claim periods 5 and onwards, the subsidy amount for such employees, who are not on leave with pay, in respect of a week in the claim period, is the amount of the employer’s base percentage plus top-up percentage for the claim period multiplied by the least of: the amount of eligible remuneration paid in respect of that week, $1,129, and the baseline remuneration for the employee for that week.

The subsidy is only available in respect of non-arm’s length employees employed prior to March 15, 2020.

Special Rule for Inactive Employees

For periods 5 and onward, a differentiation has been made for the subsidy amount available for inactive employees (employees on leave with pay, also referred to as ‘furloughed employees’). For periods 5 to 8 inclusive, the subsidy amount for an inactive employee for a given week remains the same as the subsidy amount using the calculation applicable to periods 1 to 4. For periods 9 to 11, the subsidy amount for an inactive employee for a given week is the amount of eligible remuneration paid in respect of the week; or, if the employee receives remuneration of $500 or more in respect of the week, the greater of $500 and 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of:

  • $573 for claim periods 9 and 10;
  • $595 for claim periods 11 to 19;
  • $0 for claim period 20.

Additional Subsidy Amount – Refund of Certain Payroll Contributions

In addition to the above wage subsidy amount, employers eligible for the CEWS are entitled to receive a 100-per-cent refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This refund would apply to the entire amount of employer-paid contributions in respect of remuneration paid to furloughed (on leave with pay) employees in a period where the employer is eligible for the CEWS.

For each week in claim periods 5 and onward throughout which the employee is on leave with pay and for which claim period the employer is eligible for the wage subsidy for the employee, and where either:

  • the revenue reduction percentage of the eligible employer for the claim period is greater than 0%, or
  • the top-up percentage of the eligible employer for the claim period is greater than 0%,

employers are entitled to receive a 100-per-cent refund of the total of the employer contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan for an eligible employee.

Interaction with Other Subsidies

TWS and Work Sharing

The CEWS subsidy is reduced by:

  • amounts claimed under the 10% temporary wage subsidy (TWS)

If an employer is eligible for both CEWS and the TWS for a period, all amounts that the employer claims under the TWS for remuneration paid in a specific claim period, reduce the amount available to be claimed under the CEWS in that same period. If an employer completes their CEWS application and does not enter any amount for the TWS, the CEWS will be determined as if the employer is electing 0% as the prescribed percentage for calculating their TWS and requesting the maximum CEWS. However, the eligible employer should indicate the 0% election on the self-identification form under the TWS program.

  • amounts received under a work-sharing benefit program

Canada Recovery Hiring Program

If you are eligible for both the CEWS and the Canada Recovery Hiring Program (CRHP) for a claim period, you must claim the greater of the two subsidy amounts for that period, but not both. If the CRHP amount is the greater of the two, then the CEWS amount will be deemed to be nil, and vice versa. If the CEWS and the CHRP amounts are equal for a given claim period, you must claim the CEWS amount.

Further, you can claim the CEWS for a claim period if you claimed the CRHP in a previous claim period or vice versa. There is no legislative provision which requires that the subsidy you claim in the current claim period be the same as the one you claimed in the previous claim period.

Taxation

The CEWS subsidy is considered assistance received from a government. The amount is taxable and is to be included in the computing the income of the eligible employer.

Eligible Entities

Eligible entities include:

  • corporation (that is not exempt from tax under Part I of the Income Tax Act);
  • individual (including a trust);
  • registered charity;
  • person that is exempt from tax under Part I of the Act, that is:
    • an agricultural organization;
    • a board of trade or a chamber of commerce;
    • a non-profit corporation for scientific research and experimental development;
    • a labour organization or society;
    • a benevolent or fraternal benefit society or order; and
    • a non-profit organization;
  • a partnership, each member of which is a person or partnership described in this list OR
  • the following prescribed organizations:
    • a person or partnership that operates a private school or private college;
    • in respect of a claim period, a partnership, if throughout the claim period, 50% or more of the fair market value of all interests in the partnership are held – directly or indirectly, through one or more partnerships – by eligible employers;
    • a registered Canadian amateur athletic association;
    • a registered journalism organization;
    • certain Indigenous businesses; specifically:
      • a tax-exempt corporation (under paragraph 149(1)(d.5) of the Act) carrying on a business that is at least 90% owned by one or more Indigenous governments;
      • a tax-exempt corporation (under paragraph 149(1)(d.6) of the Act) carrying on a business that is owned 100% by one or more Indigenous governments or by tax-exempt corporations described above;
      • a partnership, each member of which is an eligible employer or an Indigenous government;

Public institutions are ineligible. A public institution includes: a public school, school board, hospital, health authority, public university or college,  municipality and local government and tax-exempt Crown corporation.

Eligibility

In order to qualify for the wage subsidy, an eligible entity must meet the following conditions:

    • on March 15, 2020, it meets one of the below conditions:
      • it had an open payroll program account with the CRA or,
      • it employed one or more individuals in Canada, had a payroll service provider administer its payroll, and that service provider,
      • it purchased all (or almost all) of another person’s or partnership’s business assets and that person/partnership had an open payroll program account with the CRA on March 15, 2020
    • for any of the claim periods 1 to 4, if applicable, it experienced the required reduction in revenue;
    • for any of the claim periods 5 to 17, if applicable, it experienced a reduction in revenue greater than 0%;
    • for any of the claim periods 18 to 20, if applicable, it experienced a reduction in revenue greater than 10%;
    • it makes a wage subsidy application for the claim period, in a prescribed form and manner, on or before the later of January 31, 2021 and 180 days after the end of the claim period; and
    • the individual who has principal responsibility for the eligible employer’s financial activities attests that the application mentioned above is complete and accurate in all material respects.

Revenue Reduction Test

Periods 1 to 4: Eligible employers must meet a prescribed revenue reduction test for a reference period in order to qualify for CEWS for the related claim period. Employers must demonstrate a drop of at least:

    • 15% of qualifying revenue in March 2020
    • 30% of qualifying revenue in April 2020
    • 30% of qualifying revenue in May 2020
    • 30% of qualifying revenue in June 2020

when compared to their qualifying revenue for the same period in 2019 (‘general approach’) or, if elected, the average of January and February 2020 (‘alternative approach’), in order to qualify for the wage subsidy. Employers are under no obligation to prove that the decline in revenue is related to the COVID-19 crisis.

Periods 5 to 17: Eligible employers experiencing any decline in revenue for a reference period can qualify for CEWS for the related claim period, with the amount of the subsidy varying depending on the extent of the decline in the current period (base percentage and top-up percentage) and for periods 5 to 10, the average decline over the prior three months (top-up percentage). An eligible employer is required to have a revenue reduction greater than 0% to be eligible for the wage subsidy (unless the deeming rules for claim periods 5 to 9 apply, or the employer is eligible for the top-up subsidy).

Periods 18 to 20: Eligible employers experiencing a decline in revenue greater than 10% for a reference period can qualify for CEWS for the related claim period, with the amount of the subsidy varying depending on the extent of the decline in the current period.

An eligible employer’s revenue reduction percentage is relevant to determining its base wage subsidy amount in claim periods 5 to 20. Additionally, an eligible employer might qualify for the top-up wage subsidy for that claim period.

An eligible employer’s reduction in revenue for a particular claim period is its decline in qualifying revenue from the relevant prior reference period to the relevant current reference period, expressed as a percentage. The relevant prior reference period is the same period in 2019* (general approach) or, if elected, the average of January and February 2020 (alternative approach). *For claim periods 12 and 13 , the prior reference period is the same period in 2020 and for claim period 11, the current reference period is the same as claim period 10’s current reference period, being December 2020.

Current Reference Periods

The current reference periods are the periods for which qualifying revenues are assessed to determine the revenue reduction. The reference periods as they relate to claim periods are as follows:

  • March 2020 – for the claim period 1;
  • April 2020 – for the claim period 2;
  • May 2020 – for the claim period 3;
  • June 2020 – for the claim period 4;
  • July 2020 – for the claim period 5;
  • August 2020 – for the claim period 6;
  • September 2020 – for the claim period 7;
  • October 2020 – for the claim period 8;
  • November 2020 – for the claim period 9;
  • December 2020 – for the claim period 10;
  • December 2020 – for the claim period 11;
  • January 2021 – for the claim period 12;
  • February 2021 – for the claim period 13;
  • March 2021 – for the claim period 14;
  • April 2021 – for the claim period 15;
  • May 2021 – for the claim period 16;
  • June 2021 – for the claim period 17;
  • July 2021 – for the claim period 18;
  • August 2021 – for the claim period 19; and
  • September 2021 – for the claim period 20.

If an employer meets the revenue reduction test for a reference period, it qualifies for the wage subsidy for that related claim period. If an employer has not experienced the required reduction in revenue to qualify to claim the wage subsidy for a particular claim period, it may still qualify to claim the wage subsidy for another claim period if it has experienced the required reduction in revenues in that other claim period.

Deeming Rule

Periods 1 to 4: Once an employer has experienced the required reduction in revenue for a particular claim period, it is automatically considered to have experienced the required reduction in revenue for the immediately following claim period.

Periods 5 to 20: If an employer has a greater reduction in revenue in the immediately preceding claim period than it has otherwise determined for the current claim period, the reduction in revenue for the immediately preceding period is deemed to be the eligible employer’s reduction in revenue for the purposes of determining its base wage subsidy amount for the current claim period. A deemed revenue reduction cannot apply beyond the current claim period.

Safe Harbour Rule

Under the safe harbour rule for periods 5 and 6, if an employer has a revenue reduction of 30% or more, then the employer would be entitled to a wage subsidy not lower than the amount calculated under the rules in place for periods 1 to 4 in respect of an eligible employee who is not on leave with pay for that week. This means that in claim periods 5 and 6, an eligible employer with a revenue decline of 30% or more (actual or deemed reduction because of the deeming rules applicable to period 5 and subsequent periods), would receive a wage subsidy rate of at least 75%.

When an eligible employee is on leave with pay in respect of a week in claim periods 5 and 6, if either the base revenue reduction percentage or the top-up percentage of the eligible employer for the claim period is greater than 0%, then the eligible employer will be entitled to a wage subsidy amount calculated based on the rules for claim periods 1 to 4. Otherwise, if neither the base revenue reduction percentage nor the top-up wage percentage of the eligible employer is greater than 0%, then the employer will not be entitled to a wage subsidy in respect of that employee.

Qualifying revenue

This means the inflow of cash, receivables, or other consideration arising in the course of its ordinary activities in Canada in a particular period. These inflows are generally from the sale of goods, the rendering of services, and the use—by others—of the eligible employer’s resources. Qualifying revenue excludes amounts from extraordinary items, amounts on account of capital and amounts from persons or partnerships that the eligible employer was not dealing with at arm’s length.

For registered charities, qualifying revenue generally includes gifts and other amounts received in the course of its ordinary activities. Where it operates a related business, the revenue from that related business is also included in the registered charity’s qualifying revenue.

Electable Options 

For the purposes of applying the revenue reduction test, a number of options are available:

  • Option to compare revenues to the same calendar month of 2019 (except for claim periods 12 and 13 , where comparison is to the same calendar month in 2020) (general approach) or to an average of revenue earned in January and February 2020 (alternative approach). An election is required in order to use the alternative approach (for employers that were carrying on business on March 1, 2019). The selected option is required to be used for all of Periods 1-4, with an opportunity for a prospectively applied option change in Period 5 (see ‘Changing Elections’ below for further details).
  • Option to measure revenues on the accrual method or cash method of accounting (election required for use of method that is not in accordance with employer’s normal accounting practices). The selected option is required to be used for the entire duration of the program (all claim periods).
  • For registered charities and non-profit organizations, an option to include or exclude (election required) government funding in their revenues. The selected option is required to be used for the entire duration of the program (all claim periods).
  • Where all or substantially all of revenue is from non-arm’s length sources, a jointly-elected option to use a special weighted-average approach to determine qualifying revenue for the reference period, which would include non-arm’s length revenues.
  • For a group of eligible employers that prepares consolidated financial statements, jointly-determined option to use revenue of the group on a consolidated basis or to use revenue of each member of the group separately.
  • For an affiliated group of eligible employers, jointly-elected option to use revenue of the affiliated group on a consolidated basis or to use revenue of each member of the group separately.
  • For a joint venture, jointly-elected option to use revenue of the joint venture or each member of the joint venture separately.
Changing elections
  • An employer that was using the general approach in Periods 1 – 4 can switch prospectively to the alternative approach, and vice versa, starting in Period 5, for all of Periods 5 – 9. Once the approach for Period 5 is set, the employer cannot switch again for subsequent periods. The use of the alternative approach for Periods 5 to 20 requires an election. Further, for Periods 5 to 20, the approach chosen must be used for both the base revenue reduction percentage calculation and the top-up revenue reduction percentage calculation.
  • An employer that did not elect to use either the cash or accrual method (as applicable) when filing its initial application for the wage subsidy may later elect to do so. Since the election to use either a cash or accrual method will apply for all claim periods, the employer must amend all previously submitted applications to reflect this change.
  • An employer can make an election to exclude funding received from government sources when determining qualifying revenue retroactively, but must amend all previously submitted applications to reflect the change.

