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Introduction: Targeted COVID-19 Business Support Measures

Millions of Canadians have been impacted by the ongoing COVID-19 pandemic. To ensure that Canadians continue to receive the financial support that they need, in 2020 the Government of Canada introduced various benefits, including, but not limited to, the Canada Emergency Wage Subsidy (CEWS), the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB), the Canada Recovery Caregiving Benefit (CRCB) and the Canada Emergency Rent Subsidy (CERS). 

On October 21, 2021, the Minister of Finance, Chrystia Freeland, announced that the CRB, CEWS and the CERS will wind down as of October 23, 2021. To coincide with the expiration of the CRB, the CEWS and the CERS, the federal government proposed to:

  • Introduce the Tourism and Hospitality Recovery Program (THRP) and the Hardest-Hit Business Recovery Program (HBRP) to support certain businesses.
  • Provide support to other qualifying businesses (i.e., non-THRP or HBRP) that are continuously impacted by COVID-19 due to public health restrictions at the subsidy rates, as calculated under the THRP.
  • Extend the Canada Recovery Hiring Program (CRHP) to May 2022 and increase the subsidy rates, as of October 24, 2021. 

The THRP and the HBRP are proposed to be in effect from October 24, 2021 to May 7, 2022. The objective of these proposed programs (i.e., THRP and the HBRP) is to support businesses that have been and continue to be severally impacted by COVID-19 (i.e., businesses in the travel and tourism and hospitability industries). The THRP and the HBRP reflect the Canadian Government’s efforts to support businesses and organizations that are subject to the ongoing public health restrictions due to COVID-19. According to the Minister of Finance, Chrystia Freeland, the Canadian Government aims to implement the THRP and the HBRP, by regulation, for claim period 22 (from October 24 to November 20, 2021) and introduce legislation which will extend the THRP and the HBRP to May 7, 2022. Further, the Canadian Government will seek legislative approval to further extend the THRP and the HBRP to July 2, 2022.

Key Features of the Tourism and Hospitality Recovery Program (THRP

The THRP will provide wage and rent subsidy to qualifying businesses in the tourism and hospitality industries that have been and continue to be impacted by COVID-19. The THRP will be in effect from October 24, 2021 to May 7, 2022. Between October 24, 2021 and March 12, 2022, the THRP will offer qualifying businesses with wage and rent subsidy rates of up to 75% of eligible renumeration and expenses. In addition, between March 13, 2022 and May 7, 2022, the THRP will offer qualifying businesses with wage and rent subsidy rates of up to 37.50% of eligible renumeration and expenses.

Eligibility the Tourism and Hospitality Recovery Program

To qualify for the THRP, applicants must be in the tourism and hospitality industries. Such businesses include, but are not limited to, restaurants and bars, hotels and travel agencies. The Canadian Government has yet to release a detailed definition of “a qualifying business”. 

So far, the Canadian Government confirmed that to qualify for the THRP, applicants much have experienced the following:

  • A monthly revenue reduction on an average of at least 40% over claim periods 1 to 13 of the CEWS (from March 2020 to February 2021); and
  • A loss in revenue of at least 40% for the current month, as determined under the current rules relating to the CEWS.

Subsidy Rate the Tourism and Hospitality Recovery Program

An applicant’s THRP subsidy rate eligibility will be determined based on their revenue deduction for the applicable claim period, pursuant to the existing CEWS and CERS rules, and will include an additional Lockdown Support Subsidy of up to 25% of eligible expenses. 

Key Features of the Hardest-Hit Business Recovery Program (HBRP)

The HBRP will provide wage and rent subsidy to the “hardest-hit businesses” that do not qualify for the THRP but continue to be impacted by COVID-19. Similar to the THRP, the HBRP is proposed to be in effect from October 24, 2021 to May 7, 2022.

Eligibility for the Hardest-Hit Business Recovery Program 

To be eligible for the HBRP, applicants much have experienced the following:

  • A monthly revenue reduction on an average of at least 50% over claim periods 1 to 13 of the CEWS (from March 2020 to February 2021); and
  • A loss in revenue of at least 50% for the current month, as determined under the current rules relating to the CEWS, which is the current month revenue reduction.

Subsidy Rate for the Hardest-Hit Business Recovery Program

Similar to the THRP, the HBRP subsidy rate eligibility will be calculated based on their revenue deduction for the applicable claim period, , using the existing CEWS and CERS rules, and will include an additional Lockdown Support Subsidy of up to 25% of eligible expenses. 

