Tourism and Hardest-Hit Recovery Subsidies

Summary#

These final regulations change the Income Tax Regulations to extend and target COVID-19 business supports for a short period October 24, 2021 to November 20, 2021 (the “twenty-second qualifying period”). They create two targeted recovery streams for hard-hit firms (one for tourism and hospitality) with higher maximum subsidy rates, and they raise the hiring-program rate for that same period. The regulations came into force on December 10, 2021.

What it does#

• Creates definitions and rules to identify businesses that qualify as a qualifying tourism or hospitality entity and what counts as a qualifying public health restriction.
• Adds two targeted support streams for the twenty-second qualifying period:
  • Tourism and Hospitality Recovery Program — higher help for businesses that mainly earn revenue from tourism/hospitality activities and show big revenue losses. Maximum subsidy rate: 75%.
  • Hardest-Hit Business Recovery Program — support for other businesses that have been deeply affected over time. Maximum subsidy rate: 50%.
• Sets the specific revenue-decline tests businesses must meet to qualify:
  • Tourism/hospitality route needs an average revenue shortfall of at least 40% over prior reference periods and a current-period decline of at least 40% (plain terms).
  • Hardest-hit route needs an average revenue shortfall of at least 50% over prior reference periods and a current-period decline of at least 50%.
• Keeps Lockdown Support at a fixed 25%, paid pro‑rata for days a location was subject to a qualifying public-health closure.
• Raises the Canada Recovery Hiring Program (CRHP) subsidy rate back to 50% for the same period to encourage hiring and rehiring.
• Specifies formulas and percentage cutoffs that determine exact subsidy amounts within those caps.
• Estimates the measures will benefit about 50,000 employers and cost the federal government about $950 million.

Who's affected#

• Businesses in tourism and hospitality (for example, hotels, motels, cottages, bed-and-breakfasts, tour operators, travel agencies, restaurants, museums, cinemas, amusement parks, campgrounds and similar services) that earn most of their revenue from those activities.
• Other businesses that have had very large and sustained revenue declines (those meeting the higher 50% tests).
• Tenants and property owners who can claim the Canada Emergency Rent Subsidy (CERS) or Lockdown Support for eligible properties.
• Employers eligible for the Canada Emergency Wage Subsidy (CEWS) and the Canada Recovery Hiring Program (CRHP) — including corporations, charities, non-profits and certain small employers — who may claim the higher rates for this specific period.
• The Canada Revenue Agency (CRA), as the administrator, will apply the new rules and handle claims.

If it is unclear whether a specific business fits the detailed eligibility tests, the regulation text spells out the exact definitions and thresholds.

Why it matters#

• The rules target extra help to businesses still hit hardest by the pandemic rather than offering broad, economy-wide subsidies. That concentrates taxpayer support where it’s most needed.
• A higher maximum subsidy (75%) for tourism and hospitality could make a meaningful difference to struggling hotels, restaurants and tour operators facing seasonal and COVID-related slowdowns.
• Raising the hiring subsidy to 50% for the same short period gives employers a stronger financial incentive to rehire and expand payroll quickly.
• The changes are temporary and cover only October 24, 2021 to November 20, 2021, so they offer a short, time-limited boost rather than a long-term program.
• The federal cost is non-trivial (about $950 million), and the government estimated roughly 50,000 employers would be helped.