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COVID-19 Update - New Program Edition

Part of our COVID-19 series (view more)

This post contains information we shared with our clients on November 1, 2021. Please note that, as government response to COVID-19 is rapidly changing, the content of this post may be out of date by the time you’re reading this. If you’re an Origami client, please contact your CPA if you have any questions.

As the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) programs have now come to an end, we’re letting you know about the new programs intended to replace them.

We also touch on the Highly Affected Sectors Credit Availability Program (HASCAP) and a few other resources and programs we think you should be aware of.

Tourism and Hospitality Recovery Program

On October 21, the Canadian government announced what is effectively a continuation of the CEWS and CERS program to hotels, tour operators, travel agencies, and restaurants for businesses in these sectors with revenue drops of at least 40%.

  • The subsidy rate is up to 75% of wages and rent and matches revenue decline percentages.
  • The minimum subsidy rate is 40% for businesses in these sectors with a 40% revenue drop.
  • In order to qualify for the maximum 75% subsidy rate you need a 75% or greater revenue drop.
  • The subsidy rates above will be in place until March 12, 2022, after which time they will be cut in half.

Hardest-Hit Business Recovery Program

Much like the Tourism and Hospitality Recovery Program, the Hardest-Hit Business Recovery Program extends the wage and rent subsidies to those who have experienced at least a 50% revenue decline for a sustained period with a subsidy rate of up to 50%.

  • The subsidy rate is up to 50% of wages and rent and matches revenue decline percentages.
  • In order to qualify the 12 month average of all revenue decline percentages from March 2020 to February 2021 must be greater than or equal to 50%.
  • The actual subsidy rates received depend upon the current month’s revenue drop and are calculated as follows: 10% + (revenue decline - 50%) x 1.6
  • The minimum subsidy rate is 10% for businesses with sustained losses of 50% and a 50% current month revenue drop.
  • In order to qualify for the maximum 50% subsidy rate you need a 75% or greater revenue drop.
  • The subsidy rates above will be in place until March 12, 2022, after which time they will be cut in half.

Canada Recovery Hiring Program

The Canada Recover Hiring Program was introduced over the summer as an either/or calculation to the Canada Emergency Wage Subsidy. It subsidizes increases in wage expense relative to the baseline period of March 14 to April 10 for employers who experience a decrease in sales relative to pre-COVID levels. In most cases, the wage subsidy exceeded the hiring amount and never came into play but now the wage subsidy is not available to businesses with less than a 40% reduction in revenue, we expect that to change. The government recently announced that the hiring program has been extended to May 7, 2022.

  • The subsidy rate is 50% of the amount that a period’s remuneration paid to eligible employees exceeds the amount paid from March 14 to April 10, 2021.
  • In order to be eligible for the subsidy you must have a revenue decrease of more than 10% from pre-COVID levels.
  • In cases where a business qualifies for Tourism and Hospitality Recovery Program or Hardest-Hit Business Recovery Program it is expected that the same either or calculation will apply for the hiring program as did under the wage subsidy regime.

How to Apply for the Tourism and Hospitality Recovery Program, the Hardest-Hit Business Recovery Program, and the Canada Recovery Hiring Program

The subsidies must be applied for online via the CRA My Business Account portal or can be applied for by us, on your behalf, via our CRA Represent a Client portal.

Please note that, consistent with our policy on the old wage subsidy applications, Origami will charge the standard per period fee to prepare and file these new applications.

The deadline for all applications is expected to be 180 days after the end of a subsidy period.

Once the application has been approved, payment is made between 3-8 days if direct deposit has been set up and about 14 days if it hasn’t.

Regardless of whether or not you choose to have us file the subsidy applications for you, you’ll still want your own CRA My Business Account access so you can make sure that the CRA has your up to date direct deposit information.

You can register for that here.

https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html

The easiest way to go about the registration is to click: sign-in partner login and enter your bank credentials. If you don’t already have CRA My Business Accounts Access, follow the prompts, they will ultimately result in the CRA mailing you out an access code within 10 business days.

If you’re already an Origami client, please contact us if you think you qualify and would like to apply for the subsidies so we can get to work on putting together the calculations.

Highly Affected Sectors Credit Availability Program (HASCAP)

HASCAP loans are available for small and medium-sized Canadian businesses who meet the following criteria:

  • Financially stable and viable prior to the pandemic
  • Received payments from the CEWS or the CERS by having demonstrated a 50% revenue decline for at least 3 months within the 8-month period prior to the HASCAP application.
  • If the business does not qualify for CEWS and CERS, 3 months of financial statements must be provided that show year-over-year revenue decreased by at least 50% within the 8-month period prior to the date of the HASCAP application.
  • The loan must be used to continue or resume operations.
  • The loan cannot be used to pay or refinance existing loans.

Unlike CEBA, these loans are not interest free (4% annual rate) and no portion of them is forgivable. They also vary in size from $25,000 to $1 million depending on need.

Much like CEBA, this particular program does require the owner to submit the application and cannot be filed by us but we are happy to assist with your application.

Consistent with our policy regarding CEWS and CERS applications, we will be charging our standard per period fee to assist with loan applications.

Please contact us if you think you qualify and would like to apply for the HASCAP so we can work on putting together the calculations.

Great Resources for the Evolving Situation

Government of Canada

While we hit on what we think are the most important programs above, as the pandemic continues government response programs multiply.

Innovation Canada put up a nifty website to help you navigate what programs may be available to your business.

Check it out here: https://innovation.ised-isde.canada.ca/s/?language=en_CA

A similar calculator is available for individuals here: https://covid-benefits.alpha.canada.ca/en/start

Canadian Federation of Independent Business

In addition to playing an important role in lobbying the government to open the CEWS up to every small business that experienced a downturn as a result of COVID-19, the Canadian Federation of Independent Business has produced an excellent resource for small businesses dealing with COVID-19 here:

https://www.cfib-fcei.ca/en/small-business-resources-dealing-covid-19

All of the programs and details are still evolving, and we will keep tabs on changes as they are announced.

The people at CFIB are great and we highly recommend donating to them when funds allow.

The Origami team has transitioned primarily to remote work during the situation. You can continue to reach us by phone, email, and through the Origami portal. For everyone’s safety we have temporarily discontinued in-person meetings. If you need to drop something off at one of our offices, please contact us first so that someone is prepared to meet you.

We’ll keep you updated as we learn more.

Please contact me with any questions you may have regarding these programs. We’ll do our very best to help our clients navigate this unprecedented situation.

This post contains information we shared with our clients on November 1, 2021. Please note that, as government response to COVID-19 is rapidly changing, the content of this post may be out of date by the time you’re reading this. If you’re an Origami client, please contact your CPA if you have any questions.

covid-19