All elections must be made and retained with the eligible employer’s other books and records in support of its wage subsidy claim and eligibility and the individual who has principal responsibility for the eligible employer’s financial activities must attest that this is the case.

Average of January and February 2020 revenue (Alternative Approach)

Where the average of January/February revenue option is used for purposes of the revenue reduction test, the average qualifying revenue must be calculated as follows: 0.5 x [total qualifying revenues for January and February of 2020] x [60 days divided by the number of days in January and February of 2020 during which the employer was carrying on business].

Summary Reference Table

The table below outlines each claiming period, the required reduction in revenue and the reference period for eligibility, for claim periods 1 to 4:

 

The table below summarizes the relevant reference periods for base wage subsidy, applicable for claim periods 5 to 20:

Application

Applications opened on April 27, 2020. The deadline to make an application for a qualifying period is the later of January 31, 2021 or 180 days after the end of the qualifying period. Applications can be made only after the end of the claim period, provided the employer has paid the eligible remuneration that it is claiming for that period. A separate application must be made for each eligible claim period.

The CEWS subsidy will be processed at the payroll program (RP) account level, so a separate application is required to be filed for each RP account. For an in-depth understanding of the online application requirements and input fields, refer to: CEWS application guide.

There are three ways to apply:

• Most businesses may apply using My Business Account
• Business representatives may apply using Represent a Client
• If neither are an option for you, use the Web Forms application with your web access code.

Note: Only representatives authorized at Level 2 or 3 will be able to apply

If you do not have a web access code, you will need to provide the date of registration or the total income tax reported in box 22 of the most recent original 2018 tax year submitted T4 summary.

Adjustments to Applications

The mechanism to make adjustments to your previously filed CEWS claim is now available (Note – you cannot correct a CEWS claim by adjusting a subsequent CEWS claim – you need to make an adjustment to the original claim). See below:

https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-after-apply.html#change

To Change a Claim You Submitted

You may request adjustments to applications you have already submitted. To change a previous wage subsidy claim, visit:

• My Business Account or
• Represent a Client

If you applied using the Web Forms application and need to change your claim, you may call CRA’s business enquiries phone number.

You will need to make sure you continue to meet eligibility requirements for any updated claims and keep records supporting your wage subsidy claim adjustment.
When completing the adjustment, you will need:

• your payroll program account number (123456789RP0001, for example)
• to know which claim period you are adjusting
• all of the information necessary to change the amount on each line(s) you would like to adjust

Representatives who are changing a claim on behalf of an employer must be authorized at level 2 or 3. You will need to have an updated Attestation for owner/managers and/or senior employees to support the amended application.

Canada Recovery Hiring Program *NEW*

This economic support measure provides Canadian businesses who employ workers in Canada with a subsidy of up to 50 per cent of incremental remuneration paid to eligible active employees between June 6, 2021 to November 20, 2021.

The Canada Recovery Hiring Program (CRHP) provides eligible employers with a subsidy of up to 50 per cent of incremental remuneration paid to eligible active employees between June 6, 2021, and November 20, 2021. It is available to eligible employers who experience a qualifying revenue decline relative to before the pandemic. The aim of the CRHP is to provide incentive for businesses to hire new workers as the economy reopens. An eligible employer could receive either the CRHP or the CEWS (Canada Emergency Wage Subsidy), but not both, for a claim period.

Subsidy Amount

If an eligible employer meets the revenue-decline threshold for a qualifying period, its subsidy amount would be equal to its eligible incremental remuneration multiplied by a fixed subsidy rate (e.g. 50%, 40%, 30% or 20%) for the qualifying period. The fixed subsidy rates for each period are shown below:

Eligible remuneration and incremental remuneration

The types of remuneration eligible for the Canada Emergency Wage Subsidy are also eligible for the Hiring Program. Eligible remuneration generally includes salary, wages, and other remuneration for which employers are required to withhold or deduct amounts on account of the employee’s income tax obligations. However, severance pay, stock option benefits, or the personal use of a corporate vehicle are not eligible. The amount of remuneration for employees would be based solely on remuneration paid during the qualifying period.

Incremental remuneration for a qualifying period is the difference between total eligible remuneration paid to eligible employees during the qualifying period and total eligible remuneration paid to them during the baseline period. For calculation of total eligible remuneration paid for both the qualifying period and the baseline period, eligible remuneration for each eligible employee would be subject to a maximum of $1,129 per week.

As with the Canada Emergency Wage Subsidy, the eligible remuneration for a non-arm’s length employee for a week could not exceed their baseline remuneration determined for that week.

The table below outlines the dates used for calculating incremental remuneration.

Eligible Employees

An eligible employee must be actively employed by an eligible employer throughout a qualifying period (or the portion of the qualifying period throughout which the individual was employed by the eligible employer) and are primarily employed in Canada.

Unlike the CEWS program, the CRHP program is not available for furloughed employees, meaning those who are on leave with pay but do not perform any work for the employer. An employee would not be considered to be on leave with pay for the purposes of the Hiring Program if they are on a period of paid absence such as vacation leave, sick leave, or sabbatical.

Interaction with CEWS Subsidy Program

If you are eligible for both the CEWS and the CRHP for a claim period, you must claim the greater of the two subsidy amounts for that period, but not both. If the CRHP amount is the greater of the two, then the CEWS amount will be deemed to be nil, and vice versa. If the CEWS and the CHRP amounts are equal for a given claim period, you must claim the CEWS amount.

Further, you can claim the CEWS for a claim period if you claimed the CRHP in a previous claim period or vice versa. There is no legislative provision which requires that the subsidy you claim in the current claim period be the same as the one you claimed in the previous claim period.

Taxation

The CRHP subsidy is considered assistance received from a government. The amount is taxable and is to be included in the computing the income of the eligible employer.

Eligible Entities

Employers eligible for the Canada Emergency Wage Subsidy (CEWS) are generally eligible for the Canada Recovery Hiring Program. However, the following are some additional requirements for corporations and partnerships eligibility for CRHP:

  • For a for-profit corporation to be eligible, it must be a CCPC (including a cooperative corporation that is eligible for the small business deduction).
  • For a partnership to be eligible, no more than 50% of the interest in the partnership (determined by fair market value) can be held—directly or indirectly, through one or more partnerships—by any combination of non-eligible employers including corporations that don’t meet the condition for corporations in (i) above.

Employers that are ineligible for the CEWS would also be ineligible for the CRHP.

Eligible entities for CEWS can be found on our COVID-19 HUB under the CEWS ‘Who’ tab and are also included below for ease of reference:

  • corporation (that is not exempt from tax under Part I of the Income Tax Act);
  • individual (including a trust);
  • registered charity;
  • person that is exempt from tax under Part I of the Act, that is:
    • an agricultural organization;
    • a board of trade or a chamber of commerce;
    • a non-profit corporation for scientific research and experimental development;
    • a labour organization or society;
    • a benevolent or fraternal benefit society or order; and
    • a non-profit organization;
  • a partnership, each member of which is a person or partnership described in this list OR
  • the following prescribed organizations:
    • a person or partnership that operates a private school or private college;
    • in respect of a claim period, a partnership, if throughout the claim period, 50% or more of the fair market value of all interests in the partnership are held – directly or indirectly, through one or more partnerships – by eligible employers;
    • a registered Canadian amateur athletic association;
    • a registered journalism organization;
    • certain Indigenous businesses; specifically:
      • a tax-exempt corporation (under paragraph 149(1)(d.5) of the Act) carrying on a business that is at least 90% owned by one or more Indigenous governments;
      • a tax-exempt corporation (under paragraph 149(1)(d.6) of the Act) carrying on a business that is owned 100% by one or more Indigenous governments or by tax-exempt corporations described above;
      • a partnership, each member of which is an eligible employer or an Indigenous government;

Public institutions are ineligible. A public institution includes: a public school, school board, hospital, health authority, public university or college,  municipality and local government and tax-exempt Crown corporation.

Eligibility

In order to qualify for the CRHP, an eligible entity must meet the following conditions (same as for CEWS):

    • on March 15, 2020, it meets one of the below conditions:
      • it had an open payroll program account with the CRA or,
      • it employed one or more individuals in Canada, had a payroll service provider administer its payroll, and that service provider,
      • it purchased all (or almost all) of another person’s or partnership’s business assets and that person/partnership had an open payroll program account with the CRA on March 15, 2020
    • experience the required revenue reduction for the applicable period;
    • the individual who has principal responsibility for the eligible employer’s financial activities attests that the application mentioned above is complete and accurate in all material respects.

Revenue Reduction Test

To be eligible for the CRHP an employer must demonstrate a decline in revenues sufficient to qualify for the Canada Emergency Wage Subsidy during a qualifying period. If an employer is applying during a period when the Canada Emergency Wage Subsidy is no longer in effect, they must demonstrate a revenue decline of more than 10 per cent. As such, an eligible employer’s decline in revenues must be:

  • More than 0 per cent, for the qualifying period between June 6, 2021 and July 3, 2021.
  • More than 10 per cent, for qualifying periods between July 4, 2021 and November 20, 2021.

An employer’s decline in revenues is determined in the same manner as under the Canada Emergency Wage Subsidy. This method compares the employer’s revenues in a current calendar month with its revenues in the same calendar month, pre-pandemic. An employer can also elect to use an alternative approach, which compares the employer’s monthly revenues relative to the average of its January 2020 and February 2020 revenues. An employer’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.

Employers that had chosen to use the general approach for prior periods of the Canada Emergency Wage Subsidy are required to continue to use that approach for the Hiring Program. Similarly, employers that had chosen to use the alternative approach are required to continue to use the alternative approach.

The table below sets out the reference periods used to determine an eligible employer’s revenue decline or the qualifying periods.

Qualifying revenue

This means the inflow of cash, receivables, or other consideration arising in the course of its ordinary activities in Canada in a particular period. These inflows are generally from the sale of goods, the rendering of services, and the use—by others—of the eligible employer’s resources. Qualifying revenue excludes amounts from extraordinary items, amounts on account of capital and amounts from persons or partnerships that the eligible employer was not dealing with at arm’s length.

For registered charities, qualifying revenue generally includes gifts and other amounts received in the course of its ordinary activities. Where it operates a related business, the revenue from that related business is also included in the registered charity’s qualifying revenue.

Application

A CRHP application for a claim period can be made only after the end of that claim period. In addition, at the time of application, the amount of total base period remuneration and total current period remuneration used to calculate the CRHP amount for that claim period must have already been paid. Further, a CRHP application for a claim period must be made no later than 180 days after the end of the claim period. The table below provides the application due dates for claim periods 17 to 22.

table providing the application due dates for claim periods 17 to 22
Claim Period Application due date
Period 17 – June 6 to July 3, 2021 Thursday, December 30, 2021
Period 18 – July 4 to July 31, 2021 Thursday, January 27, 2022
Period 19 – August 1 to August 28, 2021 Thursday, February 24, 2022
Period 20 – August 29 to September 25, 2021 Thursday, March 24, 2022
Period 21- September 26 to October 23, 2021 Thursday, April 21, 2022
Period 22 – October 24 to November 20, 2021 Thursday, May 19, 2022

Like the CEWS subsidy, the CHRP subsidy will be processed at the payroll program (RP) account level, so a separate application is required to be filed for each RP account.

There are three ways to apply:

• Most businesses may apply using My Business Account
• Business representatives may apply using Represent a Client
• If neither are an option for you, use the Web Forms application with your web access code.

Note: Only representatives authorized at Level 2 or 3 will be able to apply

If you do not have a web access code, you will need to provide the date of registration or the total income tax reported in box 22 of the most recent original 2019 tax year submitted T4 summary.

Adjustments to Applications

The mechanism to make adjustments to your previously filed CHRP claim is the same mechanism as for a CEWS claim adjustment (Note – you cannot correct a CRHP claim by adjusting a subsequent CRHP claim – you need to make an adjustment to the original claim). See below:

https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-after-apply.html#change

To Change a Claim You Submitted

You may request adjustments to applications you have already submitted. To change a previous wage subsidy claim, visit:

• My Business Account or
• Represent a Client

If you applied using the Web Forms application and need to change your claim, you may call CRA’s business enquiries phone number.

You will need to make sure you continue to meet eligibility requirements for any updated claims and keep records supporting your subsidy claim adjustment.
When completing the adjustment, you will need:

• your payroll program account number (123456789RP0001, for example)
• to know which claim period you are adjusting
• all of the information necessary to change the amount on each line(s) you would like to adjust

Representatives who are changing a claim on behalf of an employer must be authorized at level 2 or 3. You will need to have an updated Attestation for owner/managers and/or senior employees to support the amended application.

