Canada: Proposed changes to wage and rent subsidy programs (COVID-19)

Canada: Proposed changes to wage, rent subsidy programs

Certain employers and property owners may be affected by proposed new relief under the Canada emergency wage subsidy (CEWS) and Canada emergency rent subsidy (CERS)—programs introduced in response to the coronavirus (COVID-19) pandemic.


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The Ministry of Finance introduced draft technical amendments to ease the requirement of a decline in revenue to qualify for the CEWS for the period from 20 December 2020 to 16 January 2021, and to allow certain applicants that rent property to a non-arm’s length entity to qualify for the lockdown support subsidy.

The Canada Revenue Agency (CRA) has indicated that it will administer the subsidies on the basis of the draft legislation.

CEWS revenue decline calculations

Finance’s proposals would deem an employer’s percentage revenue decline for the period from 20 December 2020 to 16 January 2021 (i.e., “Period 11”) to be equal to its percentage revenue decline for the period from 25 October 2020 to 21 November 2020 (Period 9), if that earlier revenue decline in Period 9 would otherwise be higher.

As a result, an employer would effectively be able to use its percentage revenue decline from Period 9 to calculate its subsidy for Period 11, if its revenue declined more in Period 9 than in Period 11. The reference to Period 9 (instead of Period 10) is needed because the percentage revenue decline for Period 11 and Period 10 would otherwise be the same, since they use the same reference months (December 2020 over December 2019). 

Lockdown support subsidy

Finance’s proposals would allow additional property owners to qualify for the lockdown support subsidy. Specifically, when a property owner rents its qualifying property to a non-arm’s length entity (a tenant), and the tenant must cease or significantly restrict its activities as a result of a “public heath restriction,” the property owner would now qualify for the lockdown support subsidy—provided they also meet the subsidy’s other requirements.

Previously, the property owner would not have qualified for the subsidy because the “public health restriction” conditions looked only to the activities of the property owner (and not the tenant). This proposed amendment would apply retroactively as of 27 September 2020.

Read a February 2021 report [PDF 245 KB] prepared by the KPMG member firm in Canada

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