The Federal Budget 2021: What It Means For Your Business

On April 19, 2021, the Federal government tabled its first budget in two years, and it could not have come at a more difficult time. 

While the economy is reeling from the effects of the ongoing COVID-19 pandemic, and many businesses rely on government support to stay afloat, there was a great deal of interest in how the government would respond. 

The good news is that the government extended the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS). They also added the Canada Recovery Hiring Program (CRHP).

Here’s a detailed look at what support programs are new, what’s changed, and what it all could mean for your business! 

Canada Emergency Rent Subsidy (CERS) at a Glance

Initially set to expire in June 2021, the federal budget extends the rent subsidy and lockdown support through September 25, 2021. The budget also gives the government the authority to extend the program to November 20, 2021, if necessary. 

This program has been in place since October 2020 and provides financial support to tenants and property owners. Businesses that have lost 70% or more in revenue are eligible to receive a 65% rent subsidy during a claim period.

The criteria for who can apply have been essentially unchanged. And the additional 25% available through lockdown support is also unchanged. The only change to the program is the size of the base subsidy in claim periods after July 4, 2021.

The base subsidy will decline incrementally as follows:

 For businesses with a revenue drop of 70% or more: 

  1. Period 17 (June 6 – July 3): Available base subsidy of 65% to a maximum of 90% if eligible for lockdown support.
  2. Period 18 (July 4 – July 31): Available base subsidy of 60% to a maximum of 85% if eligible for lockdown support. 
  3. Period 19 (August 1 – August 28): Available base subsidy of 40% to a maximum of 65% if eligible for lockdown support. 
  4. Period 20 (August 29 – September 25): Available base subsidy of 20% to a maximum of 45% if eligible for lockdown support. 

For businesses that have seen a revenue drop of 10-70%, the base subsidy will still be determined using the same calculations, but declines will begin on July 4, 2021. 

For businesses with losses between 50-70% of revenue

  1. Period 17 (June 6 – July 3): Available maximum of 65% + (revenue drop % – 50%) x 1.25
  2. Period 18 (July 4 – July 31): Available maximum of 60% + (revenue drop % – 50%) x 1.25
  3. Period 19 (August 1 – August 28): Available maximum of 50% + (revenue drop % – 50%) x 0.75
  4. Period 20 (August 29 – September 25): Available maximum of 35% + (revenue drop % – 50%) x 0.5

For businesses with losses between 10-50% of revenue

  1. Period 17 (June 6 – July 3): Available maximum of 25% + revenue drop % x 0.8%
  2. Period 18 (July 4 – July 31): Available maximum of 25% + (revenue drop % – 10%) x 0.875
  3. Period 19 (August 1 – August 28): Available maximum of 25% + (revenue drop % – 10%) x 0.625
  4. Period 20 (August 29 – September 25): Available maximum of 25% + (revenue drop % – 10%) x 0.25

Businesses with a decline of less than 10% of revenues will not be eligible for CERS after July 4, 2021. 

What’s New with the Canada Emergency Wage Subsidy?

As with CERS, the wage subsidy has been extended to September 25, 2021, with a possible extension to November 20, 2021, if necessary. 

The rate structure for active employees that went into effect for Period 11 on December 19, 2020, will remain in effect until Period 17 (June 6 to July 3, 2021). 

Beginning with Period 18 (July 4 to July 31, 2021), the base and top-up subsidy rates will gradually decrease. Employers with a revenue drop below 10% will no longer be eligible for the program. 

Here’s how the decrease will look:

For businesses with a loss of 70% or more

  1. Period 17 (June 6 – July 3): Available base subsidy of 75% (Base: 40% + Top-up: 35%) to a maximum of $847 per active employee
  2. Period 18 (July 4 – July 31): Available base subsidy of 60% (Base: 35% + Top-up: 25%) to a maximum of $677 per active employee
  3. Period 19 (August 1 – August 28): Available base subsidy of 40% (Base: 25% + Top-up: 15%) to a maximum of $452 per active employee
  4. Period 20 (August 29 – September 25): Available base subsidy of 20% (Base: 10% + Top-up: 10%) to a maximum of $226 per active employee

For businesses with losses between 50-70% of revenue:

  1. Period 17 (June 6 – July 3): Available base subsidy of 40% + (revenue drop % – 50%) x 1.75
  2. Period 18 (July 4 – July 31): Available base subsidy of 35% + (revenue drop % – 50%) x 1.25
  3. Period 19 (August 1 – August 28): Available base subsidy of 25% + (revenue drop % – 50%) x 0.75
  4. Period 20 (August 29 – September 25): Available base subside of 10% + (revenue drop % – 50%) x 0.5

