On Wednesday, Prime Minister Justin Trudeau announced the federal government will extend the current rate of the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) programs through to June.
Rates for the Lockdown Support program, which supports property owners subject to a lockdown, will also remain the same as the most recent period. The available Lockdown Support will remain at 25 percent.
CEWS will remain at 75 percent for the upcoming period.The federal government brought CEWS back to 75 percent for the period of December 20 to March 13 after promising to do so last year. The 75 percent rate is the maximum amount companies can receive from the program if they qualify (the base rate for the wage subsidy is 40 percent, with a potential top-up of 35 percent for eligible businesses). The amount each company can receive is proportional to its revenue drop and is based on a single month’s revenue decline.
When CEWS was originally signed into law in April, employers were subject to a 30 percent revenue decline measurement, which made them eligible for a payroll subsidy of 75 percent. Since that time, the subsidy’s base rate has been altered a number of times, prior to this past period the amount capped out at 65 percent.
When it comes to CERS, the base subsidy rate for the period going into June continues to be 65 percent. This applies to a maximum of $75,000 in eligible expenses per location with the overall maximum companies can receive being $300,000 in expenses. The rate each company can receive is also based on revenue drop.
CERS replaced the federal government’s previous Canada Emergency Commercial Rent Assistance (CECRA). That program, which expired at the end of September, faced criticism and low uptake as it required commercial property owners to apply for the loans rather than businesses themselves.
Deputy Prime Minister and Minister of Finance Chrystia Freeland noted on Wednesday that the government’s estimated costs for the rent subsidy will be $4.4 billion by March 13, with an additional cost of $2.1 billion from March 14 to June 5. For CEWS, the minister estimated costs of approximately $83.53 billion until March 13, with additional costs of approximately $13.9 billion by June 5.
Last month, the Department of Finance released two draft legislative proposals to implement technical amendments to the CEWS and CERS programs, aiming to give applicants more flexibility regarding revenue decline for the previous qualifying period, December 20, 2020, to January 16, 2021.
Both Trudeau and Freeland emphasized the need to continue the programs and provide support to the Canadian economy, arguing that even if there are some encouraging signs of economic recovery the pandemic is not at an end yet.
The rent and wage subsidies are currently set to only continue until June.
Developing…
Image source Justin Trudeau Flickr account
