The Federal Government recently announced a new wage subsidy as part of Budget 2021 – The Canada Recovery Hiring Program (“CHRP”).

Please find key details below:

CHRP

  • This new program provides eligible employers with a subsidy of up to 50 percent on the incremental remuneration paid to employees between June 6, 2021 and November 20, 2021.  There are 6 claim periods during this time.
  • Eligible employers can claim either the CRHP or the Canada Emergency Wage Subsidy (CEWS) for a particular period, but not both.  The employer will want to calculate and determine which program is most beneficial in each period.  This will depend on revenue reduction, hiring of new employees and whether they increased pay to arm’s length employees. For example, it may be more beneficial to claim the CRHP if the employer has a small revenue drop and sufficient incremental remuneration.
  • The filing deadline is 180 days after the end of the qualifying period.

Qualifications

  • Similar to the CEWS program, a revenue reduction is required.  However, it is different in that it is only an amount >0 in period 1 (June 6-July 3) and an amount >10% in periods 2-6.
  • The revenue drop calculation is the same as CEWS, using consistent methods (general or alternative) and reference periods (i.e., GEN June 2021 vs June 2019, or ALT June 2021 vs Jan/Feb 2020).
  • The method/approach chosen must be consistent with approach selected for CEWS.  Meaning if CEWS filings used the general method, CHRP must also use the general method.

Subsidy Calculation

  • The eligible remuneration for each employee is subject to a maximum of $1,129 per week. There is an additional restriction for non-arm’s length employees such that their eligible remuneration for the purposes of computing the CRHP for a week cannot exceed their baseline remuneration for that week. Furloughed employees are not eligible for the subsidy.
  • The subsidy is equal to the incremental remuneration multiplied by the applicable hiring subsidy rate for that qualifying period. Incremental remuneration for a qualifying period means the difference between remuneration paid by an employer in a qualified period and remuneration paid by an employer in a baseline period. The initial baseline period will be the period of March 14 to April 10, 2021.
  • This means that new employees hired during the period would be subject to the full 50% subsidy rate; and existing (arm’s length) employee incremental increase in salary during this period would also be subject to the rate.  Meaning if an existing employee was making $500 per week from March 14 to April 10 and is now earning $1,000 per week, the subsidy would be $250 ($1,000-$500 * 50%).

    Subsidy rates are:

  • June to August (P1-P3):  50%
  • September (P4): 40%
  • October (P5): 30%
  • November (P6): 20%

We expect more information to be released in the coming weeks.

If you need any assistance applying for any COVID-relief programs, do not hesitate to reach out to us.

F.H. Black & Company