Interaction with CEWS application

Although one of the conditions that an eligible employer must satisfy to qualify for the CRHP is that it must also file an application for the CEWS for that claim period, the CRA will consider this condition to be satisfied when the eligible employer files an application to claim the CRHP. Therefore, if an eligible employer files an application for the CRHP for a claim period, it will not have to file a separate application for the CEWS for the same claim period.

Canada Emergency Rent Subsidy

This economic support measure provides businesses and non-profits who have experienced a revenue decline with a subsidy on eligible rent and property-ownership expenses. The subsidy is comprised of two parts: a base subsidy and a lockdown support subsidy. The amount of the base subsidy is based on the revenue reduction experienced, up to a maximum of 65% of eligible expenses. The lockdown support subsidy, of an additional 25%, is available to those who are affected by a public health order. This program is available from September 27, 2020 to December 19, 2020, followed by a series of extensions until September 25, 2021, and most recently, a newly proposed extension to October 23, 2021.

This economic support measure provides businesses and non-profits who have experienced a revenue decline with a subsidy on eligible rent and property-ownership expenses. Qualifying organizations that have suffered a revenue drop are eligible for a subsidy on eligible expenses for each qualifying property. The subsidy is comprised of two parts: a base Canada Emergency Rent Support (CERS) subsidy and a Lockdown Support subsidy. The amount of the base subsidy is based on the revenue reduction experienced, applied on a declining scale to the eligible expenses, up to a maximum of 65% of eligible expenses. The lockdown support subsidy, of an additional fixed 25% applied to eligible expenses, is available to those who are affected by a public health order. This program is available from September 27, 2020 to December 19, 2020, with further extensions thereafter to June 2021, and then to September 25, 2021, with another proposed extension to October 23, 2021.

Base Subsidy

The structure of the base subsidy mirrors the Canada Emergency Wage Subsidy rate structure.  The amount of the subsidy is the base subsidy rate (calculated on a declining scale) applied to the eligible expenses. The base subsidy rate is based on the percentage of revenue decline experienced in the reference period, and is calculated according to the legislated formula, as shown below. As shown below, the maximum base rate subsidy for periods 1 to 10 is 65 per cent, and available to organizations with a revenue drop of 70 per cent or more. The base rate then declines to a rate of 40 per cent for organizations with a revenue drop of 50 per cent, and then gradually reduces to zero for those not experiencing a decline in revenues.

Base Subsidy Rates
Lockdown Support

The Lockdown Support (also referred to as ‘top-up’) is a subsidy of 25 per cent applied to eligible expenses and is available to organizations with locations that are temporarily forced to close or temporarily have their business activities significantly restricted (ceased activities responsible for at least approximately 25 per cent of the location’s revenues) by a public health order issued under the laws of Canada or a province or territory. This includes a shutdown of a location as a result COVID-19 outbreak (as declared by a provincial, territorial or regional health authority).

Refer to Eligibility for more information on what constitutes a qualifying public health restriction. Lockdown Support would be pro-rated for the number of days in the period during which the relevant location was affected.

CLAIM PERIOD

This is the period for which an entity can claim the rent subsidy. An entity may be able to claim the rent subsidy for one or more of the following claim periods:

  • Period 1- begins on September 27, 2020 and ends on October 24, 2020;
  • Period 2- begins on October 25, 2020 and ends on November 21, 2020;
  • Period 3 – begins on November 22, 2020 and ends on December 19, 2020;
  • Period 4 – begins on December 20, 2020 and ends on January 16, 2021;
  • Period 5 – begins on January 17, 2021 and ends on February 13, 2021;
  • Period 6 – begins on February 14, 2020 and ends on March 13, 2021;
  • Period 7 – begins on March 14, 2020 and ends on April 10, 2021;
  • Period 8 – begins on April 11, 2020 and ends on May8, 2021;
  • Period 9 – begins on May 9, 2020 and ends on June 5, 2021;
  • Period 10 – begins on June 6, 2020 and ends on July 3, 2021;
  • Period 11 – begins on July 4, 2020 and ends on July 31, 2021;
  • Period 12 – begins on August 1 and ends on August 28, 2021; and
  • Period 13 – begins on August 29 and ends on September 25, 2021.
Qualifying Property

The CERS covers a portion of eligible expenses in respect of a claim period for each qualifying property, subject to certain maximums. The CERS is calculated on a property by property basis.

Properties (business locations) that qualify include any “real or immovable property” (buildings or land) in Canada that a business or organization:

  • owns or rents, and
  • uses in the course of its ordinary business activities

Properties that do not qualify, include:

  • home, cottage, or other residence used by you, your family members, or other non-arm’s-length persons
  • any properties owned that are primarily used to earn rental income from arm’s-length parties
Eligible Expenses

In order to be eligible, expenses must be amounts paid or payable to an arm’s-length party, must be in respect of the claim period, and must be paid or payable under a written agreement in place before October 9, 2020 (or a renewal on substantially similar terms or assignment of such an agreement).

Expenses that are paid or payable to non-arm’s-length entities or expenses for a timeframe that falls outside of the claim period being applied for are not eligible. For eligible expenses that have not yet been paid, an appropriate attestation made of the intention to pay the eligible expenses owing no later than 60 days after the day on which the CERS amount is paid is required.

For each claim period, eligible expenses can be claimed up to a maximum of:

  • $75,000 per business location (base and top-up)
  • $300,000 in total for all locations (including any amounts claimed by affiliated businesses)
    • applies to the base subsidy only
    • there is no maximum for the top-up subsidy (Lockdown Support)

Eligible expenses if a qualifying property is rented include:

  • Rent (including rent based on a percentage of sales, profit or similar criteria)
  • Amounts required to be paid or payable under a net lease (either to the lessor or a third party). Includes:
    • base rent
    • regular payments for customary operating expenses
    • property and similar taxes
    • regular payments to the lessor for customary ancillary services

Eligible expenses exclude amounts paid or payable for sales taxes (such as GST/HST and provincial sales taxes), damages, interest or penalties on unpaid amounts, or other special amounts.

Eligible expenses if a qualifying property is owned include:

  • Property and similar taxes (including school taxes and municipal taxes, if these are part of property tax assessment)
  • Property insurance
  • Interest on commercial mortgages for the purpose of purchasing real property
    • Mortgage amount cannot exceed the lesser of:
      • the lowest principal amount secured by one or more mortgages on the property at any time it was acquired OR
      • the cost amount of the property

An eligible entity’s qualifying rent expense must be reduced by all amounts received or receivable (directly or indirectly) by the eligible entity in respect of the qualifying period on account of rent from a party with which the eligible entity deals at arm’s length. For example, where a renter subleases out a portion of the qualifying property to an arm’s length party, any amounts received in respect of that sublease must be deducted from the eligible entity’s qualifying rent expense.

Revenue Drop

Revenues will be calculated in the same manner as under the Canada Emergency Wage Subsidy program. See Eligibility for further information on the revenue reduction calculation.

Eligibility would generally be determined by the change in an eligible entity’s monthly revenues, year-over-year, for the applicable calendar month. Alternatively, an entity can choose to calculate its revenue decline by comparing its current reference month revenues with the average of its January and February 2020 revenues. Once an entity has chosen to use either the general or alternative approach, they must use that approach for each of the three periods. The approach chosen would apply to both the base Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy.

An eligible entity would use the greater of its percentage revenue decline for the current qualifying period and that for the previous qualifying period in order to determine its subsidy rate.

Special rules for the computation of revenue are provided to take into account certain non-arm’s-length transactions, such as where an entity sells all of its output to a related company that in turn earns arm’s-length revenue. Affiliated groups that do not normally compute revenue on a consolidated basis may elect to do so.

TAXATION

The Canada Emergency Rent Subsidy is taxable. The amount of CERS received must be included on your Annual Return of Income (e.g. Corporation Income Tax Return, Partnership Return) when calculating taxable income.

Eligible Entities

The definition of eligible entities is the same as for the Canada Emergency Wage Subsidy (CEWS) and is reproduced below. Eligible entities include:

  • corporation (that is not exempt from tax under Part I of the Income Tax Act);
  • individual (including a trust);
  • registered charity;
  • person that is exempt from tax under Part I of the Act, that is:
    • an agricultural organization;
    • a board of trade or a chamber of commerce;
    • a non-profit corporation for scientific research and experimental development;
    • a labour organization or society;
    • a benevolent or fraternal benefit society or order; and
    • a non-profit organization;
  • a partnership, each member of which is a person or partnership described in this list OR
  • the following prescribed organizations:
    • a person or partnership that operates a private school or private college;
    • in respect of a claim period, a partnership, if throughout the claim period, 50% or more of the fair market value of all interests in the partnership are held – directly or indirectly, through one or more partnerships – by eligible employers;
    • a registered Canadian amateur athletic association;
    • a registered journalism organization;
    • certain Indigenous businesses; specifically:
      • a tax-exempt corporation (under paragraph 149(1)(d.5) of the Act) carrying on a business that is at least 90% owned by one or more Indigenous governments;
      • a tax-exempt corporation (under paragraph 149(1)(d.6) of the Act) carrying on a business that is owned 100% by one or more Indigenous governments or by tax-exempt corporations described above;
      • a partnership, each member of which is an eligible employer or an Indigenous government;

Public institutions are ineligible. A public institution includes: a public school, school board, hospital, health authority, public university or college,  municipality and local government and tax-exempt Crown corporation.

Eligibility

To qualify for the base Canada Emergency Rent Subsidy, an eligible entity must meet one of the following criteria:

  • have a payroll account as of March 15, 2020 or another person or partnership made payroll remittances on your behalf;
  • have a CRA business number as of September 27, 2020; or
  • purchased the business assets of another person or partnership who meets a condition above, and have made an election under the special asset acquisition rules; or
  • meet other conditions that may be prescribed in the future.

To qualify for the Lockdown Support for a qualifying property, an eligible entity must meet all of the following criteria:

  • the organization qualifies for the base Canada Emergency Rent Subsidy; and
  • the public health order requires that the organization
    • completely shut down the location; or,
    • cease some or all of the activities at the location and it is reasonable to conclude that the ceased activities, in the appropriate pre-pandemic prior reference period, were responsible for at least approximately 25 per cent of the revenues of the entity at that location.

In addition to the above, for both the base and lockdown support rent programs, an entity must have experienced a revenue reduction in the reference period and incurred eligible expenses for a qualifying property.

Eligible Expenses and Qualifiying Property

For more information on the definition of eligible expenses and qualifying property, refer to information provided under our ‘WHAT’ tab.

Revenue Reduction

A qualifying entity is required to have a revenue reduction greater than:

  • 0% in a reference period, for periods 1 to 10
  • 10% in a reference period, for periods 11 to 13

to be eligible for the subsidy (unless the deeming rules apply), with the amount of the base CERS varying depending on the extent of the revenue decline. As such, an entity’s revenue reduction percentage is relevant to determining its rent subsidy amount.

An eligible employer’s reduction in revenue for a particular claim period is its decline in qualifying revenue from the relevant prior reference period to the relevant current reference period, expressed as a percentage. The relevant prior reference period is the same period in 2019 (general approach) or, if elected, the average of January and February 2020 (alternative approach). Special rules for the computation of revenue are provided to take into account certain non-arm’s-length transactions, such as where an entity sells all of its output to a related company that in turn earns arm’s-length revenue. Affiliated groups that do not normally compute revenue on a consolidated basis may elect to do so.

For purposes of determining the revenue reduction, revenues will be calculated in the same manner as under the Canada Emergency Wage Subsidy program. These rules are reproduced below.

CURRENT REFERENCE PERIODS

The current reference periods are the periods for which qualifying revenues are assessed to determine the revenue reduction. The reference periods as they relate to claim periods are as follows:

  • October 2020 – for the claim period 1;
  • November 2020 – for the claim period 2;
  • December 2020 – for the claim period 3;
  • December 2020 – for the claim period 4;
  • January 2021 – for the claim period 5;
  • February 2021 – for the claim period 6;
  • March 2021 – for the claim period 7;
  • April 2021 – for the claim period 8;
  • May 2021 – for the claim period 9;
  • June 2021 – for the claim period 10;
  • July 2021 – for the claim period 11;
  • August 2021 – for the claim period 12;
  • September 2021 – for the claim period 13.
QUALIFYING REVENUE

This means the inflow of cash, receivables, or other consideration arising in the course of its ordinary activities in Canada in a particular period. These inflows are generally from the sale of goods, the rendering of services, and the use—by others—of the eligible employer’s resources. Qualifying revenue excludes amounts from extraordinary items, amounts on account of capital and amounts from persons or partnerships that the eligible employer was not dealing with at arm’s length.

For registered charities, qualifying revenue generally includes gifts and other amounts received in the course of its ordinary activities. Where it operates a related business, the revenue from that related business is also included in the registered charity’s qualifying revenue.

