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Canada Recovery Hiring Program

May 03, 2021

Canada Recovery Hiring Program

Synopsis
6 Minute Read

Is the new Canada Recovery Hiring Program for you? Find out in this post who qualifies for what under the Budget 2021 incentive.

Michael Saxe
Michael Saxe, CPA, CA, LL.M.
Partner, Taxation Services

Budget 2021 introduced the new Canada Recovery Hiring Program (CRHP). 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.

Eligible employers can claim either the CRHP or the Canada Emergency Wage Subsidy (CEWS) for a particular period, but not both.

The filing deadline is 180 days after the end of the qualifying period.

Qualification

Eligible employers include Canadian-controlled private corporations (CCPCs), individuals, non-profit organizations, registered charities, and certain partnerships. Employers qualify for this program if they have a drop in revenue, which is to be computed the same way as it is computed for the CEWS. Therefore, the revenue drop must be more than 0 percent for the June 6 – July 3, 2021 qualifying period. The revenue drop must be greater than 10 percent for the qualifying periods between July 4, 2021 and November 20, 2021.

The revenue drop for the CRHP is computed under the general or alternative approach, similar to the CEWS program. The reference periods to compute the revenue drop are as follows:

Timing Period 17
June 6 – July 3
Period 18
July 4 – July 31
Period 19
August 1 – August 28
Period 20
August 29 – September 25
Period 21
September 26 – October 23
Period 22
October 24 – November 20
General approach June 2021 over June 2019 or May 2021 over May 2019 July 2021 over July 2019 or June 2021 over June 2019 August 2021 over August 2019 or July 2021 over July 2019 September 2021 over September 2019 or August 2021 over August 2019 October 2021 over October 2019 or September 2021 over September 2019 November 2021 over November 2019 or October 2021 over October 2019
Alternative approach June 2021 or May 2021 over average of January and February 2020 July 2021 or June 2021 over average of January and February 2020 August 2021 or July 2021 over average of January and February 2020 September 2021 or August 2021 over average of January and February 2020 October 2021 or September 2021 over average of January and February 2020 November 2021 or October 2021 over average of January and February 2020
*Period 17 of the Canada Emergency Wage Subsidy would be the first period of the Canada Recovery Hiring Program. Period identifiers have been aligned for ease of reference.

The revenue drop approach chosen must be consistent with the approach chosen for the CEWS. Therefore, if the general approach was chosen for the CEWS then it must be used for the CRHP. Similarly, if the alternative approach was chosen for the CEWS then it must be used for the CRHP.

Eligible employers, or their payroll service provider, needed to have a Canada Revenue Agency (CRA) payroll account number on March 15, 2020.

Subsidy amount

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. 

The hiring subsidy rates are as follows:

  Period 17 June 6 - July 3 Period 18 July 4 – July 31 Period 19 August 1 – August 28 Period 20 August 29 – September 25 Period 21 September 26 – October 23 Period 22 October 24 – November 20
Hiring subsidy rate 50% 50% 50% 40% 30% 20%
*Period 17 of the Canada Emergency Wage Subsidy would be the first period of the Canada Recovery Hiring Program. Period identifiers have been aligned for ease of reference.

 

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.

What this means for you and your business

Your business is only eligible for the subsidy if it has a revenue drop greater than 10 percent starting in the qualifying period beginning July 4, 2021. This coincides with a qualification change to the CEWS program which currently applies with any decline in revenue.

You will need to compare whether the CEWS or new CRHP will be more beneficial for your business, as eligible employers can only claim one for a particular period, starting for the qualifying period beginning June 6, 2021. For example, it may be more beneficial to claim the CRHP if you have a small revenue drop and sufficient incremental remuneration.

There is incentive for employers to begin hiring as soon as possible to maximize the benefit of the program, since the subsidy rate decreases over time. Conversely, the benefit of this hiring program reduces over time since the subsidy rate decreases over time.

Consideration should be given to cash management if your business is once again required to temporarily close or scale back due to COVID-19, given the gradually decreasing hiring subsidy rate applicable for the CRHP.

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