On November 2, 2020, the federal government introduced Bill C-9, An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy) to provide additional support to Canadian businesses struggling to cope with the effects of the COVID-19 pandemic. An overview of the changes that would be implemented by Bill C-9 are set out below.
Extension and Expansion of Canada Emergency Wage Subsidy (“CEWS”)
If enacted, Bill C-9 would extend the Canada Emergency Wage Subsidy (“CEWS”), which is currently set to end in December 2020, until June 30, 2021. This would represent the planned CEWS extension that the government announced in October.
The CEWS would continue to cover up to 65% of eligible employee wages, with a maximum base subsidy rate of 40% and a maximum top-up subsidy rate of 25%, until December 19, 2020. The maximum CEWS funding available after December 19, 2020 would be set by the government later through regulation.
Notably, Bill C-9 would also expand the scope of the CEWS, including by broadening the definition of “eligible employee” for the purposes of the CEWS. In particular, eligible employers would be able to claim the CEWS for the wages of employees who are employed primarily in Canada throughout the qualifying period or a portion of the qualifying period.
Creation of Canada Emergency Rent Subsidy (“CERS”)
Bill C-9 would also create the previously announced CERS, which would provide eligible employers that have suffered drops in revenue due to COVID-19 with a subsidy to assist with the costs of renting or owning a qualifying commercial property (read our recent blog for details on the CERS). The essential elements of the CERS are the same as previously announced, and it would be available until June 30, 2021.
However, under Bill C-9, the 25% top-up subsidy for businesses that are directly impacted by public health orders would be expanded, such that it would be available to businesses required to shut down and those that must significantly limit their activities due to public health orders. Further, Bill C-9 has clarified that the top-up subsidy would be prorated for the number of days that a business is affected in this way.
Takeaways for Employers
If Bill C-9 is passed, it will be great news for many Canadian employers. The extension of the CEWS would provide much-needed financial relief to employers that continue to experience reduced revenues due to the pandemic beyond this December. Further, the proposed expansion of the CEWS would allow eligible employers to claim the CEWS for the wages of certain employees which they could not before.
Similarly, the CERS would provide a massive benefit to businesses that are struggling to pay their rent or mortgage and help them bridge the gap to better times. Further, the CERS would be substantially more accessible to employers than its predecessor, the Canada Emergency Commercial Rent Assistance (“CECRA”), given that eligible employers would be able to apply for the CERS directly without needing their landlords’ agreement. Finally, the expanded CERS top-up subsidy would provide additional relief to employers directly impacted by public health orders.
As Bill C-9 has not yet been enacted, details of these subsidies, including subsidy rates and criteria for eligibility, are subject to change. We will monitor the progression of these developments and keep you apprised of any further updates as they become available.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.