ELECTABLE OPTIONS 

For the purposes of applying the revenue reduction test, a number of options are available:

  • Option to compare revenues to the same calendar month of 2019 (general approach) or to an average of revenue earned in January and February 2020 (alternative approach). An election is required in order to use the alternative approach (for employers that were carrying on business on March 1, 2019). The selected option is required to be used for all of Periods 8 -10 and the option chosen would apply to both the base Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy.
  • Option to measure revenues on the accrual method or cash method of accounting (election required for use of method that is not in accordance with employer’s normal accounting practices). The selected option is required to be used for the entire duration of the program (all claim periods).
  • For registered charities and non-profit organizations, an option to include or exclude (election required) government funding in their revenues. The selected option is required to be used for the entire duration of the program (all claim periods).
  • Where all or substantially all of revenue is from non-arm’s length sources, a jointly-elected option to use a special weighted-average approach to determine qualifying revenue for the reference period, which would include non-arm’s length revenues.
  • For a group of eligible employers that prepares consolidated financial statements, jointly-determined option to use revenue of the group on a consolidated basis or to use revenue of each member of the group separately.
  • For an affiliated group of eligible employers, jointly-elected option to use revenue of the affiliated group on a consolidated basis or to use revenue of each member of the group separately.
  • For a joint venture, jointly-elected option to use revenue of the joint venture or each member of the joint venture separately.

All elections must be made and retained with the eligible entity’s other books and records in support of its rent subsidy claim and eligibility and the individual who has principal responsibility for the eligible entity’s financial activities must attest that this is the case.

AVERAGE OF JANUARY AND FEBRUARY 2020 REVENUE (ALTERNATIVE APPROACH)

Where the average of January/February revenue option is used for purposes of the revenue reduction test, the average qualifying revenue must be calculated as follows: 0.5 x [total qualifying revenues for January and February of 2020] x [60 days divided by the number of days in January and February of 2020 during which the entity was carrying on business].

DEEMING RULE

If an entity has a greater reduction in revenue in the immediately preceding claim period than it has otherwise determined for the current claim period, the reduction in revenue for the immediately preceding period is deemed to be the eligible employer’s reduction in revenue for the purposes of determining its base rent subsidy amount for the current claim period. A deemed revenue reduction cannot apply beyond the current claim period.

Qualifying Public Order 

Lockdown Support of 25 per cent would be available to organizations with locations that are temporarily forced to close or temporarily have their business activities significantly restricted by a public health order issued under the laws of Canada or a province or territory. This would include a shutdown of a location as a result COVID-19 outbreak (as declared by a provincial, territorial or regional health authority). This follows a commitment in the Speech from the Throne to provide direct financial support to businesses temporarily shut down as a result of a local public health decision.

Specifically, a public health restriction would be an order that meets the following conditions:

  • it is made under the laws of Canada, a province or territory (including orders made by a municipality or regional health authority under one of those laws) in response to the COVID-19 pandemic;
  • it is limited in scope based on factors such as defined geographical boundaries, type of business or other activity, or risks associated with a particular location;
  • non-compliance with the order is a federal, provincial or territorial offence or can result in the imposition of an administrative monetary penalty or other sanction imposed by the Government of Canada or a province or territory;
  • it cannot result from a violation of an order that meets the above conditions; and
  • it must be in effect, for a period of at least a week, so that some or all of the activities of the eligible entity at, or in connection with, the qualifying property are required to completely cease. In other words, limitations would be on the type of activity rather than the extent to which an activity may be performed or limits placed on the time during which an activity may be performed.

If the organization is subject to a public health restriction and has to cease activities for only part of a qualifying period, the Lockdown Support would be pro-rated for the number of days in the period during which the relevant location was affected.

Application

The application process opens on November 23, 2020. All applications must be made on or before 180 days after the end of the qualifying period. Claims can be made retroactively to September 27, 2020. A separate application must be made for each eligible CERS claim period.

The CERS is administered by the Canada Revenue Agency.  Application can be made for CERS online through either:

• Most businesses may apply using My Business Account
• Business representatives may apply using Represent a Client

A CERS number must be created before an application can be made. This can be done through CRA My Business Account under the option ‘Create a CERS number’.

Information requirements

For each qualifying property, the following information is needed:

  • amounts you owe or have paid for all eligible expenses
  • property address
  • name and contact information of your
    • mortgage holder if you have a mortgage on the property
    • landlord if you rent the property

The application form will accept information for up to 3 properties. For more than 3 properties, enter information for the 3 properties with the highest eligible expenses. Keep the information for all properties in your records in case CRA asks for it at a later date.

For affiliated entities that have claimed, or will be claiming the CERS for the same claim period, you will need the:

  • number of affiliated entities in the agreement
  • percentage assigned to you under the agreement with your affiliated entities
  • business number of each affiliated entity
  • percentage assigned to each affiliated entity under the agreement

The application form will accept information for up to 10 affiliated entities. For more than 10 properties, enter information for the 10 entities with the highest assigned percentages. Keep the complete list in your records in case CRA asks for it at a later date.

Payment

The CRA will collect applications over the coming days and, on November 30, process applications received to date. Qualifying organizations whose claims successfully clear the CRA’s automated verification system and that are registered for direct deposit should expect to begin receiving payments starting on December 4.

The CERS is paid by direct deposit or by cheque. If you have set up direct deposit, you can generally expect to receive your payment within 3 to 8 days after filing your claim. If you are not registered for direct deposit, allow additional time for a cheque to be delivered by mail. The cheque will be sent to the address entered in My Business Account.

Payment may be delayed if CRA needs to contact you for additional information as part of the review of your claim.

Return the CERS

You may need to return all or part of the subsidy you have already received if you:

  • made a calculation or data entry error for a claim period
  • find out you do not qualify for the subsidy after you receive a payment
  • receive a notice from the CRA that, following a review, your claim has been reduced or denied

Any excess amount of rent subsidy you received that is not returned may be subject to interest.

You may pay back any amount of CERS online, if your financial institution has the option.

  1. Sign in to your financial institution’s online banking service for businesses
  2. Under “Add a payee” look for
    • Federal – Canada emergency rent subsidy repayment
  3. Enter your 15-digit CERS number (ZA) as your CRA account number

Make sure the CERS number is the same one you used on your CERS application so CRA can apply your payment correctly.

If your financial institution does not offer the option to pay back the CERS online, you can return all or part of a subsidy payment by direct deposit or cheque, depending on your situation.

Review of claim information

CRA will be reviewing claims to confirm the information you submit. The CRA may need to contact you by phone or mail to confirm details, ask for more information about your application, or notify you that your claim was not approved. Please make sure your contact information is current. CRA phone agents should be able to provide you with information about your CERS application, as well as their name and phone number. You may receive a letter from the CRA if your application for CERS was not accepted, or if your claim was modified after we review the information.

If you do not meet the CERS eligibility requirements for a period, you will be required to repay any amounts you received for that period. Penalties may apply in cases of fraudulent claims, including fines or even imprisonment. If you artificially reduce your revenue or increase your expenses for the purpose of claiming the rent subsidy, you will be required to repay any subsidy amounts you received, plus a penalty equal to 25% of the total value.

Keep your records

You must keep records showing information that supports your rent subsidy claim, such as your reduction in revenue and amounts for your eligible expenses. If you use the online calculator to calculate your subsidy amounts, print the results summary or save an electronic copy for your records. We may ask to see it when validating your claim. If you calculate your amounts another way, you must still save a record of how you came up with your amounts. If you have affiliated entities that are also applying for CERS for the same period you are, you must save a copy of the agreement you made about the percentage of the subsidy each business will claim. Read more about records you should keep

 

Canada Emergency Business Account

This economic support measure provides small and medium enterprises with access to credit through interest free loans of up to $60,000. In order to qualify, an enterprise must demonstrate it paid between $20,000 to $1.5 million in total payroll in 2019 OR where an enterprise falls below this payroll threshold, it must have eligible non-deferrable expenses between $40,000 and $1.5 million.

The Canada Emergency Business Account program provides interest-free loans of up to $60,000 to eligible small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of up to $20,000 (see below for further details on loan forgiveness).

The Canada Emergency Business Account is a government guaranteed loan of up to $60,000 that is interest-free until December 31, 2022. Originally, the CEBA program provided loans of up to $40,000. As of December 4, 2020, an additional $20,000 has been added to the CEBA loan program. As such, effective December 4, CEBA loans for eligible businesses increased from $40,000 to $60,000. Applicants who have received the $40,000 CEBA loan may apply for the $20,000 expansion, which provides eligible businesses with an additional $20,000 in financing. Once a financial institution begins to offer the $60,000 loan, the $40,000 loan will no longer be available for application.

For those who have received the $40,000 loan and subsequently apply for and receive the $20,000 expansion loan, the terms of the $20,000 expansion loan will become applicable for the entire $60,000 loan.

Use of Funds

The acceptable use of funds is stipulated in the CEBA loan agreement. The funds from the loan should generally be used to pay non-deferrable operating expenses of the borrower, including payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation. With respect to payroll, some earlier loan agreements use a descriptor “without limitation, payroll’ while others use a descriptor “wages and other employment expenses to independent (arm’s length) third parties”.  More recent loan agreements (including the $20,000 expansion loans) stipulate use of funds to be Eligible Non-Deferrable Expenses’ as further defined in the agreements (also see our Covid-19 Hub ‘Eligibility’ section for this definition).  For further clarity on what constitutes acceptable use of the funds received, applicants should refer to the specific wording in their CEBA loan agreement with their financial institution.

Terms for the $40,000 and $60,000 loan and the $20,000 expansion

The following terms apply to all CEBA loans (original loan and expansion loan):

Interest:

  • 0% per annum interest until December 31, 2022
  • 5% per annum interest starting on January 1, 2023; interest payment frequency to be determined by your financial institution

Repayments & Maturity:

  • No principal repayment required before December 31, 2022
  • If loan remains outstanding after December 31, 2022, only interest payments required until full principal is due on December 31, 2025

Debt Forgiveness:

  • If the outstanding principal, other than the amount of potential debt forgiveness, is repaid by December 31, 2022, the remaining principal amount will be forgiven, provided that no default under the Loan has occurred
Terms of forgiveness

If you borrowed $40,000 or less: Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).

Example 1:
Maximum Amount Borrowed: $40,000
Amount Repaid By December 31, 2022: $30,000
Available Forgiveness: $10,000

Example 2:
Maximum Amount Borrowed: $20,000
Amount Repaid By December 31, 2022: $15,000
Available Forgiveness: $5,000

Example 3:
Maximum Amount Borrowed: $40,000
Amount Repaid By December 31, 2022: $25,000
Available Forgiveness: $0

If you borrowed more than $40,000 and up to $60,000: If you received a $40,000 loan and subsequently received the $20,000 expansion, the terms of your forgiveness have changed and are described here. Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before December 31, 2022 will result in a single tranche of loan forgiveness up to $20,000 based on a blended rate:

  • 25 percent on the first $40,000; plus
  • 50 percent on amounts above $40,000 and up to $60,000.

For clarity, the portion of forgiveness based on a rate of 25% and the portion of forgiveness based on a rate of 50% are combined into a single tranche of forgiveness, which is only available if all other amounts outstanding are repaid by December 31, 2022. For example, if $60,000 is borrowed, no forgiveness is available unless $40,000 is repaid.

Note: some financial institutions may record your $40,000 loan and $20,000 expansion as two separate loans. For the purposes of loan forgiveness, borrowings and repayments on both loans will be aggregated.

Example 4:
Maximum Amount Borrowed: $60,000
Amount Repaid By December 31, 2022: $40,000
Available Forgiveness: $20,000 ($40,000 x 25% + $20,000 x 50%)

Example 5:
Maximum Amount Borrowed: $50,000
Amount Repaid By December 31, 2022: $35,000
Available Forgiveness: $15,000 ($40,000 x 25% + $10,000 x 50%)

Example 6:
Maximum Amount Borrowed: $60,000
Amount Repaid By December 31, 2022: $35,000
Available Forgiveness: $0

If you fully repaid your original $40,000 loan, claimed forgiveness, and thereafter received the $20,000 expansion: Repaying the outstanding balance of the $20,000 expansion (other than the amount available to be forgiven) on or before December 31, 2022 will result in loan forgiveness of 50 percent (up to $10,000).

Example 7:
Maximum amount Borrowed: $20,000
Amount Repaid By December 31, 2022: $10,000
Available Forgiveness: $10,000

Example 8:
Maximum amount Borrowed: $20,000
Amount Repaid By December 31, 2022: $8,000
Available Forgiveness: $0

Eligible Entities

Eligible entities include:

  • small businesses
  • not-for-profit organizations
  • union, charitable, religious or fraternal organization that is a registered T2 or T3010 corporation that generates a portion of its revenue from the sales of goods or services

Ineligible entities include:

  • government organization or body, or an entity owned by a government organization or body;
  • union, charitable, religious or fraternal organization or entity owned by such an organization that is not a registered T2 or T3010 corporation that generates a portion of its revenue from the sales of goods or services;
  • an entity owned by individual(s) holding political office;
  • any entity that promotes violence, incite hatred or discriminate on the basis of sex, gender, sexual orientation, race, ethnicity, religion, culture, region, education, age or mental or physical disability.

