On December 22, 2021, the Federal Government proposed to expand eligibility for the Local Lockdown Program, which would enable businesses that face capacity-limiting public health restrictions to receive assistance through the wage and rent subsidy programs.
Crowe MacKay’s tax advisors summarize how businesses and individuals can be eligible for these programs once available.
Expanding Eligibility for the Local Lockdown Program
Currently, only employers facing a lockdown are eligible for the Local Lockdown Program; however, the government intends to temporarily expand the program to allow employers subject to capacity-limiting public health restrictions to also qualify.
The temporary expansion of the program would allow businesses to qualify if:
- one or more locations are subject to a public health order that reduces an entity’s capacity at the location by 50% or more, and
- activities restricted by the public health order accounted for at least 50% of the entity’s total qualifying revenues in the prior reference period.
Additionally, the government intends to temporarily lower the current month revenue loss threshold from 40% to 25%. Employers must demonstrate current-month losses, without the requirement for a historical 12-month revenue decline.
The starting subsidy rate would be 25% for eligible organizations with a 25% current month revenue decline, increasing thereafter in proportion to their current month revenue decline up to a maximum rate of 75% for those with a current month revenue decline of 75% or higher.
The above temporary changes would be in effect for qualifying periods from December 19, 2021, to February 12, 2022 (periods 24 and 25).
| Current-month revenue decline |
Period 24-25 December 19, 2021 - February 12, 2022 |
| 75% and over | 75% |
| 25-74% |
Revenue decline e.g., 50% revenue decline = 50% subsidy rate |
| 0-24% | 0% |
Expanding Eligibility for the Canada Worker Lockdown Benefit
The new Canada Worker Lockdown Benefit provides income support to workers whose employment is interrupted by specific government-imposed public health lockdowns and who are unable to work due to such restrictions.
The Federal Government has proposed the temporary expansion of the definition of a public health lockdown for the purposes of the benefit. The definition of a lockdown order would then include provincial and territorial orders involving capacity restrictions of 50% or more – from December 19, 2021, to February 12, 2022. These changes would also include reducing the minimum number of days a lockdown order needs to be in place to meet the new definition of seven consecutive days, down from 14 consecutive days.
The temporary definition will revert to its original form after February 12, 2022, as set out in Bill C-2 which states that, for the purposes of the Canada Worker Lockdown Benefit, a lockdown order is an order made because of COVID-19 that requires a premise where commercial activities or services are carried out to be closed to the public for at least 14 consecutive days in a region. These would be for non-essential services (i.e. services that are not essential to preserving life, health, public safety, and basic societal functioning).
Other eligibility requirements of the benefit remain intact, which would:
- Provide $300 a week.
- Be available to workers whose work interruption is a result of a government-imposed public health lockdown.
- Be available to workers who are ineligible for Employment Insurance (EI) and those who are eligible for EI, as long as they are not paid benefits through EI for the same period.
- Require workers to attest that they have lost 50% or more of their income as a result of COVID-19-related lockdowns during the applicable period.
Those who refuse to adhere to a vaccine mandate and face a loss of income or employment are not eligible for this benefit.
The Canada Recovery Caregiving Benefit and Canada Recovery Sickness Benefit
The extension and expansion announced for the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit remain in place. In October, the government announced that both of these benefits would extend until May 7, 2022, and the maximum duration of these benefits would be increased by two weeks. This would mean that the caregiving benefit would be extended from 42 to 44 weeks and the sickness benefit from four to six weeks. Individuals can now apply retroactively to periods between November 21, 2021, and December 11, 2021.
Employment Insurance benefits are still available to individuals at the current temporary low common entrance requirements of 420 hours through the temporary changes and simplifications announced in the 2021 Budget to support Canadian workers in accessing EI.
This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual tax needs. This publication is not a substitute for obtaining personalized advice.
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