Federal update: New wage and rent subsidy details

Published November 6, 2020

The federal government has released technical backgrounders on the proposed legislation tabled in Parliament this week for implementing changes to the wage and rent subsidies, and introducing new lockdown support.

The following table provides an overview of the business aid details proposed in Bill C-9:

Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support: Summary Table

Rate structures applicable in Periods 8, 9 and 10
(Sept. 27 to Dec. 19, 2020)

Revenue Decline Canada Emergency Wage Subsidy (CEWS) Canada Emergency Rent Subsidy (CERS) – Base Subsidy Lockdown Support Rent Subsidy Total Rent Subsidy (if eligible for Lockdown Support)
70% and over 65% 65% 25% 90%
50% to 69% 40% + (revenue drop – 50%) x 1.25 40% + (revenue drop – 50%) x 1.25 25% 65% + (revenue drop – 50%) x 1.25
1% to 49% Revenue drop x 0.8 Revenue drop x 0.8 25% 25% + Revenue drop x 0.8

Wage subsidy extension details

The federal government is proposing to extend the wage subsidy program until June 2021 and implement other enhancements to the program to better respond to the evolving economic and public health situation. The proposed changes will make the program more flexible and more generous, and ensure that the program provides continued support to employers.

Details on the current terms of the program, which will remain in effect until Dec. 19, 2020, are available at: https://www.canada.ca/en/department-finance/news/2020/10/extending-the-canada-emergency-wage-subsidy.html

The government will provide details for the upcoming periods in advance of the current terms’ expiry and will ensure the wage subsidy program continues to remain responsive to changing economic realities.

More information on the wage subsidy extension can be found here: https://www.canada.ca/en/department-finance/news/2020/11/details-on-the-canada-emergency-wage-subsidy-extension.html

New rent subsidy details

On Oct. 9, the government proposed the new Canada Emergency Rent Subsidy to provide direct relief to businesses, non-profits, and charities that continue to be economically impacted by the COVID-19 pandemic. The new rent subsidy would be available retroactive to Sept. 27, 2020, until June 2021.

If your organization has been subject to a public health order issued under the laws of Canada, a province or territory (including orders made by a municipality or regional health authority under one of those laws), you may be eligible for additional resources under the new Lockdown Support portion of the program.

More information on the new rent subsidy can be found here: https://www.canada.ca/en/department-finance/news/2020/11/canada-emergency-rent-subsidy.html

Lockdown support details

The federal government has proposed to provide further aid through a Lockdown Support portion of the new rent subsidy, retroactive to Sept. 27, 2020, until June 2021, during periods when businesses are facing eligible public health restrictions.

The proposed Lockdown Support of 25% would be available to organizations with locations that are temporarily forced to close or temporarily have their business activities significantly restricted by a public health order issued under the laws of Canada or a province or territory. This would include a shutdown of a location as a result of a COVID-19 outbreak (as declared by a provincial, territorial or regional health authority). This follows a commitment in the Speech from the Throne to provide direct financial support to businesses temporarily shut down as a result of a local public health decision.

If an organization is subject to a public health restriction and has to cease activities for only part of a qualifying period, the proposed Lockdown Support would be pro-rated for the number of days in the period during which the impacted location was affected.

The following examples illustrate some common circumstances in which an organization qualifying for the base subsidy may have qualifying property (i.e., a location) that would be eligible for Lockdown Support:

  • Restrictions on indoor dining: A restaurant that normally earns approximately 25% or more of its revenues in connection with indoor dining could qualify due to its dining room being shut down even if it shifts its activities to takeout orders to make up some of the lost revenues from indoor dining.
  • Closure of bars: A bar that is ordered to close down due to a regional public health restriction, and, anticipating low demand for takeout, does not continue operating, could qualify.

The following examples illustrate some common circumstances where an organization would generally not be eligible for Lockdown Support:

  • Reduction in business hours: A bar that is subject to a restriction requiring bars in a region to shut down by 10:00 pm each day would not qualify, as their activities would not be required to cease for a period of at least one week.
  • Requirements for physical distancing: A restaurant that earns most of its revenues in connection with indoor dining would not qualify due to a public health restriction limiting patrons to six persons per table, as it could continue to carry on its indoor dining activities.

Next steps

Restaurants Canada continues to be at the table, working with the federal government to ensure the legislation proposed in Bill C-9 addresses industry concerns and will provide updates as further details become available.

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