Post Covid-19 Business Recovery

Post Covid-19 Recovery

The federal government has taken the position that the COVID-19 pandemic has subsided, and economy is slowly getting back to normality based on their announcements in the recent weeks. 

Accordingly, the Liberal Government last week has allowed for expiry of the three support programs 

(i.e., Canada Emergency Wage Subsidy CEWS, Canada Emergency Rent Subsidy CERS and Lockdown Support) 

Replacing them are new programs catering to specific industry, which is expected to run until May 7, 2022. The intention is to help businesses that will continue to be impacted due to the continuing restrictions (e.g., social distancing). 

The focus is on the Tourism and Hospitality Industry (termed as Tourism and Hospitality Recovery Program), namely hotels, restaurants, tour operators, convention centres or trade show organizers, to name only a handful of eligible organizations. 

Qualifying applicants would need to demonstrate:

“An average monthly revenue reduction of at least 40 percent over the first 13 qualifying periods for the Canada Emergency Wage Subsidy (12-month revenue decline); and [comment: most people, me included, won’t understand what this means) A current-month revenue loss of at least 40 percent.”

The 12-month revenue decline would be the average of all revenue decline percentages for the period between March 2020 and February 2021. The maximum wage and rent subsidy rate under the program would be 75 per cent between October 24th, 2021 and March 12th, 2022. It would start at 40 per cent for eligible organizations that can demonstrate a 40 per cent monthly revenue decline, then increasing in proportion to current-month revenue losses. Wage and subsidy rates would be calculated based on current-month revenue losses as compared to prior reference periods.

Lockdown Support would be available at a fixed rate of 25 percent and pro-rated based on the number of days a particular location was affected by a lockdown, as under existing rules for businesses that qualify for the Tourism and Hospitality Recovery Program.

Another program, the Hardest-Hit Business Recovery Program, would provide rent and wage subsidies to organizations that do not qualify Tourism and Hospitality Recovery Program, but are struggling to make ends meet. To qualify, they would need to demonstrate:

“An average monthly revenue reduction of at least 50 percent over the first 13 qualifying periods for the Canada Emergency Wage Subsidy (12-month revenue decline);  A current-month revenue loss of at least 50 percent”

The revenue decline calculation would be the same as for the Tourism and Hospitality Recovery Program, but the maximum wage and rent subsidies would be 50 per cent for the period from October 24th, 2021 to March 12th, 2022. In this case, the rates “would start at 10 per cent for eligible hard-hit organizations with a 50 per cent current-month revenue decline, increasing thereafter on a straight-line basis to a maximum rate of 50 percent for those with a current-month revenue decline of 75 percent or higher.”  Rates would be calculated based on current-month revenue declines compared to a prior reference

period. Rent and subsidy rates would be halved from March 13th to May 7th, 2022.

Like the Tourism and Hospitality Program, businesses that qualify for the Hardest-Hit Business Recovery Program would also be eligible for Lockdown Support at a fixed rate of 25 per cent, pro-rated based on the number of days a location was forced to close due to pandemic restrictions.

 

In addition, the government announced an extension to the Canada Recovery Hiring Program until May 7, 2022, while proposing to increase the subsidy rate for eligible employers under the program to 50 per cent from October 24th to November 20th, 2021. The subsidy was set to expire on November 20th, 2021. Remuneration would be calculated using the existing baseline period (March 14th to April 10th, 2021), while qualifying organizations would need to meet existing eligibility rules and demonstrate a revenue decline of more than 10 per cent.

Lastly, Ottawa is also proposing to increase the monthly cap on eligible expenses under the now-defunct Canada Emergency Rent Subsidy—to $1 million from $300,000 for all of a company’s locations (or $75,000 per location). The benefit would now be available to organizations that qualify for the rent subsidy under the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program.

A new Program is being introduced that replaces Canada Recovery Benefit, i.e., “Canada Worker Lockdown Benefit”, which would provide income support for workers whose employment is interrupted by specific government imposed public health lockdown scenarios and who are unable to work due to such restrictions.

The new benefit would be $300/week and will be strictly available to workers whose work interruption is a direct result of the government imposed public health lockdown. “This will be available until May 7, 2022, with retroactive application to October 24, 2021 should the situation warrant it. This support is also available to workers who are ineligible for Employment Insurance (EI) and those who are eligible for EI, as long as they are not paid benefits via EI for the same period”.

The Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit would also be extended until May 7, 2022, while the maximum duration of the benefits would be extended by two weeks (for a total of 44 weeks for the caregiving benefit, and six weeks for the sickness benefit).

Overall, the message from Ottawa is that as the economy returns to normal the government programs will be reduced and targeted to the sectors that continue to the most severely impacted.

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