New COVID-19 Federal Support Program: Canada Recovery Hiring Program (CRHP)

The 2021 Federal Budget introduced the new Canada Recovery Hiring Program (CRHP), in addition to several updates to other COVID-19 Support Programs. The CRHP is designed to complement the phase out of the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) by providing eligible employers a subsidy for increased wages. Employers must experience a revenue reduction of any amount in the first period (Period 17, June 6- July 3) or at least 10% in the remaining periods. The CRHP subsidy amount is up to 50% of the incremental remuneration paid to eligible employees between June 6, 2021, and November 20, 2021.

Incremental remuneration is the difference between:

• the total eligible remuneration paid to qualifying employees for the qualifying period
• the total eligible remuneration paid to qualifying employees for the baseline period

The baseline period for all application periods is March 14 to April 10, 2021. Eligible remuneration includes the same types of remuneration eligible for CEWS (i.e.: salary, wages and other remuneration for which employers are required to withhold or deduct amounts) paid within the qualifying period. The CRHP has a maximum weekly amount per employee of $1,129.33 for both the baseline period and qualifying period. Below are two examples that are based on the Federal Budget’s proposed legislation and assume the employer and employee meet the eligibility criteria (reviewed subsequently).

Example #1

ABC Inc (“ABC”) has seen a revenue reduction of 10%, but projects an increase in business over the coming months. ABC wishes to rehire employees that were terminated during 2020 as well as bring on additional employees. Between March 14 and April 10, 2021, ABC paid ten employees equally for a total of $30,000. For the June 6 to July 3 period, ABC rehired three employees and hired two additional employees, paying their 15 employees a total of $45,000. The additional $15,000 would be eligible for the CRHP subsidy and ABC would receive a $7,500 subsidy calculated as:

$45,000 – $30,000 = $15,000 x 50% = $7,500.

Example #2

XYZ Company (“XYZ”) is a small, specialized technology company with two employees. They have experienced a revenue reduction of 13% and in anticipation of the economy reopening, a third employee will increase capacity and revenue. Between March 14, and April 10, 2021, XYZ paid each of their two employees $5,000 for a total of $10,000. With the addition of the third employee, XYZ pays each of their three employees $5,000 for a total of $15,000 between August 1 and August 28. Since the maximum weekly CRHP subsidy amount for both periods is $1,129.33, XYZ would be eligible for a $2,258.66 subsidy.

($1,129.33*4 weeks)*3 employees – ($1,129.33*4 weeks)* 2 employees = $4,517.32 * 50% = $2,258.66

Eligibility Criteria – Employers

Most organizations that qualify for the CEWS are also eligible for the CRHP. The program applies to Canadian controlled private corporations (CCPCs), individuals, non-profit organizations, registered charities and certain partnerships. A partnership is only eligible if less than 50% of its interests are owned by any person or partnership that is not an eligible entity, or a corporation other than a CCPC. Eligible employers must have had a CRA payroll account established by March 15, 2020. An eligible employer can claim the CRHP or the CEWS for a particular qualifying period, but not both.

Similar to the CEWS, eligible remuneration for a non-arm’s length employee for a particular week can not exceed their baseline remuneration determined for that week.

Eligibility Criteria – Employees

An eligible employee must be employed primarily in Canada by an eligible employer throughout the qualifying period (or the portion of the qualifying period throughout which the eligible employer employed the individual). The CRHP does not apply to furloughed employees but does apply to employees on other periods of paid leave such as vacation leave, sick leave, or a sabbatical.

Rates and Revenue Decline Reference Periods

*Period 17 of the CEWS is the first period of the CRHP.
**Period 20 is the final period for the CEWS and CERS.

This new government program has numerous nuances, please contact your Bateman MacKay LLP tax advisor for assistance.