Eligibility

To qualify for this program, an eligible entity must meet the following conditions:

  • Has an active CRA Business Number (BN) with an effective date of registration on or prior to March 1, 2020.
  • Has an active business chequing/operating account with the Lender at the time of applying for CEBA. Note: If Borrower currently does not have a business chequing/operating account the Borrower must create one at their primary financial institution before applying for CEBA.
  • Has not previously used the Canada Emergency Business Account Program (the “Program”) and will not apply for support under the Program at any other financial institution.
  • Intends to continue to operate its business or to resume operations.
  • meets one of the following:
    • has total employment income paid in the 2019 calendar year between $20,000 and $1,500,000 (called the Payroll Stream).
    • has $20,000 or less in total employment income paid in the 2019 calendar year (called the Non-Deferrable Expense Stream) and also meets both of the following conditions :
        • Has eligible non-deferrable expenses between Cdn. $40,000 and Cdn. $1,500,000. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. Expenses will be subject to verification and audit by the Government of Canada.
        • Filed an income tax return with the CRA with a tax year ending in 2019 or, if its tax return for 2019 has not yet been submitted, 2018.
Eligible Non-Deferrable Expense categories

Eligible Non-Deferrable Expenses may have already been incurred after January 1, 2020 or are to be incurred prior to December 31, 2020. For example, if you have a monthly telecommunications bill for $200 and it is expected to continue throughout the year, then your full 2020 forecasted Eligible Non-Deferrable Expense would be 12 months at $200 = $2,400 total expenses for 2020.

Total incurred and projected Eligible Non-Deferrable Expenses are measured as they stood on March 1, 2020. Under all expense categories, the amounts to be included in the total are those actually paid in January and February 2020, as well as those for which a legal or contractual obligation existed on March 1, 2020, for the applicant to pay the expense within the remainder of 2020 and which cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID. For periodic or indefinite contracts that renew or continue with the passage of time absent intervention by the parties, such as a monthly phone contract, assume that the contract continues on the same terms beyond March 1 such that payments related to the later periods in 2020 are included as obligations provided for in contract as at March 1.

For example, assume your business signed an insurance policy on February 1, 2020. As at March 1, the business had paid the monthly insurance expense for February and a contractual obligation then existed providing for payments of the expense for the subsequent months of 2020. All 11 monthly insurance payments would be included in the total Eligible Non-Deferrable Expenses.

Eligible Non-Deferrable Expense categories are the following:

    • Wages and other employment expenses to independent (arm’s length) third parties;
    • Rent or lease payments for real estate used for business purposes;
    • Rent or lease payments for capital equipment used for business purposes;
    • Payments incurred for insurance related costs;
    • Payments incurred for property taxes;
    • Payments incurred for business purposes for telephone and utilities in the form of gas, oil, electricity, water and internet;
    • Payments for regularly scheduled debt service;
    • Payments incurred under agreements with independent contractors and fees required in order to maintain licenses, authorizations or permissions necessary to conduct business by the Borrower.

Dividends are not an Eligible Non-Deferrable Expense.

Adjustments to the Amount of Eligible Non-Deferrable Expenses

Other Government of Canada COVID response programs that will cause adjustments to the amount of 2020 Eligible Non-Deferrable Expenses that can be reported include the following:

  • Canada Emergency Wage Subsidy,
  • 10% Temporary Wage Subsidy,
  • Canada Emergency Commercial Rent Assistance, Regional Relief and Recovery Fund,
  • Futurpreneur Canada,
  • Northern Business Relief Fund,
  • Fish Harvester Grant,
  • relief measures for Indigenous businesses, and
  • $250 million COVID-19 IRAP (Industrial Research Assistance Program) Subsidy Program

Application

Businesses should contact their financial institution to apply for a CEBA loan. All applicants have until June 30, 2021, to apply for $60,000 CEBA loan or the $20,000 expansion.

Applicants must contact the financial institution that provided them with their original CEBA loan to apply for the $20,000 expansion. You will need to submit a new application and attestation to the financial institution that provided you with your original CEBA loan. You will not need to resubmit your original application, or re-upload expense documents. The new attestation includes statements such as: all eligibility criteria are met, the business is facing ongoing financial hardship (including, for example, a continued decline in revenue or cash reserves, or an increase in operating costs) as a result of the COVID-19 pandemic, that in response to the COVID-19 pandemic it has made all reasonable efforts to reduce its costs and to otherwise adapt its business to improve its viability, and that funds will be used towards Eligible Non-Deferrable Expenses (as specifically defined).

Once a financial institution begins to offer the $60,000 loan, the $40,000 loan will no longer be available for application.

There are two CEBA application streams, depending on which eligibility criteria are met: the Payroll Stream and the Non-Deferrable Expenses Stream.

Payroll Stream

This stream is for businesses with total employment income paid to employees in 2019 greater than $20,000 and less than $1,500,000.

Businesses in this stream should contact their primary financial institution (where primary active business chequing/operating account is held) to apply for these loans. Most financial institutions allow application through their mobile banking app or through OnLine banking. Applying through these digital channels is the easiest and fastest way to get access to funds.

Financial institutions provide application information to the Government of Canada to confirm eligibility. If successful, the Government of Canada will notify the financial institution and it will provide funding for the CEBA loan.

Non-Deferrable Expenses Stream

This stream is for businesses with total employment income paid to employees in 2019 of $20,000 or less and 2020 Eligible Non-Deferrable Expenses (subject to adjustments for support or subsidies under other Government of Canada COVID response programs) greater than $40,000 and less than $1,500,000.

CEBA applications under the 2020 Eligible Non-Deferrable Expenses Stream will follow a three-step process:

Step 1: Complete the online Pre-Screen Tool. The Pre-Screen Tool is not a CEBA application and is solely intended to provide a non-binding indication of eligibility to inform your decision of whether to open a business account (if needed) and apply for CEBA at your financial institution. If you are declined at this step you can still apply for CEBA and therefore still need to complete the next two steps as identified.

Step 2: Businesses will initiate applications directly at their primary financial institution where they hold their primary business chequing / operating account. The financial institution will then direct applicants to Step 2 of the application process.

Step 2: Following the initial application through the financial institution, applicants will be directed to a CEBA website to provide supporting documentation of the 2020 Eligible Non-Deferrable Expenses and to complete the application.

The Government of Canada will assess application information submitted via financial institutions in Step 1 together with the supporting documentation and information provided in Step 2. If successful, the Government of Canada will notify the financial institution and provide funding for the CEBA loan.

Preparing for application – documents needed

The three main pieces of information needed to complete the application are:

  • The name of the financial institution where the CEBA application was submitted; and
  • 9-digit business number (same number used in the CEBA application with the financial institution); and
  • Electronic or paper copies of Receipts / Invoices / Agreements to be uploaded as evidence of 2020 Eligible Non-Deferrable Expenses.

Once you have applied at your financial institution, uploaded all necessary supporting documents (if applicable), and if pre-funding eligibility validation is successful, you should expect to receive funding within 10-15 business days.

Multiple Businesses

Each qualifying business must have a unique 9-digit Canada Revenue Agency (CRA) Business Number. Each qualifying business is limited to one CEBA loan.

Helpful Links

CEBA 

CEBA call centre (open Monday to Friday 8 am to 9 pm EST): 1-888-324-4201

Loan Guarantee for Small and Medium Enterprises

This economic support measure provides small and medium enterprises with access to credit through EDC guaranteed and BDC co-lending term loans. Qualification is assessed through each financial institution’s criteria.

EDC Loan Guarantee for Small and Medium-Sized Enterprises

This program provides credit and cash flow term loans to small and medium-sized enterprises. Canadian businesses in all sectors that were otherwise financially viable and revenue generating prior to the COVID-19 outbreak are eligible to apply.

It allows financial institutions to issue operating credit and cash flow term loans of up to $6.25 million to existing clients, with 80 per cent guaranteed by EDC.

This money is to be used for operational expenses, not for dividend payouts, shareholder loans, bonuses, stock buyback, option issuance, increases to executive compensation or repayment/refinancing of other debt.

BDC Co-Lending Program for Small and Medium Enterprises

This program provides term loans for operational and liquidity needs of businesses, which could include interest payments on existing debt. Similar to the EDC program, this program is available to businesses that were financially viable and revenue-generating prior to the COVID-19 outbreak.

Loans would be interest-only for the first 12 months, with a 10-year repayment period. Maximum finance amounts will differ based on business revenues. 80% of financed amount provided by BDC and the remaining 20% by applicant’s financial institution. Financing is to be used for operational cash flow requirements. The program is available until or before September 30, 2020.

The program is designed in three segments to target support to different business sizes.

  • Loans of up to $312,500 to businesses with revenues of less than $1 million.
  • Up to $3.125 million for businesses with revenues between $1 million and $50 million.
  • Up to $6.25 million for businesses with revenues in excess of $50 million.

Eligible Entities

Eligible entities include small and medium-sized enterprises.

Eligibility

Canadian businesses in all sectors that were otherwise financially viable and revenue generating prior to the COVID-19 outbreak are eligible to apply. The programs are available to both exporting and non-exporting companies. Eligibility is based criteria established by the financial institution in conjunction with EDC/BDC.

Application

To apply for these programs, contact your primary financial institution. Both programs are now available.

Canada Recovery Benefit

The Canada Recovery Benefit (CRB) gives income support of $500 per week (up to a total of 26 weeks) to employed and self-employed individuals who are directly affected by COVID-19 and are not entitled to Employment Insurance (EI) benefits. The CRB is available for eligibility periods between September 27, 2020 and September 25, 2021, with a recently announced proposed further extension to October 23, 2021.

The Canada Recovery Benefit (CRB) gives income support to employed and self-employed individuals who are directly affected by COVID-19 and are not entitled to Employment Insurance (EI) benefits.

An eligible individual can receive $1,000 (before taxes withheld) for each 2-week period applied for. After the Canada Revenue Agency (CRA) withholds a 10% tax at source, the actual payment an individual gets is $900 per 2-week period.

When period 22 opens for application on August 2, 2021, CRB amounts will change to $600 ($540 after taxes withheld) for each 2-week period if either:

  • you already applied for 21 periods (42 weeks)
  • your first time applying for the CRB is for period 22 (July 18 to 31, 2021) or later

If an individual continues to be eligible, the CRB is available for a maximum of 25 periods (50 weeks).

Eligibility Periods

Each Canada Recovery Benefit (CRB) eligibility period is a specific 2-week period. It begins and ends on specific dates. An individual may apply for any period that they are eligible for, provided they meet the eligibility criteria for the entire two-week period. When an individual applies, they will receive a $1,000 ($900 after taxes withheld) payment for the period that they applied for (or $600 after August 2, 2021 – see above). The CRB does not renew automatically. An application must be made for each period between September 27, 2020 and September 25, 2021 separately. An individual can apply for a maximum of 25 periods. The periods do not have to be taken consecutively. 

Period dates begin as follows:

  • Period 1 – September 27 to October 10, 2020
  • Period 2 – October 11 to October 24 ,2020
  • Period 3 – October 25 to November 7, 2020

and continue on in two-week increments until the final Period 27 – September 12 to September 25, 2021.

July 30, 2021 Update: The Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB) are proposed to be extended until October 23, 2021. The maximum number of weeks available for the CRB is also proposed to be increased by an additional 4 weeks, to a total of 54 weeks, at a rate of $300 per week.

Income Taxes

CRB payments received must be reported when filing a personal income tax return. The CRA will provide individuals with a T4A tax information slip at tax time for the amount received in CRA administered COVID-19 benefits.

The 10% tax withheld at source may not be all the tax an individual needs to pay. When completing their personal income tax return, they may need to pay more (or less), depending on how much income they earned.

Impact of other income earned

Individuals may earn employment or self-employment income while they receive the CRB. However, there is a difference in how much they can keep if they earn more than $38,000 in the calendar year (excluding CRB payments). Individuals will have to reimburse $0.50 of the CRB for every dollar of net income earned above $38,000 on their income tax return. They will not have to pay back more than their benefit amount for that year. This will be due at the same time as their income tax return for the year. Late payments will be charged interest. Net income includes any CERB, CRCB and CRSB payments you received. It does not include the CRB.

Eligible Entities

Eligible entities are individuals.

Eligibility

To qualify for the CRB, individuals must meet all of the following conditions:

  • reside in and are present in Canada and are at least 15 years old and have a valid Social Insurance Number
  • during the period of application, were not working because of COVID-19 OR had a 50% reduction in their average weekly income compared to the previous year due to COVID-19
  • are not eligible for EI benefits
  • have not quit their job or voluntarily reduced their hours on or after September 27, 2020, unless it was reasonable to do so
  • were seeking work during the period, either as an employee or in self-employment and have not turned down reasonable work during the period of application
  • had income of at least $5,000 in 2019, 2020, or in the 12 months prior to the date of their application
  • did not apply for or receive any of: Canada Recovery Sickness Benefit, Canada Recovery Caregiving Benefit, short-term disability benefits, workers’ compensation benefits, EI benefits, QPIP benefits

As of January 3, 2021, all international travelers who need to quarantine upon return to Canada will not be eligible to receive support from the Canada Recovery Sickness Benefit, the Canada Recovery Caregiving Benefit and the Canada Recovery Benefit for the period of their mandatory quarantine.  Individuals who are exempt from the mandatory quarantine requirements under the Quarantine Act will be eligible to apply following their return to the country.

