NOTE: Bill C-9 has not officially been passed as of the date this article was posted.
Bill C-9 is in the process of being amended and is receiving its first reading in the House of Commons. If passed, this amendment will extend the Canada Emergency Wage Subsidy (“CEWS”) and create the Canada Emergency Rent Subsidy (“CERS”).
Canada Emergency Wage Subsidy
The CEWS extension will continue up to June 30, 2021 and includes the following details:
- An eligible employee, for the purpose of CEWS, is an employee who works primarily for the entity throughout the qualifying period, meaning an employee not going more than 14 days without work in the period, unless that employee has just been hired.
- The base subsidy will be calculated as 0.8 times the revenue reduction to a maximum base subsidy of 40% (50% decrease in revenue).
- The top-up subsidy will be calculated as the drop in revenue when comparing the prior three months average revenue to the average revenue from the reference period (either the same months in the prior year or January/February 2020) in excess of 50% to a maximum of 25% (75% revenue reduction)
- All applications for the subsidies must be made no later than January 31, 2021, or 180 days after the end of the period being claimed.
Canada Emergency Rent Subsidy
Qualifying rent includes the lesser of $75,000 or the total of all rent amounts paid for a real or movable property for a rental agreement entered into prior to October 9, 2020, in respect of the qualifying period, less any rent received from third parties for the occupation of the property (sublets).
In the case of a corporately owned building, or a building rented from related parties, the qualifying rent consists of:
- Interest paid on an outstanding debt obligation secured by the property, as long as the debt is not in excess of the lowest total principal amount secured by mortgages on the property at any time after acquisition of the property, and the cost amount of the property.
- Insurance paid for the property
- Property and other taxes paid on the property
- Less any payments received directly or indirectly from arm’s length parties
Applications for the CERS must be filed within 180 days of the end of the qualifying period.
The rent subsidy is calculated as follows:
- If the revenue reduction is greater than 70%, the subsidy is 65%
- If the revenue reduction is between 50% and 70%, the subsidy is calculated as:
- 40% plus revenue reduction in excess of 50% multiplied by 1.25. For example, a revenue reduction of 60% would create a subsidy of 52.5% (40+10×1.25)
- If revenue reduction is less than 50%, the subsidy is calculated as 0.8 times the revenue reduction
There is also a rent top-up subsidy that is available if your place of business was closed due to a public health restriction and some or all the activities of the business have stopped for at least one week. This top up is 25% of your qualifying rent amounts pro-rated for the time your business was closed over the total period. For example, if the business was closed for 2 weeks the calculation would be 25% x 14 / 28 or 12.5%.
If you have questions regarding Bill C-9 or any pre-existing relief program, please contact a member of the EPR Maple Ridge Langley team at firstname.lastname@example.org.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. EPR Maple Ridge Langley, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.