CERS and CEWS Extended to June 2021

Picture of Canadian money to denote businesses receiving help due to CERS and CEWS being extended to June 2021.

On March 3, 2021, the government announced that the CERS and CEWS would be extended to June 5, 2021. They said both programs will be maintained at current levels. This is good news for businesses who are still struggling. Here’s what that means below.

CERS and CEWS Extended June 2021 Details

The Canada Emergency Rent Subsidy (CERS) will be extended to June 5, 2021. It will still cover up to 65% of eligible employers’ rent. Also, the additional 25% lockdown subsidy top-up for hard hit businesses restricted by more severe public health guidelines will be extended to June 5, 2021.

The Canada Emergency Wage Subsidy (CEWS) will also be extended to June 5, 2021. It will still cover up to 75% of employees’ wages for eligible employers.

The government also announced an extension for Furloughed workers to June 5, 2021. Here’s a quote from the government’s website regarding this:

“the government intends to continue to align the wage subsidy rate structure with the benefits provided through the Employment Insurance program from March 14 to June 5, 2021. This means employers who qualify for the wage subsidy would be able to continue to claim up to a maximum benefit of $595 per week per employee to support remuneration of their furloughed workers.”

Conclusion

The Prime Minister said, “This isn’t the time to pull back on support for workers or business owners, it’s the time to see people through what is hopefully the final stretch of this crisis and it’s time to get the whole economy ready to come roaring back,”

Hopefully he is correct and we are in the final stretch of this pandemic. But as already seen so far, the coronavirus is unpredictable and highly resilient. So only time will tell if we are nearing the finish line. Until then, please stay safe.

Government of Canada’s Fall Economic Statement and Budget – Highlights

A picture of someone holding Canadian money to denote how the Government of Canada's fall economic statement will affects many Canadian's pocket books.

On Monday November 30, 2020, I got up and watched the Government of Canada’s fall economic statement. I wanted to see what further relief plans they had for Canadians who are struggling due to the ongoing COVID-19 pandemic. The finance minister, Chyrstia Freeland, mentioned a myriad of things they were planning to do with some ideas being more concrete than others. Here are some of the highlights below.

Government of Canada’s Fall Economic Statement- Increasing the Canada Emergency Wage Subsidy (CEWS) Rate

To continue to help businesses, the government is increasing the maximum rate of the Canada Emergency Wage Subsidy to 75 per cent for the period beginning December 20, 2020 and extending this rate until March 13, 2021. This means the government will cover up to 75% of employees’ wages during this time period. Originally, this had decreased, but this amount has now been restored to cover up to 75% of wages again.

Extension of The Canada Emergency Rent Subsidy (CERS) Rate and Lockdown Support

The current maximum rate of the Canada Emergency Rent Subsidy is 65 percent and businesses severely affected by a lockdown good get could get up to additional 25 percent of eligible expenses. This rate was to last until December 19, 2020 but now has been extended until March 13, 2021.

Potential Support for Airlines, Tourism, Hotels, Arts – Highly Affected Sectors Credit

The Finance Minister also mentioned setting up low interest loans in these industries of up to a million dollars. Those industries, as noted in the heading, are airlines, tourism, hotels and the arts. The terms of these loans would be extended over a period of up to 10 years. This will be called the Highly Affected Sectors Credit Availability Program.

Government of Canada’s Fall Economic Statement – More Support for Families

To help families with young children through the pandemic, the government will provide temporary support of up to $1,200 in 2021 for each child under the age of six for families entitled to the Canada Child Benefit.

Conclusion

The Government of Canada’s Fall Economic statement contained a lot of details on programs and ideas to help Canadians navigate through this pandemic and beyond. The above were just some of the main highlights gleaned from it. If you want a more detailed listing, please visit the government’s website. The cost of these programs will be enormous but the government feels it is necessary for the situation we are in. Will it help? Only time will tell but for many who are suffering due to covid-19, any help at all is good help. Stay safe.

Canada Emergency Wage Subsidy Extension, New Adjustments and Details

A picture to denote person looking at finances to see if qualifies for the Canada Emergency Wage Subsidy Extension changes.

The Canada Emergency Wage Subsidy extension was passed through Bill C-20 this week. Along with the extension, there are significant changes to the program. I will try to break down these changes as clearly as possible.

