New Hiring Program for Canada’s Economic Recovery

Budget 2021 proposes to introduce the new Canadian Economic Recovery Hiring Program to provide eligible employers with a subsidy of up to 50% of the additional compensation paid to eligible employees between June 6, 2021 and November 20, 2021.

An eligible employer would be allowed to apply for either the hiring subsidy or the Canada Emergency Wage Subsidy for a given eligibility period, but not both.

The proposed details of the hiring subsidy are described below.

Eligible employers

Employers eligible for the Canada Emergency Wage Subsidy would normally be eligible for the hiring subsidy. However, a for-profit corporation would only be eligible for the hiring subsidy if it is a Canadian-controlled private corporation (including a cooperative corporation that qualifies for the small business deduction). Other eligible employers would be individuals, non-profit organizations, registered charities and certain partnerships.

Corporations and trusts that are ineligible for the Canada Emergency Wage Subsidy because they are public institutions would not be eligible for the hiring subsidy. Public institutions would generally include municipalities and local governments, Crown corporations, wholly-owned municipal corporations, public universities, colleges, schools and hospitals.

Eligible employers (or their payroll service provider) would be required to have an open payroll account with the Canada Revenue Agency by March 15, 2020.

Eligible employees

An eligible employee must be employed by an eligible employer, primarily in Canada, on a continuous basis during the eligibility period (or the portion of the eligibility period during which the individual was continuously employed).

The hiring subsidy would not be available to employees on paid leave. An employee on paid leave is an employee who is on leave with pay, i.e. who is paid by the eligible employer, without having performed any work for the employer. An employee would not be considered to be on leave with pay for the purposes of the hiring subsidy if he or she is absent for other reasons, such as annual leave, sick leave or sabbatical.

Eligible compensation and additional compensation

The types of remuneration eligible for the Canada Emergency Wage Subsidy would also be eligible for the hiring subsidy. Eligible compensation generally includes salaries, wages and other remuneration for which employers are required to withhold or deduct amounts on account of the employee’s income tax liability. However, it does not include severance pay or items such as employee stock option benefits or the personal use of a company vehicle. The amount of compensation for these employees would be calculated exclusively on the basis of compensation paid in respect of the eligibility period.

Additional compensation for an eligibility period means the difference between an employer’s total eligible compensation paid to eligible employees for the eligibility period and its total eligible compensation paid to eligible employees for the basic compensation period. During both periods, eligible compensation for each eligible employee would be subject to a maximum amount of $1,129 per week.

As is currently the case with the Canada Emergency Wage Subsidy, a non-arm’s length employee’s eligible earnings for a week cannot exceed his or her basic earnings calculated for that week. More information on base pay is available in the “Additional Information” section of Emergency Business Support.

The relevant dates for calculating additional compensation are shown in Table 5.

Amount of subsidy

An eligible employer’s subsidy for an eligibility period would be equal to its additional remuneration multiplied by the hiring subsidy rate in effect for that eligibility period, provided that its revenue decline exceeds the revenue decline threshold for an eligibility period (see Revenue Decline Threshold below).

Revenue decline threshold

To be eligible for a hiring subsidy in an eligibility period, an eligible employer would have to have a drop in revenue sufficient to qualify for the Canada Emergency Wage Subsidy in that eligibility period. For eligibility periods in which the Canada Emergency Wage Subsidy is no longer in effect, an eligible employer should have a drop in earnings greater than 10%. Thus, an eligible employer’s revenue decline should be greater than :

• 0%, for the eligibility period between June 6, 2021 and July 3, 2021;
• 10%, for the eligibility period between July 4, 2021 and November 20, 2021;

An employer’s revenue decline would be determined in the same way as for the Canada Emergency Wage Subsidy. This method compares the employer’s revenue in the current calendar month with its revenue in the same calendar month prior to the pandemic. Employers may also choose the alternative approach of comparing their monthly revenues with the average of their revenues for January and February 2020. A deeming rule states that an employer’s revenue decline for a given eligibility period is the greater of its revenue decline for the given eligibility period and the previous eligibility period.

Employers who had chosen to use the general approach for previous Canada Emergency Wage Subsidy periods would be required to continue using this same approach for the hiring subsidy. Similarly, employers who had chosen the alternative approach would be required to continue with that same approach.

The reference periods shown in Table 7 would be used to determine the decline in an eligible employer’s income for the eligibility periods from June 6, 2021 to November 20, 2021.

An application for the hiring subsidy for an eligibility period must be made no later than 180 days after the end of that eligibility period.

For questions about existing programs for businesses, and for emergency financial assistance, you can contact our expert, Gustave Legault-Brousseau, CPA, CMA, Senior Financial Analyst at Amyot Gélinas at 819 326-3400, ext. 3472 or at glegault-brousseau@amyotgelinas.com.

(source: https://www.budget.gc.ca/2021/report-rapport/anx6-fr.html#programme-d-embauche-pour-la-relance-economique-du-canada)