The eligibility rules allow people to earn income while collecting the CRB, but the CRB has an income threshold of $38,000. Individuals will have to reimburse $0.50 for every dollar of net income earned above $38,000 on their income tax return for that year (2020 or 2021). They will not have to pay back more than their benefit amount for that year.

If an individual refuses reasonable work, they will automatically lose 5 periods (10 weeks) of the CRB eligibility periods. They must also wait 5 periods (10 weeks) before they can re-apply. If they refuse work again, they will face the penalty again.

The $5,000 income includes:

  • all employment income (total or gross pay)
  • self-employment income (after deducting expenses)
  • maternity and parental benefits from EI or similar QPIP benefits
  • tips declared as income
  • non-eligible dividends
  • honoraria (e.g., nominal amounts paid to volunteers)
  • royalties (e.g., paid to artists).
  • If not eligible for Employment Insurance, may also include maternity and parental benefits received from the Employment Insurance program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan.

Pensions, disability benefits, student loans, bursaries, scholarships, and amounts from other COVID-benefits are not considered income and should not be included.

Application

The benefit is available for prescribed 2-week eligibility periods between September 27, 2020 and September 25, 2021. Applications may begin on the first Monday after the 2-week period being applied for has ended. Applications do not renew automatically and separate applications must be made for each 2-week period for which eligibility requirements are met. Applicants can apply for benefits retroactively for any period up to 60 days after that period has ended.

The CRB is administered by the Canada Revenue Agency (CRA). Application can be done through the following:

  • CRA My Account
  • automated phone service, by calling 1-800-959-2019 or 1-800-959-2041. Phone services will be available 21 hours per day, 7 days per week and will be closed from 3:00 a.m. – 6:00 a.m. EST.

Before you apply, ensure your direct deposit and mailing information is up to date with the CRA through your My CRA Account. You can also securely update your direct deposit information with the CRA through your bank, credit unions or trust companies.

Validation

The CRA is validating applications. When you apply, CRA may ask for additional information. Only some people will need to do this, but you may want to prepare before you first apply. Documents the could be requested include: recent pay slips, employment verification letter, record of employment, bank statements, invoice for services, and receipt of payment for services.

Payment

Payments will be made through direct deposit or by cheque; however direct deposit is faster. Applications that do not require validation will have benefits received within 3 to 5 (for direct deposit) or 10 to 12 business days (for cheque) of applying. Applications that require further validation, may take up to 4 weeks from the time documentation is received by CRA.

Canada Recovery Caregiving Benefit

The Canada Recovery Caregiving Benefit (CRCB) gives income support of $500 (up to a total of 26 weeks) per household for each 1-week period to employed and self-employed individuals who are unable to work because they must care for their child under 12 years old or a family member who needs supervised care. The CRCB is available for eligibility periods between September 27, 2020 and September 25, 2021, with a recently announced proposed further extension to October 23, 2021.

The Canada Recovery Caregiving Benefit (CRCB) gives income support to employed and self-employed individuals who are unable to work because they must care for their child under 12 years old or a family member who needs supervised care. This applies if their school, regular program or facility is closed or unavailable to them due to COVID-19, or because they are sick, self-isolating, or at risk of serious health complications due to COVID-19.

If eligible for the CRCB, a household can receive $500 (before taxes withheld) for each 1-week period. After the Canada Revenue Agency (CRA) withholds a 10% tax at source, the actual payment an individual gets is $450 per 1-week period.

Only one eligible individual in the same household (living as a family at the same address) can apply for the benefit per week. Each household may receive payments for a maximum of 26 weeks between September 27, 2020 and September 25, 2021.

If eligible, the payment amount will be the same for each period applied for, even if:

  • an individual is caring for more than one family member who needs supervised care
  • an individual worked for less than 50% of the work week
Eligibility Periods

Each CRCB eligibility period is a specific 1-week period. When an individual applies, their household will receive a payment for that period. The CRCB does not renew automatically. If the household situation continues, application must be made for each period separately.  Each household can apply up to a maximum of 26 periods between September 27, 2020 and September 25, 2021. The 26 weeks do not need to be taken consecutively.  Eligibility cannot be extended, even if there is a need to care for the same or other family members for more than 26 weeks or if their school, regular program or facility is closed or unavailable to them again due to COVID-19.

If an individual started caring for a family member part way through a period, application can only be made for that period if the individual missed more than 50% of that work week. If an individual misses less than that, they need to wait to apply for the next eligibility period.

Eligibility Periods

Each 1-week period starts on a Sunday and ends on the following Saturday.

Period dates begin as follows:

  • Period 1 – September 27 to October 3, 2020
  • Period 2 – October 4 to October 10 ,2020
  • Period 3 – October 11 to October 24, 2020

and continue on in one-week increments until the final Period 52 – September 19 to September 25, 2021.

July 30, 2021 Update: The Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB) are proposed to be extended until October 23, 2021. 

Income Taxes

CRCB payments received must be reported as income when filing a personal income tax return. The CRA will provide individuals with a T4A tax information slip at tax time for the amount received in CRA administered COVID-19 benefits.

The 10% tax withheld at source may not be all the tax an individual needs to pay. When completing their personal income tax return, they may need to pay more (or less), depending on how much income they earned.

Eligible Entities

Eligible entities are individuals.

Eligibility

To qualify for the CRCB, individuals must meet all of the following conditions for the 1-week period being applied for:

  • reside in and are present in Canada and are at least 15 years old and have a valid Social Insurance Number
  • are unable to work at least 50% of their scheduled work week because they are caring for a family member
  • are the only person in the household applying for the benefit for the week
  • are not receiving paid leave from their employer for the same period
  • had income of at least $5,000 in 2019, 2020, or in the 12 months prior to the date of their application
  • did not apply for or receive any of: Canada Recovery Sickness Benefit, Canada Recovery Benefit, short-term disability benefits, workers’ compensation benefits, EI benefits, QPIP benefits

As of January 3, 2021, all international travelers who need to quarantine upon return to Canada will not be eligible to receive support from the Canada Recovery Sickness Benefit, the Canada Recovery Caregiving Benefit and the Canada Recovery Benefit for the period of their mandatory quarantine.  Individuals who are exempt from the mandatory quarantine requirements under the Quarantine Act will be eligible to apply following their return to the country.

The $5,000 income includes:

  • all employment income (total or gross pay)
  • self-employment income (after deducting expenses)
  • maternity and parental benefits from EI or similar QPIP benefits
  • tips declared as income
  • non-eligible dividends
  • honoraria (e.g., nominal amounts paid to volunteers)
  • royalties (e.g., paid to artists).
  • If not eligible for Employment Insurance, may also include maternity and parental benefits received from the Employment Insurance program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan.

Pensions, disability benefits, student loans, bursaries, scholarships, and amounts from other COVID-benefits are not considered income and should not be included.

Application

The benefit is available for prescribed 1-week eligibility periods between September 27, 2020 and September 25, 2021. Applications may begin on the first Monday after the 1-week period being applied for has ended. Applications do not renew automatically and separate applications must be made for each 1-week period for which eligibility requirements are met. Applicants can apply for benefits retroactively for any period up to 60 days after that period has ended.

The CRCB is administered by the Canada Revenue Agency (CRA). Application can be done through the following:

  • CRA My Account
  • automated phone service, by calling 1-800-959-2019 or 1-800-959-2041. Phone services will be available 21 hours per day, 7 days per week and will be closed from 3:00 a.m. – 6:00 a.m. EST.

Before you apply, ensure your direct deposit and mailing information is up to date with the CRA through your My CRA Account. You can also securely update your direct deposit information with the CRA through your bank, credit unions or trust companies.

Validation

The CRA is validating applications. When you apply, CRA may ask for additional information. Only some people will need to do this, but you may want to prepare before you first apply. Documents the could be requested include: recent pay slips, employment verification letter, record of employment, bank statements, invoice for services, and receipt of payment for services.

Payment

Payments will be made through direct deposit or by cheque; however direct deposit is faster. Applications that do not require validation will have benefits received within 3 to 5 (for direct deposit) or 10 to 12 business days (for cheque) of applying. Applications that require further validation, may take up to 4 weeks from the time documentation is received by CRA.

Canada Recovery Sickness Benefit

The Canada Recovery Sickness Benefit (CRSB) gives income support of $500 per 1-week period (up to a total of 2 weeks) to employed and self-employed individuals who are unable to work because they are sick or need to self-isolate due to COVID-19, or have an underlying health condition that puts them at greater risk of getting COVID-19. The CRSB is available for eligibility periods between September 27, 2020 and September 25, 2021, with a recently announced proposed further extension to October 23, 2021.

The Canada Recovery Sickness Benefit (CRSB) gives income support to employed and self-employed individuals who are unable to work because they are sick or need to self-isolate due to COVID-19, or have an underlying health condition that puts them at greater risk of getting COVID-19.

An eligible individual can receive $500 (before taxes withheld) for each 1-week period applied for. After the Canada Revenue Agency (CRA) withholds a 10% tax at source, the actual payment an individual gets is $450 per 1-week period. The payment amount will be the same for each period applied for, even if you worked for part of the week.

If an individual continues to be eligible, the CRSB is available for a maximum of 2 weeks between September 27, 2020 and September 25, 2021.

Eligibility Periods

Each Canada Recovery Benefit (CRB) eligibility period is a specific 1-week period. An individual may apply for any period that they are eligible for, provided they meet the eligibility criteria for the entire 1-week period. The CRSB does not renew automatically. An application must be made for each period separately.

An individual can apply for a maximum of 2 weeks between September 27, 2020 and September 25, 2021. The 2 weeks do not have to be taken consecutively.An individual can no longer receive CRSB payments after they have reached the maximum of 2 periods. Eligibility cannot be extended, even if an individual:

  • is sick or self-isolating due to COVID-19 for more than 2 periods
  • becomes sick or is self-isolating due to COVID-19 again between September 27, 2020 and September 25, 2021

If an individual becomes sick or has to self-isolate due to COVID-19 part way through a period, they can only apply for the period if they missed more than 50% of that work week. If they miss less than that, they need to wait to apply for the next eligibility period.

Period dates begin as follows:

  • Period 1 – September 27 to October 3, 2020
  • Period 2 – October 4 to October  10,2020
  • Period 3 – October 11 to October 17, 2020

and continue on in two-week increments until the final Period 52 – September 19 to September 25, 2021.

July 30, 2021 Update: The Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB) are proposed to be extended until October 23, 2021. 

Income Taxes

CRB payments received must be reported when filing a personal income tax return. The CRA will provide individuals with a T4A tax information slip at tax time for the amount received in CRA administered COVID-19 benefits.

The 10% tax withheld at source may not be all the tax an individual needs to pay. When completing their personal income tax return, they may need to pay more (or less), depending on how much income they earned.

Eligible Entities

Eligible entities are individuals.

Eligibility

To qualify for the CRSB, individuals must meet all of the following conditions for the 1-week period being applied for:

  • reside in and are present in Canada and are at least 15 years old and have a valid Social Insurance Number
    • have an underlying health condition that puts them at greater risk of getting COVID-19
  • are not receiving paid leave from their employer for the same period
  • had income of at least $5,000 in 2019, 2020, or in the 12 months prior to the date of their application
  • did not apply for or receive any of: Canada Recovery Benefit, Canada Recovery Caregiving Benefit, short-term disability benefits, workers’ compensation benefits, EI benefits, QPIP benefits

As of January 3, 2021, all international travelers who need to quarantine upon return to Canada will not be eligible to receive support from the Canada Recovery Sickness Benefit, the Canada Recovery Caregiving Benefit and the Canada Recovery Benefit for the period of their mandatory quarantine.  Individuals who are exempt from the mandatory quarantine requirements under the Quarantine Act will be eligible to apply following their return to the country.

The $5,000 income includes:

  • all employment income (total or gross pay)
  • self-employment income (after deducting expenses)
  • maternity and parental benefits from EI or similar QPIP benefits
  • tips declared as income
  • non-eligible dividends
  • honoraria (e.g., nominal amounts paid to volunteers)
  • royalties (e.g., paid to artists).
  • If not eligible for Employment Insurance, may also include maternity and parental benefits received from the Employment Insurance program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan.

Pensions, disability benefits, student loans, bursaries, scholarships, and amounts from other COVID-benefits are not considered income and should not be included.

Application

The benefit is available for prescribed 1-week eligibility periods between September 27, 2020 and September 25, 2021. Applications may begin on the first Monday after the 1-week period being applied for has ended. Applications do not renew automatically and separate applications must be made for each 1-week period for which eligibility requirements are met. Applicants can apply for benefits retroactively for any period up to 60 days after that period has ended.

