Federal legislation that became law on December 17, 2021 aims to provide additional support for the tourism and hospitality sector, and other businesses that have been hit hard by the COVID-19 pandemic.
Bill C-2, an Act to provide further support in response to COVID-19, includes the Tourism and Hospitality Recovery Program (THRP) and the Hardest-Hit Business Recovery Program (HHBRP), which are two new rent support programs. The applicable claim periods for the THRP and HHBRP began on October 24, 2021, which is the day after the previous Canada Emergency Rent Subsidy (CERS) program expired, and have many of the same eligibility conditions as CERS.
Who Qualifies for Relief: Eligible applicants must be taxable corporations or trusts, individuals (such as sole proprietorships), registered charities or non-profit organizations. Public institutions, including, without limitation, municipalities and local governments, Crown corporations, public universities, colleges and schools and hospitals, are not eligible. The person/organization must also meet at least one of the following conditions:
- it had a CRA business number on September 27, 2020;
- it had a payroll account on March 15, 2020, or another person or partnership made payroll remittances on its behalf;
- it purchased the business assets of another person or partnership who meets the above condition a) or b) or have made an election under the special asset acquisition rules; or
- it meets other prescribed conditions that might be introduced.
Requirements for each subsidy:
Eligible applicants can qualify for the THRP in two ways:
- If the applicant is part of the tourism and hospitality sector, and meets the following three conditions:
- more than 50% of the organization’s eligible revenue comes from one or more of the tourism, hospitality, arts, entertainment or recreation activities supported by the THRP;
- the organization has a 12-month average revenue drop from March 2020 to February 2021 of 40% or higher; and
- the organization has a claim period revenue drop of at least 40%; or
- If the applicant is affected by a qualifying public health restriction, regardless of sector, and meets the following two conditions:
- the organization was affected by a qualifying public health restriction; and
- the organization has a claim period revenue drop of at least 40%.
A qualifying public health restriction is an order that meets certain conditions, including:
- the public health restriction required the applicant or their non-arm’s-length tenant to stop some or all regular activities at the qualifying property for at least 7 days in a row; and
- the activities stopped account for at least 25% of the eligible revenues earned during the prior reference period from or in connection with the affected qualifying property.
What Properties Qualify for Relief: Only commercial properties qualify for relief, which means any “real or immovable property”, including buildings or land, in Canada that a business or organization owns or rents, and uses in the course of its ordinary activities. This excludes homes, cottages, or other residences, and any properties that are primarily used to earn rental income from arm’s-length parties or properties primarily used to earn rental income directly or indirectly from a non-arm’s length party that is primarily used by that party to earn rental income.
The Relief: Which Property Expenses are Eligible: The THRP and HHBRP each have a $75,000 maximum eligible expenses per business location. The maximum total for all locations is $1,000,000 for both programs. There are further eligibility criteria for expenses, including:
– the expenses can only include amounts paid or payable to an arm’s-length party;
– the expenses must be in respect of the claim period; and
– the expense must be paid or payable under a written agreement entered into before October 9, 2020, or a renewal on substantially similar terms or assignment of such an agreement.
The THRP rent subsidy rate is available:
– up to 75% through the THRP based on the claim period revenue drop for claim periods 22-26, and
– up to 37.5% for claim periods 27-28.
The HHBRP subsidy rate is up to a maximum of 50% for claim periods 22-26 and 25% for claim periods 27-28.
Lockdown support top-up: If a person/organization must close or cease certain activities at one or more of their locations under a public health restriction for one week or longer, they may be eligible for a lockdown support top-up. This support provides an amount of up to 25% of eligible expenses per affected location for the days during the claim period that the restriction was in place.
Eligible property owners with non-arm’s length tenants may have access to the lockdown support top-up for the THRP and HHBRP. This requires all of the following conditions being met:
- the qualifying property is used by the tenant in the course of the tenant’s regular activities;
- the property is subject to a lockdown;
- a public health restriction requires that the tenant shut their doors or significantly restrict their activities; and
- the property owner must meet all of the other applicable conditions required for the lockdown support top-up.
The calculation of the lockdown support top-up for an eligible property owner with tenants not at arm’s length is based on its own eligible expenses and not the commercial rent paid or payable by its tenant(s).
Which claim periods can persons/organizations apply for?
Periods 22-26: October 24, 2021 – March 12, 2022
Period 22: October 24-November 20, 2021
Period 23: November 21-December 18, 2021
Period 24: December 19, 2021-January 15, 2022
Period 25: January 16-February 12, 2022
Period 26: February 13-March 12, 2022
Periods 27-28: March 13-May 7, 2022
Period 27: March 23-April 9, 2022
Period 28: April 10, 2022-May 7, 2022
How to Apply: A separate application must be submitted for each claim period and must be filed no later than 180 days after the end of the period. If applicants have not applied for a rent subsidy before, an online account must be created. Claim periods 25 and later are not yet open for application.
Other Support from Bill 2 – An Act to provide further support in response to COVID-19:
– The Canada Worker Lockdown Benefit, providing $300 a week in income support to eligible workers who are directly impacted by a COVID-19-related public health lockdown in their region up until May 7, 2022.
– The Local Lockdown Program, providing businesses that face temporary new local lockdowns up to the maximum amount available through the wage and rent subsidy programs.
– Extending the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit until May 7, 2022, and increasing the maximum duration of benefits by 2 weeks. This extends the caregiving benefit from 42 to 44 weeks and the sickness benefit from 4 to 6 weeks. Individuals will be able to apply retroactively back to the week of November 21, 2021. Applications for period 61 will launch on December 20, 2021.
– Extending the Canada Recovery Hiring Program until May 7, 2022, for eligible employers with current revenue losses above 10 per cent and increasing the subsidy rate to 50 per cent. This extension will help businesses continue to hire back workers, increase hours, and create the additional jobs Canada needs for a robust recovery.
Disclaimer: This article is for general information purposes only and not intended as or to be relied upon for legal advice. Consult with a lawyer for your unique situation.
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