Support for Other Businesses as a Result of a Public Health Lockdown

Qualifying businesses, in any industry, that are subject to public health restrictions due to COVID-19, from October 24, 2021 to May 7, 2022, will also be eligible for a wage and rent subsidy during the lockdown, at the rated determined for the THRP. 

Eligibility for the Public Health Lockdown Support Program

To qualify for the Public Health Lockdown support program, applicants much have experienced the following:

  • Have at least one business location subject to public health restrictions, lasting for at least seven days in the applicable claim period requiring the applicant to limit their business activities that account for at least 25% of revenue during the prior period; A monthly revenue reduction on an average of at least 40% over claim periods 1 to 13 of the CEWS (from March 2020 to February 2021); and
  • A reduction in revenue of at least 40% for the current month.

Calculating the Eligibility Subsidy Rate for the Public Health Lockdown Support Program

The subsidy rate for this support program will be determined based on the applicant’s current month revenue reduction, as determined under the current rules relating to the CEWS.

 

See also
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The Limit on Eligible Expenses Under the Rent Subsidy

As previously discussed, there is a rent subsidy that forms part of the THRP and the HBRP. Eligibility monthly expenses are capped at $75,000 per location, per applicant. However, there is a $300,000 threshold for affiliated entities. According to the Minister of Finance, Chrystia Freeland, the Canadian Government is proposing to increase this threshold from $300,000 to $1 million dollars, for qualified businesses that meet the eligibility criteria for the rent subsidy under the THRP and the HBRP, as of October 24, 2021.  

 

Canada Recovery Hiring Program (CRHP)

According to the Minister of Finance, Chrystia Freeland, the Canadian Government is proposing to introduce legislation to extend the Canada Recovery Hiring Program (CRHP) from November 20, 2021 to May 7, 2022. Further, the Canadian Government will seek legislative approval to further extend the CRHP to July 2, 2022. 

 

Eligibility Criteria to the Canada Recovery Hiring Program (CRHP)

To qualify for the CRHP, applicants much have experienced the following:

  • Meet the requirements of the CEWS; and
  • Applicants who are a for-profit corporations or partnership, must meet the additional CRHP criteria:
    • Eligible corporations and partnership
      • A Canadian-Controlled Private Corporation (CCPC)
      • Cooperative corporations that are eligible for the small business deduction.
      • Partnerships where at least 50% of the partnership’s interests are held (directly or indirectly) by employers that are ineligibility for the CRHP.

Such corporations and partnership may still be eligible for the CEWS, yet ineligible for the CRHP

 

Calculating the Eligibility Subsidy Rate for the  CRHP

The Canadian Government also proposed to increase the CRHP subsidy rate to 50% of additional eligible salary or wages (as opposed to the current period 22 rate of 20%), for eligible employers with above 10% revenue losses, as of October 24, 2021.

 

See also
Tax Court's Fast Track Settlement Conference System | Rotfleisch & Samulovitch PC
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Pro Tax Tips – Tax Guidance, THRP, HBRP and CRHP Support Measures

The THRP, the HBRP and the CRHP reflect the Canadian Government’s efforts in supporting businesses that have been and continue to be impacted by COVID-19. However, it is unknown whether these programs and support measures will provide businesses and organization with the stability required to survive another COVID-19 pandemic lock-down. Furthermore, the eligibility criteria and subsidy calculations are complex and will require assistance from a professional tax accountant. In addition, the Canadian Government has yet to release detained information relating to the proposed support programs and extended benefits, including but not limited, a detailed definition of “a qualifying business”. If you have questions concerning the Government of Canada’s the THRP, the HBRP or the CRHP’s support programs or if your application for any of the above-mentioned benefits is rejected and you would like to dispute the CRA’s decision please contact our law office to speak with one of our experienced Certified Specialist in Taxation Canadian tax lawyers.

Disclaimer:

"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

FAQs

To be eligible for the HBRP, applicants much have experienced the following:

  • A monthly revenue reduction on an average of at least 50% over claim periods 1 to 13 of the CEWS (from March 2020 to February 2021); and
  • A loss in revenue of at least 50% for the current month, as determined under the current rules relating to the CEWS, which is the current month revenue reduction.

To be eligible for the HBRP, applicants much have experienced the following:

  • A monthly revenue reduction on an average of at least 50% over claim periods 1 to 13 of the CEWS (from March 2020 to February 2021); and
  • A loss in revenue of at least 50% for the current month, as determined under the current rules relating to the CEWS, which is the current month revenue reduction.

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