On October 19, 2021, the Government of Canada announced that the final claim periods for the Canada Emergency Rent Subsidy ("CERS") and the Canada Emergency Wage Subsidy ("CEWS") would be the periods ending October 23, 2021. However, it also introduced the following two proposed programs that will replace CERS and CEWS on October 24, 2021, and provide continuing rent and wage support to eligible businesses:

1. the Tourism and Hospitality Recovery Program (the "THRP"); and

2. the Hardest-Hit Business Recovery Program (the "HHBRP").

The THRP will provide support to certain types of businesses operating in the tourism and hospitality industry. The HHBRP will assist other hard-hit organizations. For further clarity, eligible businesses under CERS and CEWS can still apply for past claim periods in accordance with their respective rules.

Although these programs will replace both CERS and CEWS and provide subsidies both in respect of eligible wage and rent expenses (subject to applicable caps), this bulletin focuses on the rent subsidy aspect of these new programs. The Government has not yet released the necessary legislation to implement these programs. Accordingly, we note that the details set out in this bulletin are subject to change until the actual legislation is finalized. We will provide a more detailed bulletin once the legislation is passed.

Claim Periods

The Government has proposed that the initial claim period for both programs will begin on October 24, 2021, the day immediately following the end of the final CERS claim period, and shall continue through at least May 7, 2022. The proposed legislation will grant the Government the authority to further extend these programs through July 2, 2022.

Eligibility for the THRP

The THRP will provide support to organizations in selected sectors of the tourism and hospitality industry that have been deeply affected by the pandemic and continue to struggle financially. Eligible organizations may include, but are not limited to: hotels, restaurants, bars, festivals, travel agencies, tour operators, convention centres, and convention and trade show organizers. We expect that the necessary legislation will further clarify the types of businesses that will be eligible for this program.

To qualify for the THRP for a given claim period, an eligible business must also satisfy the following eligibility criteria:

a. Have experienced a current-month revenue loss of at least 40% from pre-pandemic levels. The existing rules under CERS would continue to apply for this calculation.

b. Have experienced an average revenue loss of at least 40% over the 12-month period from March 2020 to February 2021,1 excluding from this calculation any periods in which the eligible business was not carrying on its ordinary operations for reasons other than a public health restriction.

Accordingly, in contrast to CERS, only certain business types will be eligible for the THRP. Those businesses must surpass a much more stringent eligibility threshold to qualify for base subsidies under the THRP.

Eligibility for the HHBRP

Businesses that are not eligible for the THRP may be eligible to receive support under the HHBRP for a given claim period if they satisfy the following criteria:

a. Have experienced a current month revenue loss of at least 50% from pre-pandemic levels. The existing rules under CERS would continue to apply to calculate the current-month revenue loss.

b. Have experienced an average revenue loss of at least 50% over the 12-month period from March 2020 to February 2021, 2 excluding from this calculation any periods in which the eligible business was not carrying on its ordinary operations for reasons other than a public health restriction.

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Footnotes

1 Please note the announcement also states that the 12-month average revenue loss should be calculated based on the first 13 claim periods for CEWS, which appears to correspond to a slightly different period than from March 2020 to February 2021. We expect this to be clarified when further details are made available.

2 See above note on calculating the 12-month average revenue loss for the THRP, which similarly applies to the HHBRP.

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