For businesses with losses between 10-50% of revenue: 

  1. Period 17 (June 6 – July 3): Available base subsidy of revenue drop % x 0.8
  2. Period 18 (July 4 – July 31): Available base subsidy of (revenue drop % – 10%) x 0.875
  3. Period 19 (August 1 – August 28): Available base subsidy of (revenue drop % – 10%) x 0.625
  4. Period 20 (August 29 – September 25): Available base subsidy of (revenue drop % – 10%) x 0.25

The subsidy rate for furloughed employees that took effect in Period 11 will continue through Periods 18 and 19. But, for Period 20 (August 29 – September 25), businesses and employers will no longer be able to claim regular remuneration paid to furloughed employees. They can, however, continue to claim Canada Pension Plan and Employment Insurance contributions paid in respect to furloughed employees. 

What is the Canada Recovery Hiring Program (CRHP)?

The Canada Recovery Hiring Program (CRHP) is a brand new program introduced in this budget. 

CRHP will provide eligible employers with a subsidy of up 50% of the incremental remuneration paid to eligible employees between June 6, 2021, and November 20, 2021. This subsidy is designed to help offset a portion of the costs employers will face in reopening by increasing wages, hours worked, or hiring additional staff. 

Eligible employers can claim the CRHP or CEWS for the qualifying period, whichever is higher, but they cannot claim both. 

Who is Eligible for CRHP?

Typically, employers that are eligible for CEWS will be eligible for CRHP; however, only corporations that are Canadian-controlled private corporations will be eligible for the CRHP. 

Other eligible employers may include: 

  • Individuals
  • Non-profit organizations
  • Registered charities
  • And certain partnerships

Corporations and trusts not eligible for CEWS because they are a public institution would also not be eligible for the hiring subsidy. 

All eligible employers or their payroll services provider would need to have had an open payroll account with the Canada Revenue Agency on March 15, 2020. 

An eligible employee is one that is employed primarily in Canada by an eligible employer for a qualifying period or the portion of the qualifying period where that individual was employed by the eligible employer. 

Eligible Remuneration and Incremental Remuneration

The types of remuneration eligible for CEWS would also qualify for CRHP. 

Generally, eligible remuneration includes salary, wages, and other remuneration that employers are required to withhold or deduct due to the employee’s income tax obligations. It does not, however, include severance pay, stock option benefits, or the personal use of a corporate vehicle. The remuneration for employees is based solely on the remuneration paid for the qualifying period. 

Incremental remuneration is the difference between an employer’s total eligible remuneration paid to eligible employees during a qualifying period and the total eligible remuneration paid to eligible employees during the baseline period. For both the qualifying period and the baseline period, eligible remuneration would be subject to a maximum of $1,129 per week. 

Period 17 (June 6 – July 3) is the first qualifying period for CRHP. The baseline period is March 14 to April 10, 2021.

Subsidy Amount

If an eligible employer has met the revenue-decline threshold for a qualifying period (more than 0% in Period 17 and more than 10% thereafter), the subsidy for that qualifying period would be equal to the incremental remuneration multiplied by the applicable hiring subsidy rate for that qualifying period.

The hiring subsidy rates are as follows:

  • Period 17 (June 6 – July 3): 50%
  • Period 18 (July 4 – July 31): 50%
  • Period 19 (August 1 – August 28): 50%
  • Period 20 (August 29 – September 25): 40%
  • Period 21 (September 26 – October 23): 30%
  • Period 22 (October 24 – November 20): 20%

Applications for a qualifying period must be made no later than 180 after the end of that qualifying period. 

This program is meant to encourage immediate hiring, as evidenced by the declining subsidy over time. 

At the moment, the application process has not been made clear, but we expect an update to the government website before too long. 

What This Means for Your Business

Most employers and business owners are simply riding the wave. No one knows what is coming around the next corner, but understanding what supports are available and how those supports are set to change can help you prepare for the change. 

It is likely in many cases that the amounts available through CRHP will balance out the potential losses from the decrease in CEWS. 

If you are uncertain where you stand or need help calculating your losses and remunerations, our team at WTC is available to help! We can help you sort through your payroll or improve your accounting setup. Proper bookkeeping can help you better understand your business cash flow and allow you to make the right decisions in these difficult times for both your business and your employees. 

Contact us today to learn more. 

Do you have a question?