COVID-19 Wage and Rent Subsidy Extension

Summary#

These are final rules called Regulations Amending the Income Tax Regulations (COVID-19 — Wage and Rent Subsidies) that extend and set the details for pandemic support programs. They add three four‑week claim periods from December 20, 2020 to March 13, 2021, change some subsidy rates, and set which months are used to measure revenue drops. The rules came into force on December 20, 2020.

What it does#

• Adds three new four‑week qualifying periods:
  • Period 11: December 20, 2020 to January 16, 2021
  • Period 12: January 17, 2021 to February 13, 2021
  • Period 13: February 14, 2021 to March 13, 2021
• Changes for the Canada Emergency Wage Subsidy (CEWS):
  • Keeps the base subsidy at 40% of eligible pay for active employees.
  • Raises the additional top‑up for the hardest‑hit employers from 25% to 35% when an employer’s revenue drop is 70% or more (so the maximum possible is 75% for those employers).
  • For employers with smaller drops, the subsidy continues to scale based on their revenue decline (rules in the Act and regulations determine the exact percentages).
  • For furloughed employees, the prescribed weekly amount is the greater of $500 and the lesser of 55% of baseline pay and $595.
• Rules for the Canada Emergency Rent Subsidy (CERS):
  • Keeps the same rate structure that applied in the prior period: a base subsidy up to 65% of qualifying rent and a Lockdown Support up to 25% of qualifying rent for places closed by public health orders.
• Sets which months are used to compare revenues (the “current” and “prior” reference months) for the three new periods:
  • Period 11 compares December 2020 with December 2019.
  • Period 12 compares January 2021 with January 2020.
  • Period 13 compares February 2021 with February 2020.
• Administration and timing:
  • The Canada Revenue Agency (CRA) administers both programs and will apply these rules for the three new periods.

Who's affected#

• Employers and organizations that were eligible for the subsidies:
  • Businesses, charities, and non‑profits that apply for the Canada Emergency Wage Subsidy (CEWS).
  • Businesses, charities, and non‑profits that apply for the Canada Emergency Rent Subsidy (CERS) (including those who rent commercial space).
• Employees of those organizations:
  • Active employees (pay subsidized under CEWS).
  • Furloughed employees (covered by the prescribed weekly amount under CEWS).
• Small businesses may apply but are not required to; they could face some paperwork to claim the subsidies.
• The Canada Revenue Agency (CRA), which runs and enforces the programs.
• If it matters to you: landlords and commercial tenants who negotiate rent relief, and people watching government spending — the regulatory impact statement estimates program costs.

Why it matters#

• It extends government wage and rent support through a period that covered the winter months of the pandemic. That helped employers keep staff on payroll or bring them back, and it helped firms cover rent when revenues fell.
• The increased top‑up (to 35%) makes the subsidy more generous for the very hardest‑hit businesses, potentially avoiding more layoffs and closures.
• Tying the furloughed‑employee amount to the higher $595 cap keeps the subsidy aligned with the increased maximum for Employment Insurance (EI) benefits, which could reduce pressure on EI.
• The government estimated the cost at about $14.79 billion for the wage subsidy extension (broken down as $10.68 billion, $2.685 billion, and $1.425 billion in different parts) and about $2.18 billion for the rent subsidy for these three periods.
• There will be some administrative work for applicants, but officials judged that the financial support outweighs those costs.