COVID-19 Tax Update: Finance Details Extension of CEWS / CERS Programs to June 2021

On March 3, 2021, further to statements in the Fall Economic Statement the Government of Canada confirmed its intention to further extend the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy and Lockdown Support (CERS) programs through June 5, 2021. As announced, the programs would remain substantially unchanged and the rate structures that are currently in place until March 13, 2021 would simply be extended for the following three periods:

  • the period that begins on March 14, 2021 and ends on April 10, 2021,
  • the period that begins on April 11, 2021 and ends on May 8, 2021, and
  • the period that begins on May 9, 2021 and ends on June 5, 2021.

Specifically, the maximum wage subsidy rate for active employees would remain at 75 per cent and the maximum rent subsidy rate would remain at 65 per cent. The Lockdown Support would remain at 25 per cent and continue to be provided in addition to the rent subsidy, providing eligible businesses with rent support of up to 90 per cent. With regard to furloughed employees, the government will continue to align the wage subsidy rate structure with the Employment Insurance (EI) program. This means employers who qualify for the CEWS would be able to continue to claim up to a maximum benefit of $595 per week per employee to support remuneration of their furloughed workers.

In addition, as the COVID-19 pandemic is approaching a full year, the prior reference periods for each of the extended qualifying periods (starting with the qualifying period from March 14 to April 10, 2021) would be based on calendar months from 2019 rather than 2020 to ensure that an organization’s revenue decline may be calculated relative to a pre-pandemic period. Qualifying organizations remain eligible to elect to use January and February 2020 as an alternative prior reference period. An additional elective alternative baseline remuneration computation for March 14 to June 5, 2021 is also proposed, allowing an employer to elect to use the period of March 1, 2019 to June 30, 2019 to calculate baseline remuneration for those qualifying periods.

More details on the programs can be found in our detailed blog posts on CEWS here (see also our discussion on the amendments introduced in November of 2020 here) and CERS here. Given the ever-increasing complexity of the CEWS, employers are well-advised to carefully consider every aspect of a CEWS application and seek professional advice where merited.

Prepared by: Nicholas McIsaac

Nicholas is an associate at the Toronto office of Thorsteinssons. Nicholas’ practice focuses on corporate and international tax planning, regularly advising Canadian and foreign-based multi-national groups on a variety of matters, including financing, mergers and acquisitions, restructurings and natural resource… more »