Canada Recovery Hiring Program

Canada Recovery Hiring Program Budget 2021 proposes to introduce the Canada Recovery Hiring Program (the “hiring subsidy”) to provide eligible employers that continue to experience qualifying declines in revenues relative to before the pandemic with a subsidy of up to 50% on the incremental remuneration paid to eligible employees in each qualifying period (that is four weeks in duration) between June 6, 2021 and November 20, 2021. ELIGIBLE EMPLOYERS Employers eligible for the CEWS are also generally eligible for the hiring subsidy. However, an eligible employer is only permitted to claim either the hiring subsidy or the CEWS in any particular qualifying period, not both. Eligible employers include individuals, non-profit organizations, registered charities, certain partnerships and Canadian-controlled private corporations (including cooperative corporations that are eligible for the small business deduction), that had a payroll account open with the CRA on March 15, 2020, which precludes new businesses from participating in this program. Employers that are not eligible for the hiring subsidy include corporations that are not Canadian-controlled private corporations, and corporations and trusts that are public institutions (i.e., Crown corporations, public universities, hospitals, etc.). ELIGIBLE EMPLOYEES An eligible employee must be employed primarily in Canada by an eligible employer throughout a qualifying period (or the portion of the qualifying period throughout which the individual was employed by the eligible employer). Employees that are on leave with pay (“furloughed employees”) are not eligible for the hiring subsidy, with the exception of employees on a period of paid absence, such as a vacation leave, sick leave or a sabbatical. ELIGIBLE REMUNERATION AND INCREMENTAL REMUNERATION Eligible remuneration generally includes salary, wages, and other remuneration paid in respect of a qualifying period for which employers are required to withhold or deduct amounts on account of the employee’s income tax obligations, but not severance pay, or items such as stock option benefits or personal use benefits. Incremental remuneration for a qualifying period means the difference between an employer’s total eligible remuneration paid to eligible employees for the qualifying period and its total eligible remuneration paid to eligible employees for the baseline period (March 14, 2021 to April 10, 2021). Total eligible remuneration paid in both periods is subject to a cap of $1,129 per week per employee, and in the case of non-arm’s length employees, their eligible remuneration for a week cannot exceed their baseline remuneration determined for that week. SUBSIDY AMOUNT If an eligible employer’s decline in revenues exceeds the revenue-decline threshold for a qualifying period, its subsidy in that qualifying period is equal to its incremental remuneration multiplied by the applicable hiring subsidy rate for that qualifying period (the hiring subsidy rate for each qualifying period ranges between 20 to 50% in descending order). This subsidy is received as an overpayment on account of the eligible employer’s liability under Part I of the Income Tax Act for the taxation year in which the which the qualifying period ends. REVENUE-DECLINE THRESHOLD To qualify for the hiring subsidy in a qualifying period, an eligible employer must have experienced a decline in revenues sufficient to qualify for the CEWS in that qualifying period, and for all other qualifying periods (between July 4, 2021 and November 20, 2021) a decline of more than 10% relative to the same calendar period pre-pandemic (i.e. in 2019). An employer can instead elect to use an alternative approach, which compares the employer’s monthly revenues relative to the average of its January 2020 and February 2020 revenues, but once an employer use one of the approaches it must continue to use that approach for the balance of its qualifying periods. Finally, a deeming rule provides that an employer’s revenue-decline for the purpose of determining its hiring subsidy in any of its qualifying periods is the greater of its decline in revenues in that qualifying period and the qualifying period immediately preceding it. An application for the hiring subsidy for a qualifying period is required to be made no later than 180 days after the end of the qualifying period.

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