Subsidies for businesses under 50% capacity limits

Summary#

The final rule titled Regulations Amending the Income Tax Regulations (COVID-19 — Twenty-Fourth and Twenty-Fifth Qualifying Periods) temporarily broadens who can get the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS) through the Local Lockdown Program (LLP). It lets businesses affected by capacity-limiting public‑health orders (like a 50% capacity cap) claim support for the qualifying periods from December 19, 2021 to February 12, 2022. The regulations were registered and came into force on February 1, 2022. The government estimates the measure will help about 30,000 employers and cost about $880 million (the document also later lists $884 million).

What it does#

• Expands the Local Lockdown Program (LLP) so businesses under a partial public‑health restriction that reduces capacity by at least 50% for at least seven days can qualify.
• Requires that the activities limited by the order accounted for roughly 50% of the business’s qualifying revenues in the prior reference period (this is a new qualifying test for partial restrictions).
• Lowers the required current‑month revenue drop to 25% (previously 40%) for the two qualifying periods covered.
• Sets the subsidy rates for those periods so employers with a 25% current‑month revenue decline get 25% support, rising in line with larger revenue losses up to a maximum of 75% for those with 75% or greater revenue decline.
• Applies these temporary changes for the twenty‑fourth and twenty‑fifth qualifying periods (covering December 19, 2021 through February 12, 2022).
• Leaves administration to the Canada Revenue Agency (CRA), which runs the CEWS and CERS claim systems.

Who's affected#

• Businesses with locations subject to capacity limits (for example, restaurants, bars, event venues, gyms) — especially in accommodation and food services, retail trade, arts, entertainment and recreation, and related services.
• Property tenants and owners who claim CERS for rent, mortgage interest, and other eligible property expenses.
• Small businesses: many may apply; the rules say small firms could face some extra paperwork to claim the subsidies.
• Employees of affected businesses: the subsidies are intended to help employers keep staff on payroll.
• The Canada Revenue Agency (CRA), which will process and oversee claims.

Why it matters#

• It closes a gap that left businesses facing capacity limits (not full closures) ineligible for federal wage and rent support during the Omicron wave.
• In practical terms, eligible businesses can get wage and rent help starting at 25% of costs and rising to 75%, depending on how much revenue they lost that month. That can help them pay workers and bills and reduce the risk of permanent closures.
• The change is temporary and targeted to two specific qualifying periods (Dec 19, 2021–Feb 12, 2022) and came into force on February 1, 2022.
• The regulatory impact statement estimates support will reach about 30,000 employers at a cost of around $880 million (the same document later lists $884 million, so the exact total is unclear from the source).