As of Saturday, October 23, 2021, a suite of federal benefits formerly slated for both individuals and small businesses was set to expire following several extension periods. In partial response, the federal government has earmarked $7.4 billion for new programs intended to maintain some level of support for businesses and individuals throughout the Covid-19 pandemic.
What Is Set To Expire?
On October 23, 2021, the Canada Emergency Rent Subsidy (CERS) and the Canada Emergency Wage Subsidy (CEWS) both expired after their initial implementation in 2020. The Budget Implementation Act would allow the government to extend these programs to November 30, 2021, however, anything beyond this time frame would require the introduction of new legislation. Under the CERS, businesses have a monthly cap of $75,000 on eligible expenses that can be claimed per business location, and $300,000 in total for all locations. In our discussion below, there is potential for an increase in this monthly cap.
The Canada Recovery Benefit (CRB; formerly known as the Canada Emergency Recovery Benefit, or “CERB”) is to be replaced by a more targeted program called the Canada Worker Lockdown Benefit (CWLB).
The expiration of these benefits has significant implications for small businesses, especially the restaurant industry. These and other small-business owners are still waiting for or adjusting to full-capacity venues, and attempting to slowly recoup significant losses from the last two years. According to a recent survey, as many as 8 out of 10 restaurants will need federal subsidies in order to survive these fall and winter months. With any cessation to wage or rent subsidies, most foodservice and other small businesses will struggle to pay staff and suppliers, and layoffs or business closures may result.
Over two million Canadians have applied for CRB to date, while approximately 700,000 have applied for the Canada Recovery Sickness Benefit (CRSB) and over 450,000 for the Canada Recovery Caregiver Benefit (CRCB). Individuals who have lost their jobs or are responsible for caring for family and loved ones, and who were reliant upon these subsidies, now find themselves in even more precarious financial positions.
According to David Macdonald, a senior economist at the Canadian Centre for Policy alternatives, as many as 1.5 million workers are set to be directly impacted upon the ending of these programs; he estimates that as a result of CERS and CEWS cuts, more than 640,000 workers’ jobs may be in jeopardy.
The federal government has announced $7.4 billion in changes to the income and business support programs put in place during the pandemic, as a shift from temporary to more targeted forms of support. The CRB will be replaced by the Canada Worker Lockdown Benefit (CWLB), for those whose work is directly impacted by government-imposed lockdowns. This program will be available until May 7, 2022, retroactive to October 24, 2021, and will provide $300/week to eligible employees. The benefit will be accessible to those ineligible for Employment Insurance (EI), as well as those who are eligible, provided they are not receiving payment through EI for the same period.
In addition, the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program will also be available until May 7, 2022. Those applying for these programs will need to pass through a two-part eligibility process.
The former program applies to businesses such as hotels, restaurants, bars, festivals and travel agencies; it requires applicants to demonstrate an average monthly revenue loss of at least 40% for the first 13 qualifying periods of the CEWS and a revenue loss of the same amount in the current month. To support hard-hit sectors like hotels and restaurants, the federal government has now proposed legislative amendments to increase the aggregate monthly cap from $300,000 to $1 million, beginning October 24, 2021.
The latter applies to those that don’t fit under the tourism/hospitality umbrella but continue to face significant challenges caused by the pandemic. In these cases, businesses would be required to show an average monthly revenue loss of at least 50% over the first 13 qualifying periods of the CEWS and a revenue loss of the same amount in the current month.
The Canada Recovery Hiring Program (CRHP) is being extended until May 7, 2022, with authority for further regulatory extensions until July 2, 2022. This benefit is for employers with greater than 10% losses in current revenue; an increased subsidy rate of up to 50% is also available.
The Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiver Benefit (CRCB) remain subject to the same potential extension until May 7, 2022. So far, the CRCB has provided $3.58 billion to 465,610 applicants while the CRSB has delivered over $742 million to 698,970 claimants.
Given the rapid pace at which laws, regulations and public health guidance are evolving, we expect to see more changes and clarity on these programs in the weeks and months to come.
If you need help with navigating legislative or benefits-related changes that may impact your business or individual financial well-being, please get in touch for a consultation.