As you probably know, the Canadian government swooped into action with a pair of major economic subsidies in 2020: CEWS and CERS.

These two subsidies were passed to mitigate the worst effects of Covid-19 on our economy during a period of real uncertainty. (Though I think we all heard the phrase “in these uncertain times” enough for one lifetime!)

Now that these key subsidy programs are being phased out, we need to talk about what the end of these programs means for your business – and what you can do to find economic relief if your business is still recovering financially from the pandemic.

CEWS and CERS for employers

If you experienced a drop in revenue and met specific eligibility requirements, then chances are good you’re already familiar with CEWS and CERS for employers.

But in case you aren’t, here’s a quick refresher!

First, the Canada Emergency Wage Subsidy (CEWS) provided wage replacement for Canadian businesses whose revenue went down during the pandemic, which helped them make payroll during leaner months.

Second, there was the Canada Emergency Rent Subsidy (CERS), which provided much-needed relief to qualifying businesses that couldn’t cover rent or mortgage payments due to a loss in revenue.

These programs were a huge boon for businesses across the country, with a total of more than $95 billion paid out in the wage subsidy alone, and more than $6.8 billion going to support rent, mortgage, and related expenses for more than 210,000 businesses.

That’s undeniably a positive thing! But now, unfortunately (or fortunately, depending on your perspective), we’ve reached a point where we’re ready to phase out these major subsidies.

The CEWS and CERS programs officially expired at the end of Period 21 (on October 23, 2021). So, what now?

Canada Wage Subsidy Program Replacement

Here’s the good news: Canada has announced new measures to replace the CEWS and CERS subsidies.

The bad news is, you’re going to have a tougher time qualifying for the new emergency wage subsidy – and the money on offer is just $7.4 billion, quite a bit less than what was available during the worst of the pandemic.

But that’s kind of the point. In fact, Canada’s Deputy Prime Minister and Finance Minister Chrystia Freeland, said as much in her recent announcement of the new programs: “Today, our support needs to be more narrow, more targeted and less expensive and we need to look forward to the day, now not too far off, when we will be able to bring it to an end entirely,” she said.

Without further ado, the new employer support programs include the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program. The former is obviously centered around businesses within the select sectors of the tourism and hospitality industries – if this might apply to you, it’s worth exploring further to see if you qualify! (Please contact us at Envolta for personalized guidance on your options.)

For more information on eligibility requirements for these two programs, see the FAQ section below in this post.

In addition, the government is extending the Canada Recovery Hiring Program (CRHP) through May 7, 2022 and possibly beyond. This is where most businesses seeking a wage subsidy should look.

How to apply for Canada Wage Subsidy

Now that CEWS has expired, if you’re in a position where you need wage subsidies, you should focus your attention on the CRHP program. The CRHP supports employers with a subsidy of up to 50% on incremental remuneration paid to eligible working employees.

While requirements are strict for the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program, many businesses should be eligible for the CRHP subsidy.

Here’s what you need in order to apply:

  1. Have a CRA Business Number issued before March 15 or a third-party payroll provider who submits your payroll to CRA;
  2. Have active employees on payroll who receive a T4 slip (includes new hires); and
  3. Have a revenue loss of more than:
    1. 0% for CRHP period 17 (between June 6 and July 3, 2021).
    2. 10% for CRHP period 18 (July 4 – July 31) and any following CRHP period.
Just be aware that the fixed subsidy rates you can receive have been falling over time – from 50% for period 17 (June 6 to July 3, 2021) down to 20% for period 22 (October 24 to November 20). As you can see, the requirements are still fairly generous, but in comparison to CEWS, they are getting more stringent as Canada looks to have more employers get back on their feet.

Oh, and one other thing: it may sound like the CRHP is focused only on hiring new employees, but it can be used for existing employees as well! Overall, the program is just designed to get as many people working and receiving wages as possible.

Frequently asked questions

What are the eligibility requirements for the Tourism and Hospitality Recovery and Hardest-Hit Business Recovery Program?

The Tourism and Hospitality Recovery Program is intended to support hotels, restaurants, bars, festivals, travel agencies, and other related businesses that were deeply affected by the pandemic. The requirements for this program include an average monthly revenue reduction of at least 40% over 12 months, as well as a current-month revenue loss of at least 40%.

As for the Hardest-Hit Business Recovery Program, this one is designed for businesses that have been hardest hit since the start of the pandemic. This is quantified in a similar way to the previous program. To qualify, you’ll have to have an average monthly revenue reduction of at least 50% over 12 months, as well as a current-month revenue loss of at least 50%.

How do I access the application through My Business Account?

In order to apply and access your application for one of these subsidy programs, you’ll want to use My Business Account on the Canada Revenue Agency’s site. This is the secure online portal that allows you to manage your application.

Simply go to the CRHP application under “Payroll” on the main menu to get started. You may also call CRA’s business enquiries phone number to discuss or cancel your claim.

Can I apply for the new CEWS program if I have multiple businesses or entities?

Under CRHP, you should only submit one application for each claim period you’re eligible for, even if you have more than one payroll program (RP) account. This is different than what you would have done under CEWS.

With that said, there may be some cases where affiliated businesses or entities could consolidate or separate their revenues. Be sure to check with us if you have any questions on this.

Is it possible to use independent contractor wages or employee dividends for the new CEWS?

No, these are still not permitted under CRHP.

Do I have to combine the wage subsidy and the 10% temporary wage subsidy for employers?

Yes. The 10% temporary wage subsidy was a 3-month measure from March to June 2020 that allowed you to reduce the amount of payroll deductions remitted to the CRA. It was limited to $1,375 per employee and $25,000 total per employer.

If you were eligible for both the TWS and the CEWS program, you could claim both, but you would reduce your CEWS claim by all amounts claimed under TWS.

Conclusion

I hope this important update has helped you figure out the next steps for your business in a post-CEWS and CERS world.

Need help?

With that said, if you’re looking for additional support and guidance, don’t hesitate to reach out to us here at Envolta. We have experts who can help you make sure you’re not leaving any much-needed support for your business on the table.
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