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On April 19, 2021, Finance Minister Chrystia Freeland tabled the minority Government’s 2021 Federal Budget, which included various updates to the Canada Emergency Wage Subsidy (CEWS) and the introduction of a new Canada Recovery Hiring Program (CRHP). A summary of the proposed measures is provided below.

CEWS

Base Wage Subsidy – Claim Periods and Reference Periods

The current combined maximum base subsidy and top-up wage subsidy rate is set at 75% through the qualifying period ending on June 5, 2021. The Budget proposes declining maximum weekly benefits per employee to phase out the CEWS as follows:

Baseline Remuneration

The Budget proposes to allow an eligible employer to elect to use the following alternative baseline remuneration periods:

  • March 1 – June 30, 2019 or July 1 – December 31, 2019, for the qualifying period between June 6, 2021 and July 3, 2021; and
  • July 1 – December 31, 2019 for the qualifying periods beginning after July 3, 2021.

Furloughed Employees

To ensure the CEWS for furloughed employees continues to align with EI benefits, the Budget proposes the weekly wage subsidy from June 6, 2021 – August 28, 2021 be the lesser of:

  • The amount of eligible remuneration paid in respect of the week; and
  • the greater of:
    • $500; and
    • 55% of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595.

Repayment by Publicly Listed Corporations

The Budget proposes to require a publicly listed corporation to repay its wage subsidy amounts received for a qualifying period that begins after June 5, 2021 where its aggregate compensation for specified executives during the 2021 calendar year exceeds its aggregate compensation for specified executives during the 2019 calendar year. For this purpose, specified executives will be its Named Executive Officers whose compensation is required to be disclosed under Canadian securities laws or similar executives as required for corporations listed in another jurisdiction.

The wage subsidy required to be repaid would be equal to the lesser of:

  • The total of all wage subsidy amounts received in respect of active employees for qualifying periods that begin after June 5, 2021; and
  • The amount by which the corporation’s aggregate specified executives’ compensation for 2021 exceeds its aggregate specified executives’ compensation for 2019.

This repayment requirement applies to wage subsidy amounts paid to any entity in the group.

Canada Recovery Hiring Program (CRHP)

The Budget proposes a new CRHP to provide eligible employers with a subsidy of up to 50% on the incremental remuneration paid to eligible employees between June 6, 2021 and November 20, 2021. An eligible employer would be able to claim either the CRHP or the CEWS for a particular qualifying period, but not both.

An application for the CRHP would be required to be made no later 180 days after the end of the particular qualifying period.

Eligible Employers

Employers eligible for the CEWS would generally be eligible for the CRHP.  However, with respect to for-profit corporations, only Canadian-controlled private corporations (CCPC), including a cooperative corporation eligible for the small business deduction, would be eligible.

Eligible employers, or their payroll service providers, would be required to have had a payroll account open with the CRA on March 15, 2020.

Eligible Employees

An eligible employee must be employed primarily in Canada by an eligible employer throughout a qualifying period. The CRHP would not be available for furloughed employees.

Eligible Remuneration and Incremental Remuneration

The types of remuneration eligible for the CEWS would also be eligible for the CRHP.

Incremental remuneration for a qualifying period means the difference between an employer’s total eligible remuneration paid to eligible employees for the qualifying period and its total eligible remuneration paid to eligible employees for the baseline period. 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 CEWS, eligible remuneration for non-arm’s length employees for a week cannot exceed their baseline remuneration for that week.

Qualifying Periods

The relevant qualifying periods are provided as follows:

Revenue Decline Threshold

An employer’s decline in revenues would be determined in the same manner as under the CEWS.

To qualify for the CRHP, an eligible employer’s decline in revenues would have to be more than:

  • Nil (i.e., any decline), for Period 17; and
  • 10%, for the qualifying Periods 18 to 22.

Employers that chose to use the general approach or the alternative approach for prior periods of the CEWS would be required to continue to use that approach for the CRHP.

Reference Periods and Subsidy Amount

If an eligible employer’s decline in revenue exceeds the revenue decline threshold for a qualifying period, its subsidy in that qualifying period would be equal to its incremental remuneration multiplied by the applicable hiring subsidy rate for that qualifying period.

 

 

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