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Out with the old and in with the new: Updated subsidies announced

With several COVID-19 support measures now expired as of Oct. 23, 2021, the federal government announced new targeted measures that will continue to provide pandemic support to eligible businesses in hard-hit industries.

While the Canada Emergency Wage Subsidy (CEWS) program and the Canada Emergency Rent Subsidy (CERS) are among those that have now expired, the new measures introduced will be based on much of the same criteria and will produce similar supports.

Tourism and Hospitality Recovery Program

Among these new measures is the Tourism and Hospitality Recovery Program (THRP), which will provide support to an industry that suffered a significant decline in revenue due to ongoing lockdowns, border closures and other COVID-19 public health restrictions. While more details on the definition of a qualifying business under this program will be forthcoming, examples of eligible organizations have been released and will include hotels, restaurants, bars, festivals, travel agencies, convention centers, and more. To qualify for this program, organizations must meet the following eligibility criteria:

  • An average monthly revenue reduction of at least 40% over the first 13 qualifying periods for the Canada Emergency Wage Subsidy (12-month revenue decline); and
  • A current-month revenue loss of at least 40%.

The 12-month revenue decline will be calculated as the average of all revenue decline percentages for eligible organizations from March 2020 to February 2021. Any periods in which an entity was not carrying on its ordinary operations for reasons other than a public health restriction would be excluded from this calculation. Existing rules introduced for previous support programs would continue to apply for the purposes of calculating the current-month revenue decline.

Eligible businesses under this program will receive wage and rent support at rates ranging from 40% to a maximum rate of 75% from Oct. 24, 2021 to March 12, 2022 and the program will follow the same 28-day period structure as the previous CEWS and CERS programs. The subsidy rate will continue to be calculated based on current-month revenue decline when compared to revenue of the specified prior period and would increase proportionately with greater declines, consistent with the previous programs.

The rates will be reduced by half for the last two proposed periods covering the time-period from March 13 to May 7, 2022.

Hardest-Hit Business Recovery Program

The Hardest-Hit Business Recovery Program was also introduced and will target organizations that do not qualify for the THRP, but that have also suffered significant revenue decline throughout the pandemic. Under this program, rent and wage support will be paid to businesses that meet the following eligibility criteria:

  • An average monthly revenue reduction of at least 50% over the first 13 qualifying periods for the Canada Emergency Wage Subsidy (12-month revenue decline); and
  • A current-month revenue loss of at least 50%.

The 12-month revenue decline calculation will follow the same rules as under the Tourism and Hospitality Recovery Program. The subsidy rates under this program will start at 10% and will increase on a straight-line basis to a maximum of 50%. These rates will also be reduced by half for the last two proposed periods.

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Source: RSM Canada LLP

Used with permission as a member of RSM Canada Alliance

Out with the old and in with the new: Updated subsidies announced

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The information contained herein is general in nature and based on authorities that are subject to change. RSM Canada LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM Canada LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

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