Canada Emergency Wage Subsidy Extension

The Canada Emergency Wage Subsidy has been extended until December 19, 2020. Here’s a quote from an article from CPA Canada below:

  • allow the extension of the CEWS until December 19, 2020, including redesigned program details until November 21, 2020

What does this mean? It means that the program is extended until December 19, 2020 but the details of the program only go to November 21, 2020. There are no details yet on how the last four weeks of the program will be administered at this time. So what are the newest changes?

Canada Emergency Wage Subsidy Extension Changes, Elimination of 30% Revenue Test

As of July 5, 2020, applicants for the subsidy will no longer have to have at least a 30% revenue drop to apply for the Canada Wage Subsidy. If you have any kind of revenue drop, you can apply. Many felt that the 30% drop requirement was too strict and due to that, many businesses could not apply. The hope now is that more businesses can apply for the subsidy. However, the subsidy has now changed, with the program now having two components, the base subsidy and the top up.

Canada Emergency Wage Subsidy Extension Changes, Base Subsidy

As of July 5, 2020 , there will be a base wage subsidy for employers to claim for wages. For example, if your revenue drop was 50% or more then you will have a base subsidy of 60% of employees’ wage. If your revenue drop was 49% or less, then your base wage subsidy will be your percentage drop x 1.2 x employee’s wage.

However, this rate is only good for the first two 4 week periods as the rates drop off afterwards. For example, if your revenue drop was greater than 50%, your base subsidy rate in the 3rd 4 week period would drop to 50%, the next 4 week period to 40% and the next one to 20%. The same is true if your revenue extension was 49% or less. In the 3rd 4 week period, your base wage subsidy would be your percentage drop x 1.0 x employee’s wage. In the fourth period you have your percentage drop x 0.8 x employee’s wage. The 5th period you would have your percentage drop x 0.4 x employee’s wage.

Chart of Canada Wage Subsidy Extension Drop

Here’s a chart from the government’s website on the drop that I just described below:

TimingPeriod 5*:
July 5 – August 1
Period 6*: August 2 – August 29Period 7: August 30 – September 26Period 8: September 27 – October 24Period 9:
October 25 – November 21
Maximum weekly benefit per employeeUp to $677Up to $677Up to $565Up to $452Up to $226
Revenue drop     
50% and over60%60%50%40%20%
0% to 49%1.2 x revenue drop
(e.g., 1.2 x 20% revenue drop = 24% base CEWS rate)
1.2 x revenue drop
(e.g., 1.2 x 20% revenue drop = 24% base CEWS rate)
1.0 x revenue drop
(e.g., 1.0 x 20% revenue drop = 20% base CEWS rate)
0.8 x revenue drop
(e.g., 0.8 x 20% revenue drop  = 16% base CEWS rate)
0.4 x revenue drop
(e.g., 0.4 x 20% revenue drop = 8% base CEWS rate)

Canada Emergency Wage Subsidy Extension Changes, Top Up

A second part of the program is a top up available for businesses that have lost 50% or more in revenue. The top-up increases depending upon the revenue to a maximum of an additional 25% subsidy which would be added to the amount of your base subsidy. Here’s another chart from the government of Canada’s website that highlights this below:

3-month average revenue dropTop-up CEWS rateTop-up calculation = 1.25 x (3 month revenue drop – 50%)
70% and over25%1.25 x (70%-50%) = 25%
65%18.75%1.25 x (65%-50%) = 18.75%
60%12.5%1.25 x (60%-50%) = 12.5%
55%6.25%1.25 x (55%-50%) = 6.25%
50% and under0.0%1.25 x (50%-50%) = 0.0%

Canada Emergency Wages Subsidy Extension Changes, Safe Harbour Rule

What is the safe harbour rule? It is when an employer who was on the program prior to July 5, 2020 and was receiving wage subsidy for their employee(s) of 75%. For the next two periods ending August 29, 2020, they will either receive 75% of employee(s) wages or the next base rate plus top up, whichever is greater. However, after August 29th, they would be subject to the new changes fully.

Conclusion

The government’s changes to the Canada Emergency Wage Subsidy does have the potential to help more Canadian businesses. However, it is a short term solution as the program has a “weaning off process” as it pays less and less over time. So there is definitely incentive for businesses to get up and going quickly.

However, there are unknowns based on how quickly certain areas of the economy can recover from the pandemic and if there is another wave or surge. At that point all bets are off and was probably why the government did not provide details for last period going into December. As that is the great unknown. The changes are a bit complicated and will take some time to understand and hopefully more details will be provided in the days ahead.

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