After several extensions and updates to the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS), the 2021 Federal Budget has proposed a gradual phase-out of both of these programs. With the vaccine rollout and introduction of the Canada Recovery Hiring Program (CRHP), the Federal Government is shifting focus from subsidizing wages of existing employees to subsidizing the hiring or hiring back of employees. Both programs will be extended to September 25, 2021, but will start phasing out beginning on July 4th, 2021. On that date, only employers with more than a 10% revenue decline will be eligible for CEWS and CERS.
CEWS
Beginning with CEWS Period 18 (July 4 – July 31), the maximum weekly benefit per employee and maximum wage subsidy percentage will decrease each period from their current levels of $847 and 75% respectively. This decrease continues until CEWS Period 20 (August 29 – September 25) which is the final period that the CEWS is available. For this final period, the maximum weekly benefit per employee is $226, and the maximum wage subsidy percentage is 20%. A full breakdown of the changes to CEWS, including reference periods for each period, and how it will be phased out can be viewed here.
Additionally, publically listed corporations must repay wage subsidy amounts received for a qualifying period that begins after June 5, 2021, if the aggregate compensation for specified executives during the 2021 calendar year exceeds that of the 2019 calendar year.
The subsidy rate structure for furloughed employees that has applied since Period 11 will continue to apply in periods 18 and 19 (ending August 28, 2021.) Beginning in Period 20, employers can no longer claim the CEWS on regular remuneration paid to furloughed employees. Employers can continue to claim Canada Pension Plan (CPP) and Employment Insurance (EI) contributions paid in respect of these employees.
CERS
The CERS phase-out parallels the CEWS phase-out very closely. While the rent subsidy declines throughout the remaining periods, Lockdown Support stays consistent at 25%. Beginning with CERS Period 11 (July 4 – July 31, the same range as CEWS Period 18), the maximum rent subsidy percentage will decrease each period from its current level of 65%. This decrease continues until Period 13 (August 29 – September 25, the same range as CEWS Period 20) which is the final period that the CERS is available. For this final period, the maximum rent subsidy percentage is 20%. A full breakdown of the changes to CEWS, including reference periods for each period, and how it will be phased out can be viewed here.
The Federal Government has repeatedly changed how its subsidies function, including extending previous phase-out timelines so this program may change throughout the course of the pandemic. Please reach out to your Bateman MacKay Business and Tax Advisor for support with the CEWS, CERS and other Federal COVID-19 Support Programs for your business.