The CRSB is administered by the Canada Revenue Agency (CRA). Application can be done through the following:

  • CRA My Account
  • automated phone service, by calling 1-800-959-2019 or 1-800-959-2041. Phone services will be available 21 hours per day, 7 days per week and will be closed from 3:00 a.m. – 6:00 a.m. EST.

Before you apply, ensure your direct deposit and mailing information is up to date with the CRA through your My CRA Account. You can also securely update your direct deposit information with the CRA through your bank, credit unions or trust companies.

Validation

The CRA is validating applications. When you apply, CRA may ask for additional information. Only some people will need to do this, but you may want to prepare before you first apply. Documents the could be requested include: recent pay slips, employment verification letter, record of employment, bank statements, invoice for services, and receipt of payment for services.

Payment

Payments will be made through direct deposit or by cheque; however direct deposit is faster. Applications that do not require validation will have benefits received within 3 to 5 (for direct deposit) or 10 to 12 business days (for cheque) of applying. Applications that require further validation, may take up to 4 weeks from the time documentation is received by CRA.

Canada Work Sharing Program Enhancements

This is an existing program that has been temporarily enhanced for COVID-19 relief to help businesses who introduce work-sharing arrangements through reduced hours of work. The program provides EI benefits to workers who agree to reduce their normal working hours for hours not paid by employers.

Work-Sharing (WS) is a program that helps employers and employees avoid layoffs when there is a temporary decrease in business activity beyond the control of the employer. The program provides Employment Insurance (EI) benefits to eligible employees who agree to reduce their normal working hours and share the available work while their employer recovers. Work-Sharing is an agreement between employers, employees and the Government of Canada that allows Canadian businesses to keep employees under part-time hours when there is a temporary decrease in business activity beyond the control of the employer.

Temporary special measures – COVID-19

  • Extension of the maximum possible duration of an agreement from 38 week to 76 weeks
  • Mandatory cooling off period has been waived for employers who have already used the Work-Sharing program so that eligible employers may immediately enter into a new agreement
  • Reduce the previous requirements for a recovery plan to a single line of text within the application form
  • Reduce the requirement and expand eligibility to employers affected by accepting business who have been in business for only 1 year rather than 2, and eliminate the burden of having to provide sales/production figures at the same time
  • Expand eligibility for staff who are essential to recovery, Government Business Enterprises (GBEs) and non-for-profit organization employers

Eligible Entities

The Work Sharing program is available to the following entities:

  • private business
  • publicly held company
  • Government Business Enterprise (a public corporation)
  • not-for-profit organization

Eligibility

Eligible employers

To be an eligible employer, a business must meet the following:

  • business has been in operation for at least one year;
  • must be a year-round business in Canada;
  • must have at least two employees in a workshare unit
  • workshare unit reduces hours of work by 10 to 60 per cent

Your business is not eligible for WS if it is experiencing a reduction in business activity due to:

  • a labour dispute
  • a seasonal shortage of work, or
  • the decrease in business activity is due to a recent increase in the size of the workforce

And if you are a:

  • shareholder who is responsible for the direction of the company and who holds 40% and more of the voting shares
  • employer who operates solely for the purpose of carrying out the administration of a government program/activity that is purely government in nature (such as municipalities, Government Agencies, etc.), or
  • self-employed
Eligible employees

To be eligible for WS, employees must:

  • be year-round, permanent, full-time or part-time employees needed to carry out the day-to-day functions of the business (your “core staff”)
  • be eligible to receive EI benefits, and
  • agree to reduce their normal working hours by the same percentage and to share the available work

Eligibility is also extended to:

  • employees considered essential to the recovery and viability of the business can now be eligible to participate in Work-Sharing (such as technical employees engaged in product development, outside sales agents, marketing agents, etc.)

Employees that are not eligible for WS include:

  • seasonal employees and students hired for the summer or a co-op term
  • employees hired on a casual or on-call basis, or through a temporary help agency
  • employees responsible for the direction of the company and who hold more than 40% of the voting shares in the business, or
  • self-employed

Application

Employers are now requested to submit their applications 10 calendar days prior to the requested start date. The streamlined measures undertaken by Service Canada will aim to reduce the processing time to 10 calendar days. Prior to COVID-19, employers were requested to send their Work-Sharing application (and supporting documentation) 30 calendar days prior to their requested start date.

To apply for the Work-Sharing program, employers must submit:

Applications should be sent to one of the following email addresses, based on the area a business is located or where the maximum of participants are located:

Atlantic Provinces

Email: ESDC.TP-ATL-WS-TP.EDSC@servicecanada.gc.ca

Quebec

Email: QC-DPMTDS-LMSDPB-TP-WS-GD@servicecanada.gc.ca

Ontario

Email: ESDC.ON.WS-TP.ON.EDSC@servicecanada.gc.ca

Western Canada and Territories

Email: EDSC.WT.WS-TP.ESDC@servicecanada.gc.ca

Temporary Wage Subsidy (ENDED)

This economic support measure provides Canadian businesses who employ workers in Canada with a 10% wage subsidy to cover their employee wages for a period of 3 months, from March 18 to June 20, 2020. In order to qualify, a business must have a business number and payroll program account with CRA on March 18, 2020.

The Temporary Wage Subsidy for employers is a three-month measure that allows eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).

The subsidy is equal to 10% of the remuneration you pay between March 18, 2020, and June 20, 2020. The subsidy is subject to two caps:

  • maximum of $1,375 per employee and
  • maximum of $25,000 total per employer

The subsidy must be calculated manually.

Associated CCPCs are not required to share the maximum subsidy of $25,000 per employer.

If you did not pay salary, wages, bonuses, or other remuneration to an employee between March 18, 2020, and June 20, 2020, you cannot receive the subsidy, even if you are an eligible employer.

The subsidy is considered assistance received from a government. The amount is taxable and is to be included in the computing the income of the eligible employer.

Eligible Entities

Eligible entities include:

  • individual (excluding trusts),
  • partnership,  if their members consist exclusively of individuals (excluding trusts) registered charities, other partnerships eligible for the subsidy, or eligible Canadian-controlled private corporations
  • non-profit organization
  • registered charity
  • Canadian-controlled private corporation (including a cooperative corporation) if:
    • it has a business limit for its last taxation year that ended before March 18, 2020, greater than nil (determined without reference to the passive income business limit reduction) and
    • its taxable capital employed in Canada for the preceding tax  year, calculated on an individual or associated group basis, is less than $15 million

Eligibility

To qualify for this subsidy, an eligible entity must:

  • have an existing business number and payroll program account with the CRA on March 18, 2020; and
  • pay salary, wages, bonuses, or other remuneration to an eligible employee.

An eligible employee is an individual who is employed in Canada.

Application

You do not need to apply for this subsidy.

Once you have calculated your subsidy, you can reduce your current remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy. The subsidy is only calculated when you remit these amounts to the CRA. You can start reducing remittances of federal, provincial, or territorial income tax in the first remittance period that includes remuneration paid between March 18, 2020, and June 20, 2020. For example, if you are a regular remitter, you can reduce your remittance that is due to the CRA on April 15, 2020.

The subsidy will not affect deductions from your employees. You will continue deducting income tax, Canada Pension Plan contributions, and Employment Insurance premiums from salary, wages, bonuses, or other remuneration paid to your employees, as you currently do.

Important: You cannot reduce your remittance of Canada Pension Plan contributions or Employment Insurance premiums.
For example, if you calculated a subsidy of $2,050, you would reduce your current remittance of federal, provincial, or territorial income tax by $2,050. You could continue reducing future income tax remittances, up to the maximum of $25,000, for all remuneration paid before June 20, 2020.

 

Remittances Made to Revenu Québec

This Temporary Wage Subsidy for Employers allows eligible employers to reduce remittances made to the CRA only.

If Subsidies Exceed the Remittances

If the income taxes you deduct are not sufficient to offset the value of the subsidy in a specific period, you can reduce future remittances to benefit from the subsidy. This includes reducing remittances that may fall outside of the application period for the wage subsidy (after June 20, 2020).

For example, if you calculated a subsidy of $2,050 on remuneration paid between March 18, 2020, and June 20, 2020, but only deducted $1,050 of federal, provincial, or territorial income tax from your employees, you can reduce a future income tax remittance by $1,000, even if that remittance is in respect to remuneration paid after June 20, 2020.

If You Do Not Reduce Remittances During the Year

If you are an eligible employer, but choose not to reduce your payroll remittances during the year, calculate the temporary wage subsidy on remuneration paid between March 18, 2020, and June 20, 2020. You can then ask for the subsidy to be paid to you at the end of the year, or transferred to the next year’s remittance.

Recordkeeping

You will need to keep information to support your subsidy calculation. This includes:

  • the total remuneration paid between March 18, 2020, and June 20, 2020;
  • the federal, provincial, or territorial income tax that was deducted from that remuneration; and
  • the number of employees paid in that period.

The CRA is currently updating reporting requirements. More information on how to report this subsidy will be released in the near future.

Reporting

If you are eligible to receive the TWS, you should notify the CRA by submitting Form PD27, 10% Temporary Wage Subsidy Self-Identification Form for Employers, for each of your payroll program (RP) accounts. If you already claimed the TWS, you will need to complete and submit this form to the CRA. If you are thinking of claiming the TWS, you will have to fill out and submit the same form. The form can help you calculate the TWS.

If you have claimed the Canada Emergency Wage Subsidy (CEWS), and want to claim a reduced amount of the TWS, fill out form PD27 and mark the appropriate percentage of the TWS you have claimed (from 0% to 10%). If you fail to indicate your reduced remittances claimed, you will be credited for the entire 10% subsidy and your CEWS claim may be reduced and recovered if necessary.

If you have a credit in your payroll program account after the subsidy is applied and your account is reconciled, the CRA will pay the amount to you or transfer it to your next year’s remittance.

The CRA will use the information from your PD27 to reconcile the subsidy on your payroll program (RP) accounts. This will ensure you do not receive a discrepancy notice at the end of the year.

This form can be submitted at the end of the eligible period. There is no stated deadline for submission of this form, but we advise it be submitted before the end of the year, so as to ensure CRA processes it and updates the payroll accounts appropriately, in time for 2020 T4 filings.

You can submit your self-identification form online, by mail or fax.

Online: Use one of the following options to submit your PD27 online through My Business Account:
  • Submit your completed PD27 web form
  • Scan and submit your completed Form PD27 using “Submit documents”

Canada Emergency Commercial Rent Assistance (ENDED)

This economic support measure provides small businesses that have been affected by COVID-19 with a 75 per cent reduction in rent for the months of April, May, and June through the provision of forgivable loans to qualifying commercial property owners. In order to qualify, a small business tenant must be paying less than $50,000 per month in rent and have experienced at least a 70% drop in pre-COVID revenues. CECRA was subsequently prolonged by 3 additional months – July, August, and September 2020, the latter being the final extension of the program. This program is now closed. As of September 27, 2020, it has been replaced with the Canada Emergency Rent Subsidy program.

The Canada Emergency Commercial Rent Assistance program will lower April, May, and June (*see below for further extensions) rent by 75 per cent for small businesses that have been affected by COVID-19. The program will provide forgivable loans to eligible commercial property owners to cover 50% of gross rent owed by impacted eligible small business tenants during the 3-month period of April, May and June 2020 (*see below for further extensions).

The loans will be forgiven if the property owner agrees to reduce the small business tenants’ rent by at least 75% under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The property owner will be responsible for no less than half of the remaining 50% of gross rent payments (paying no less than 25% of the total). The small business tenant will be responsible for no more than half of the remaining 50% of the gross rent payments (paying no more than 25% of the total).

Impacted small business tenants are businesses paying no more than $50,000 per month in rent, are generating no more than $20 million in gross annual revenues, and who have experienced at least a 70% drop in pre-COVID revenues.

Program assistance can be applied retroactively and may still be applied for once the 3-month period has ended, if eligibility can be proven during those months. Property owners must refund amounts paid by the small business tenant for the period. If rent has been collected at the time of approval, a credit to the tenant for a future month’s rent (i.e. July for April) is acceptable if agreed upon by both the property owner and the tenant. This can be a flexible 3-month period.

Canada Mortgage and Housing Corporation (CMHC) will administer this program on behalf of the Government of Canada and their provincial and territorial partners.

Loan forgiveness

The interest free loan will be forgiven on December 31, 2020. To ensure loan forgiveness, the property owner must follow the terms and conditions of the loan, including:

  • complying with the Rent Reduction Agreement
  • ensuring that the attestation and application (including supporting documentation) is accurate and truthful

If the property owner files for bankruptcy, restructure, reorganize or dissolve your business, they will need to pay back this loan. In the event of default, CMHC has full recourse to recover the CECRA funding from the property owner.

