The Canada Recovery Hiring Program (CRHP) is the federal government’s latest support program for businesses continuing to struggle during the COVID-19 pandemic. Announced during the last federal budget on April 19, 2021, it both complements and succeeds the Canada Emergency Wage Subsidy (CEWS).
CRHP program details
The CRHP was created to help companies with increased payroll expenses as they continue to experience declines in revenue relative to before the pandemic. Eligible increases in payroll costs can be by way of wage increases for existing employees or by new staff hires.
The proposed program, which still needs to be legislated before it becomes law, is designed to dovetail with CEWS in a number of ways. For details regarding the CEWS program, please see our Tax Alert, Federal budget announces further extension and changes to the Canada emergency wage subsidy program.
To be eligible for the CRHP in any given qualifying period, applicants must meet all of the following conditions:
- Be a qualifying entity as defined for CEWS purposes. For-profit corporations must be Canadian Controlled Private Corporations (CCPCs). Public and private companies that are not CCPCs do not qualify.
- Experience a decline in revenue for the qualifying period of June 6, 2021 to July 3, 2021 or a revenue decline of more than 10% for qualifying periods beginning after July 3, 2021.
- Measure the total remuneration for the period of March 14, 2021 to April 10, 2021 in the manner described in the “total base period remuneration” section.
- Measure the total current period remuneration for the particular qualifying period.
If there has been an increase in the total remuneration between the base period and the current period, applicants will qualify for the CRHP subsidy for that period, provided they meet the other conditions outlined above.
The amount of the increase is multiplied by a recovery wage subsidy rate for the qualifying period to determine the total amount of CRHP subsidy. Entities can then claim the larger of the CRHP subsidy and the CEWS for the applicable period.
These requirements are discussed in more detail below. Note that references to qualifying periods are to the same four-week qualifying periods as for CEWS, and the “eligible remuneration” and “baseline remuneration” are defined terms in the CEWS legislation.
Total base period remuneration
Remuneration paid during period 14—the qualifying period that runs from March 14, 2021 to April 10, 2021—has been designated as the benchmark total base period remuneration. As with CEWS, remuneration for this purpose is capped at a maximum of $1,129 per week.
To determine total base period remuneration, it’s necessary to aggregate for each employee, for each of the four weeks in the period, the lower of eligible remuneration paid in respect of each week, and $1,129.
If the employee deals at non-arm’s length with the entity, the amount per week is the least of the amount of eligible remuneration paid in respect of the week, $1,129 and the baseline remuneration for that employee in respect of that qualifying period.
Unlike CEWS, remuneration paid to furloughed employees is not considered in this calculation.
Total current period remuneration
Total current period remuneration is determined for a given qualifying period. The first such period that the subsidy could apply to is the period from June 6, 2021 to July 3, 2021, or Period 17 under the CEWS rules.
The total current period remuneration is also the aggregate for each employee, for each of the four weeks in the period, of the lower of eligible remuneration paid in respect of each week, and $1,129.
If the employee deals at non-arm’s length with the entity, the amount per week is the least of the amount of eligible remuneration paid in respect of the week, $1,129 and the baseline remuneration for the week in question.
The amount of current period remuneration in respect of furloughed employees is nil.
Recovery wage subsidy rate
Here’s a breakdown of the recovery wage subsidy rate:
|Qualifying Period||Subsidy Rate|
|Period 17||June 6, 2021- July 3, 2021||50%|
|Period 18||July 4, 2021- July 31, 2021||50%|
|Period 19||August 1, 2021- August 28, 2021||50%|
|Period 20||August 29, 2021- September 25, 2021||40%|
|Period 21||September 26, 2021- October 23, 2021||30%|
|Period 22||October 24, 2021- November 20, 2021||20%|
CRHP subsidy calculation
The CRHP is calculated by taking the increase in total remuneration paid in the current qualifying period compared to total base period remuneration determined for Period 14, and multiplying that increase by the subsidy rate.
Duration of the CRHP program
The proposed start date for the CRHP is June 6, 2021, and it is planned to be active through Nov. 20, 2021.
CRHP program restrictions
By not introducing new criteria for entities to qualify for the CRHP subsidy, the government has streamlined the application of the new rules. However, there continues to be a group of taxpayers that could not qualify for CEWS, such as businesses that started after March 2020. These entities will not be able to access the CRHP subsidy.
How BDO can help
Our BDO tax professionals understand the uncertainty and challenges your business is facing during the COVID-19 crisis. We can help you assess how the CRHP and other government relief programs will affect your organization and provide guidance in determining the next steps.
To learn how the CRHP subsidy applies to your organization and staffing needs, please contact:
Dave Walsh, Partner, Tax Service Line Leader
Bruce Sprague, Partner, Western Canada Tax Leader
Greg London, Partner, Eastern Canada Tax Leader
Rachel Gervais, Partner, GTA Tax Leader
The information in this publication is current as of June 1, 2021.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.