Feds extending COVID-19 wage and rent subsidy until June
OTTAWA -- Prime Minister Justin Trudeau says the government will extend the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy until June of this year as the country grapples with the COVID-19 pandemic.
Trudeau said while there have been encouraging signs the economy is rebounding and vaccines continue to roll out, support is still needed.
"We’ve come a long way in the fight against the pandemic but we’re not out of the woods yet," said Trudeau while speaking to reporters on Wednesday. "We’re making sure that the wage and rent subsidies continue through the spring, and that the amount of support remains consistent."
The wage subsidy will continue to provide up to 75 per cent coverage to eligible employers, while the rent subsidy will remain at up to 65 per cent. Ottawa is also extending the additional 25 per cent lockdown subsidy top-up until the same date for hard-hit businesses restricted by more severe public health guidelines.
"This isn’t the time to pull back on support for workers or business owners, it’s the time to see people through what is hopefully the final stretch of this crisis and it’s time to get the whole economy ready to come roaring back," Trudeau said.
Deputy Prime Minister and Finance Minister Chrystia Freeland expanded on the announcement saying at this point, the government can’t declare Canada has "turned the corner," which is why support will continue.
"Our government will continue to do whatever it takes for as long as it takes to help Canadians through this bleak time, to prevent economic scarring," said Freeland.
The Canada Emergency Wage Subsidy (CEWS) announcement makes good on the Liberals' throne speech promise to extend the benefit into summer 2021.
The subsidy applies to individuals, corporations not exempt from income tax, registered charities, and non-profits with an active Canada Revenue Agency (CRA) payroll account on March 15, 2020, and who meet a revenue decrease threshold.
Between March 15, 2020 and July 4, 2020, eligible applicants had to show a minimum revenue drop calculated by comparing a current and pervious revenue period. For claims after July 4, 2020, the government scrapped this formula, allowing for more businesses to apply. The CEWS changed to consist of a starting benefit for any business that had faced a revenue drop, and an additional top-up scaled based on extent of revenue drop.
To date, more than 2.6 million CEWS applications have been approved, with a value of $66.7 billion. Freeland noted the additional cost of extending the subsidy to June 5 will amount to approximately $13.9 billion.
The Canada Emergency Rent Subsidy (CERS) applies to businesses, charities, or non-profits with a CRA business number on September 27, 2020, or a payroll account on March 15, 2020, and who have seen a drop in revenue from the pandemic, also scaled based on scope of decline.
To date, more than 430,000 CERS applications have been approved, with a value of $1.64 billion. Freeland said the extension will amount to approximately $2.1 billion.
Conservative finance critic Ed Fast responded to the announcement in a statement to CTVNews.ca, raising concern with a still-absent federal budget – expected this spring.
"Conservatives support getting help to those who have been hit hard by Justin Trudeau’s failure to create jobs. It’s shameful that we are almost a year into the pandemic and Justin Trudeau has failed to put forward an economic plan that will get Canadians back to work," he said.
Laura Jones, the executive-vice president of the Canadian Federation of Independent Business says the decision is long-awaited "good news."
"There were some businesses that were worried that the federal government might start reducing the subsidies," she told CTV News Channel. "As long as restrictions are in place and businesses can’t operate normally, we need the support programs to continue and I suspect that’s going to take us beyond June."
In a subsequent press release, the organization calls on the government to:
- Commit to extending both subsidies for however long restrictions are in place;
- Allow businesses that opened their doors in March 2020 or later to access federal support programs;
- Further promote CERS; "Compared to the other federal support programs, very few businesses (26 per cent) have accessed CERS. Some business owners are not aware the rent subsidy program has been changed and no longer requires landlord participation," reads the release; and
- Increase CERS eligibility to include non-arms’ length entities.
The Canadian Chamber of Commerce also weighed in on the news, saying the extension of both subsidies will provide assurance to Canadian businesses facing continued financial turbulence.
"Businesses can now plan with certainty this spring, knowing what level of support they’ll receive from these critical support programs through June of this year," said Alla Drigola, director of parliamentary affairs and SME policy in a press release.
Drigola added it’s vital that businesses be able to use the 2019 reference period to calculate their decline in revenue to access support, as opposed to a year-over-year formula.
"This change is critical to ensure businesses and employees continue to receive the support they need by measuring revenue declines against the pre-pandemic period. We are very pleased to see this direct recommendation implemented to provide certainty and support for businesses," said Drigola.