Use of Funds

There are rule on how the property owner can use the funds. In order of priority, they can use the funds for:

  • reimbursing impacted tenants for any rent paid above 25% during the eligible period unless the tenant choses to apply the previously paid rent against future rent
  • any costs and expenses relating directly to the property, including any financing held by the property owner operation and maintenance and repair obligations (such as costs of common area maintenance, property taxes, insurance and utilities)
Monthly Gross Rent

Included in Gross Rent:

  • Net rent / minimum rent / base rent (in a net lease)
  • Regular monthly installments of operating costs (in a net lease)
  • Regular monthly installments of property taxes payable to the landlord (in a net lease)
  • Regular monthly installments of other additional rent amounts payable to the landlord — for example: maintenance costs, repairs, utilities, management fees, etc. (in a net lease)
  • Gross rent (in a gross lease)
  • Percentage of sales rent paid (if included in the lease arrangement)

Excluded from Gross Rent:

  • Damages
  • Indemnity payments
  • Payments arising due to tenant default / landlord enforcement
  • Payments arising due to landlord exercise of self-help remedies
  • Interest and penalties on unpaid amounts
  • Fees payable for discrete items or special services (for example: fees to landlord for reviewing plans, supervising work, considering requests for consent, performing exceptional tasks at tenant’s request)
  • Reconciliation adjustment payments
  • Amounts required under the lease agreement to be paid separately by the tenant to 3rd parties (for example: property taxes, utilities, insurers)
  • Costs of non-monetary obligations (e.g., repairs and maintenance)
  • Insurance proceeds or proceeds from other rent subsidy programs
    Note: applying for insurance coverage does not remove you from being eligible for the program, but it may adjust the amounts received if you successfully receive payments from insurance claims or other programs to cover rent

*Update: On June 29, 2020, it was announced that CECRA will be prolonged by 1-month through to the end of July 2020. On July 31, 2020, it was announced that CECRA will be further prolonged by 1-month through to the end of August 2020. On September 8, 2020, it was announced that CECRA will be further prolonged by 1-month through to the end of September 2020, being the final extension of the program. 

  • Only those tenants approved in the April, May and June application are eligible for the July, August, and September extensions.
  • If a business had an average revenue decline of 70% or more in April, May and June, they are deemed eligible for the additional months of rent relief. However, not all tenants in the original application need to be included for the July, August, and September extensions.

Eligible Entities

Eligible entities include:

  • small businesses
  • non-profit organizations
  • charitable organizations

Eligibility

Property Owner

To qualify for this program, a commercial property owner must meet the following conditions:

  • own commercial real property which is occupied by one or more impacted small business tenants
  • enter (or have already entered) into a legally binding rent reduction agreement for the period of April, May and June 2020, reducing an impacted small business tenant’s rent by at least 75%
  • ensure the rent reduction agreement with each impacted tenant includes:
    • a moratorium on eviction for the period during which the property owner agrees to apply the loan proceeds, and
    • a declaration of rental revenue included in the attestation

CECRA does not apply to:

  • any federal, provincial, or municipal-owned properties where the government is the landlord of the small business tenant; or
  • where the commercial property owner is or is controlled by an individual holding federal or provincial political office.

Exceptions:

  • Where there is a long-term lease to a First Nation, or Indigenous organization or government, the First Nation or Indigenous organization or government is eligible for CECRA for small businesses as a property owner.
  • Where there are long-term commercial leases with third parties to operate the property (for example, airports), the third party is eligible as the property owner.
  • Also eligible are post-secondary institutions, hospitals, and pension funds, as well as crown corporations with limited appropriations designated as eligible under CECRA for small businesses.

Commercial real property is defined as commercial properties with small business tenants. Commercial properties with a residential component and multi-unit residential mixed-use properties would equally be eligible with respect to their small business tenants.

Small Business Tenant

To qualify for this program, an impacted small business tenant must meet the following eligibility criteria:

  • pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement),
  • generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level), and
  • have experienced at least a 70% decline in pre-COVID-19 revenues.

Eligible small business tenants who are in sub-tenancy arrangements are also eligible, if these lease structures meet program criteria.

Revenue reduction test

Small business tenants can calculate their revenue reduction using one of the following scenarios, as applicable:

  • If business was operating during April – June 2019, then compare gross revenues from April, May and June of 2020 to gross revenues of April, May and June of 2019.
  • If business was not operating during April – June 2019, then compare average gross revenues from April, May and June of 2020 to average gross revenues for January and February 2020.

Revenue must consist of revenue earned from ordinary activities in Canada, calculated using your normal accounting method and exclude revenues from extraordinary items.

For registered charities and non-profit organizations, the calculation would include most forms of revenue, excluding revenues from non-arm’s length persons. These organizations would then be allowed to choose to include revenue from government sources as part of the calculation.

New businesses

Small businesses that opened on or after March 1, 2020 are not eligible.

Non-arms length owners and tenants

Landlords and tenants who are not at arm’s length will be included in the CECRA for small businesses so long as there was a valid and enforceable lease agreement in place prior to April 1, on no greater than market terms.

Additional months extension to July, August, and September 2020

Those who qualified for CECRA for small businesses based on existing program parameters  will be able to apply for the additional 3 months (July, August, September) based on having a 70% revenue decline for April, May and June (for example,  without reassessing whether they continue to have a 70% revenue decline in July, August, September). Participation in the three-months extension is voluntary. Both existing applicants to CECRA for small businesses and new applicants are able to apply for the July, August, and September rent reduction.

Application

This program is no longer available. The CECRA application portal is now closed. The deadline to apply was October 30, 2020.

The program can be applied for retroactively. Property owners may still apply for assistance once the 3-month period has ended if they can prove eligibility during those months. Property owners can only apply for the program once per property. For a given property, property owners must apply for all 3 months at the same time and all impacted tenants must be included on a single application.

Information Requirements

The online application process includes both fillable fields and templates of the documents required. Property owners need to provide information in support of their application, sign an attestation and agree to the terms and conditions of the loan agreement in order to be eligible for the program. Information requirements include:

Attestations
  • Tenant or Sub-tenant’s Attestation (sample PDF):
    Property owners must have each of their eligible commercial small business tenants and/or subtenants sign an attestation. The Tenants are responsible for attesting to their eligibility with the program requirements.
  • Property Owner’s Attestation (sample PDF):
    Property owners must sign an attestation confirming the information relating to the property owner and the property provided in the application is correct and attest to their eligibility with the program requirements.
Agreements
  • Rent Reduction Agreement (sample PDF):
    Property owners must enter into a legally binding rent reduction agreement with each impacted tenant to confirm the rent reduction in accordance with the program terms and conditions.  This agreement is conditional upon final approval of the application for CECRA for small businesses.
  • Forgivable Loan Agreement (sample PDF):
    Property owners must agree to the terms and conditions in the application and outlined in the forgivable loan agreement.
Property owner information
  • Property information includes: property address, property type, property tax statement, latest rent roll for each property and the number of commercial units
  • Applicant information includes: banking information (including bank statement), property owner contact information, co-ownership information and contact details for co-owners
Tenant information
  • Tenant information includes: tenant contact information, registered business name, lease area and the monthly gross rent for the period of April, May and June 2020

Canada Emergency Response Benefit (ENDED)

This economic support measure provides individuals with a taxable benefit of $2,000 every 4 weeks for up to 28 weeks within the period from March 15, 2020 to October 3, 2020. In order to qualify, individuals must be eligible workers who have lost their income due to COVID-19 and must have had income of at least $5,000 in 2019 (or 12 months prior).

The Canada Emergency Response Benefit program provides temporary financial support to employed and self-employed Canadians who have stopped working because of COVID-19.

The program provides a payment of $2,000 for a 4-week period ($500 per week) for a maximum of 28 weeks within the eligibility period from March 15, 2020 to October 3, 2020. The calculation of the 28 weeks begins with the first week for which a Benefit is received. However, the 28 weeks do not have to be taken consecutively. Applications can be made for each 4-week period of eligibility, up to a maximum of 28 weeks (7 periods in total). Each payment of the CERB covers a 4-week period.

CERB benefits are taxable and will need to be reported on next year’s tax filing. An information slip will be made available for the 2020 tax year in My Account under Tax Information Slips (T4 and more).

Eligible Entities

Eligible entities are individuals.

Eligibility

To qualify for the CERB, individuals must meet all of the following conditions:

  • live in Canada and are at least 15 years old and have a valid Social Insurance Number
  • stopped working because of COVID-19 or are eligible for EI regular or sickness benefits or have exhausted their EI regular benefits or EI fishing benefits between December 29, 2019 and October 3, 2020
  • have not voluntarily quit their job
  • had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application.

The eligibility rules allow people to earn up to $1,000 per month while collecting the CERB. When submitting a first claim, one cannot have earned more than $1,000 in income for 14 or more consecutive days within the four-week benefit period of the claim. When submitting subsequent claims, one cannot have earned more than $1,000 in income for the entire four-week benefit period of the new claim.

Income Requirements

The $5,000 income includes:

  • all employment and self-employment income
  • tips declared as income
  • non-eligible dividends
  • honoraria (e.g., nominal amounts paid to emergency service volunteers)
  • royalties (e.g., paid to artists).
  • If not eligible for Employment Insurance, may also include maternity and parental benefits received from the Employment Insurance program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan.

Pensions, student loans and bursaries are not considered employment income and should not be included.

The $1,000 income includes:

  • employment and/or self-employment income
  • tips earned while working
  • non-eligible dividends
  • honoraria (e.g., nominal amounts paid to emergency service volunteers)
  • royalties (e.g., paid to artists)

However, royalty payments received from work that took place before the period for which a person applies for the Canada Emergency Response Benefit do not count as income during that specific benefit period. Pensions, student loans and bursaries are not employment income and therefore, should not be included in the $1000.

Application

The Benefit is available from March 15, 2020, to October 3, 2020. Applicants can apply no later than December 2, 2020, for payments retroactive to within that period.

Application can be done through the following:

  • CRA My Account
  • My Service Canada
  • automated phone service, by calling 1-800-959-2019 or 1-800-959-2041. Phone services will be available 21 hours per day, 7 days per week and will be closed from 3:00 a.m. – 6:00 a.m. EST.

You will be required to apply over the phone if you have only filed tax returns in the calendar years prior to 2018. However, if you have never filed a tax return with the CRA and you would like to apply, you will need to call 1-800-959-8281.

You can either apply for the Benefit through Service Canada or the Canada Revenue Agency, but not both. Separate applications must be made for each four week period for which eligibility requirements are met.

Before you apply, ensure your direct deposit and mailing information is up to date with the CRA through your My CRA Account. You can also securely update your direct deposit information with the CRA through your bank, credit unions or trust companies.

Payment

Payments will be made through direct deposit or by cheque; however direct deposit is faster. There is no waiting period so benefits are received within 10 days of applying. Payments will be retroactive to the date of eligibility.

Filing Deadlines & Payment Deadlines

Normal filing and payment deadlines apply for 2021. No economic support measures allowing Canadian taxpayers to defer filing or payment due dates have been announced by the Canada Revenue Agency.

Normal filing and payment deadlines for corporations apply for 2021. There have been no extensions announced by the Canada Revenue Agency.

Normal filing and payment deadlines for individuals apply for 2021. There have been no extensions announced by the Canada Revenue Agency.

Normal filing and payment deadlines for GST/HST apply for 2021. There have been no extensions announced by the Canada Revenue Agency.

Normal filing and payment dates related to payroll apply for 2021. There have been no extensions announced by the Canada Revenue Agency.

New T4 Reporting Requirements

For the 2020 tax year, the Canada Revenue Agency (CRA) will be introducing additional reporting for the T4 slip, Statement of Remuneration Paid.

Additional reporting requirements will apply to all employers, and will help the CRA validate payments under the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Response Benefit (CERB), the Canada Recovery Benefits (CRB) and the Canada Emergency Student Benefit (CESB).

Employers who have already filed their T4 slips and summary for 2020 will not need to refile.

How to report employment income during COVID-19 pay periods

For the tax year 2020, in addition to reporting employment income in Box 14 or Code 71, use new other information codes when reporting employment income and retroactive payments in the following periods:

  • Code 57: Employment income – March 15 to May 9
  • Code 58: Employment income – May 10 to July 4
  • Code 59: Employment income – July 5 to August 29
  • Code 60: Employment income – August 30 to September 26

Eligibility criteria for the CERB, CEWS, CRB, and CESB is based on employment income for a defined period. The new requirement means employers should report income and any retroactive payments made during these periods.

Example

If you are reporting employment income for the period of April 25 to May 8, payable on May 14, use code 58.

Normal filing and payment deadlines for trusts, partnerships, and charities apply for 2021. There have been no extensions announced by the Canada Revenue Agency.

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    The information in this COVID Hub has been written in general terms to provide broad guidance only. It should not be relied upon to cover specific situations and you should not act upon the information contained herein without obtaining specific professional advice. Please contact our office to discuss this information in the context of your specific circumstances. We accept no responsibility for any loss or damage resulting from your reliance on the information contained in this COVID-19 Hub.

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