An Act to provide further support in response to COVID-19 (S.C. 2021, c. 26)
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Assented to 2021-12-17
An Act to provide further support in response to COVID-19
S.C. 2021, c. 26
Assented to 2021-12-17
An Act to provide further support in response to COVID-19
RECOMMENDATION
Her Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled “An Act to provide further support in response to COVID-19”.
SUMMARY
Part 1 amends the Income Tax Act and the Income Tax Regulations to extend subsidies under the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Rent Subsidy (CERS), and the Canada Recovery Hiring Program until May 7, 2022, as part of the response to the COVID-19 pandemic. Support under the CEWS and the CERS would be available to the tourism and hospitality sector and to the hardest-hit organizations that face significant revenue declines. Eligible entities under these rules would need to demonstrate a revenue decline over the course of 12 months of the pandemic, as well as a current-month revenue decline. In addition, organizations subject to a qualifying public health restriction would be eligible for support, if they have one or more locations subject to a public health restriction lasting for at least seven days that requires them to cease some or all of their activities. Part 1 also allows the government to extend the subsidies by regulation but no later than July 2, 2022.
Part 2 enacts the Canada Worker Lockdown Benefit Act to authorize the payment of the Canada worker lockdown benefit in regions where a lockdown is imposed for reasons related to COVID-19. It also makes consequential amendments to the Income Tax Act and the Income Tax Regulations.
Part 3 amends the Canada Recovery Benefits Act to, among other things,
(a) extend the period within which a person may be eligible for a Canada recovery sickness benefit or a Canada recovery caregiving benefit;
(b) increase the maximum number of weeks in respect of which a Canada recovery sickness benefit is payable to a person from four to six; and
(c) increase the maximum number of weeks in respect of which a Canada recovery caregiving benefit is payable to a person from 42 to 44.
It also makes a related amendment to the Canada Recovery Benefits Regulations.
Part 3.1 provides for the completion of a performance audit and tabling of a report by the Auditor General of Canada in respect of certain benefits.
Part 4 amends the Canada Labour Code to, among other things, create a regime that provides for a leave of absence related to COVID-19 under which an employee may take
(a) up to six weeks if they are unable to work because, among other things, they have contracted COVID-19, have underlying conditions that in the opinion of certain persons or entities would make them more susceptible to COVID-19 or have isolated themselves on the advice of certain persons or entities for reasons related to COVID-19; and
(b) up to 44 weeks if they are unable to work because, for certain reasons related to COVID-19, they must care for a child who is under the age of 12 or a family member who requires supervised care.
It also makes a related amendment to the Budget Implementation Act, 2021, No. 1.
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
PART 1R.S., c. 1 (5th Supp.)Income Tax Act
Amendments to the Act
1 (1) The portion of subsection 125.7(1) of the Income Tax Act before the definition baseline remuneration is replaced by the following:
Marginal note:Definitions
(1) The following definitions apply in this section and in subsections 163(2.901) and (2.902).
(2) Paragraphs (j) and (k) of the definition base percentage in subsection 125.7(1) of the Act are replaced by the following:
(j) for the twentieth qualifying period,
(i) if the eligible entity’s revenue reduction percentage is greater than or equal to 50%, 25%, and
(ii) in any other case, the percentage determined by the formula
0.625 × (A − 10%)
where
- A
- is the revenue reduction percentage;
(k) for the twenty-first qualifying period,
(i) if the eligible entity’s revenue reduction percentage is greater than or equal to 50%, 10%, and
(ii) in any other case, the percentage determined by the formula
0.25 × (A − 10%)
where
- A
- is the revenue reduction percentage;
(l) for the twenty-second qualifying period to the twenty-sixth qualifying period,
(i) the lesser of 75% and the eligible entity’s revenue reduction percentage for the qualifying period, if, for the qualifying period,
(A) the eligible entity’s revenue reduction percentage is greater than or equal to 40%, and
(B) either of the following conditions is met:
(I) the eligible entity is a qualifying tourism or hospitality entity, or
(II) the eligible entity is subject to a qualifying public health restriction,
(ii) if subparagraph (i) does not apply to the eligible entity, the eligible entity’s revenue reduction percentage for the qualifying period is greater than or equal to 50% and the prior year revenue decline of the eligible entity is greater than or equal to 50%, the lesser of 50% and the percentage determined by the formula
1.6 × (A − 50%) + 10%
where
- A
- is the eligible entity’s revenue reduction percentage for the qualifying period, and
(iii) in any other case, nil;
(m) for the twenty-seventh qualifying period and the twenty-eighth qualifying period,
(i) the lesser of 37.5% and one half of the eligible entity’s revenue reduction percentage for the qualifying period, if, for the qualifying period,
(A) the eligible entity’s revenue reduction percentage is greater than or equal to 40%, and
(B) either of the following conditions is met:
(I) the eligible entity is a qualifying tourism or hospitality entity, or
(II) the eligible entity is subject to a qualifying public health restriction,
(ii) if subparagraph (i) does not apply to the eligible entity, the eligible entity’s revenue reduction percentage is for the qualifying period greater than or equal to 50% and the prior year revenue decline of the eligible entity is greater than or equal to 50%, the lesser of 25% and the percentage determined by the formula
0.8 × (A − 50%) + 5%
where
- A
- is the eligible entity’s revenue reduction percentage for the qualifying period, and
(iii) in any other case, nil; and
(n) for a qualifying period after the twentieth qualifying period, a percentage determined by regulation in respect of the eligible entity for the qualifying period or, for a qualifying period after the twenty-eighth qualifying period, if there is no percentage determined by regulation for the qualifying period, nil. (pourcentage de base)
(3) The definition current reference period in subsection 125.7(1) of the Act is amended by striking out “and” at the end of paragraph (c.991) and by adding the following after that paragraph:
(c.992) for the twenty-third qualifying period, December 2021;
(c.993) for the twenty-fourth qualifying period, January 2022;
(c.994) for the twenty-fifth qualifying period, February 2022;
(c.995) for the twenty-sixth qualifying period, March 2022;
(c.996) for the twenty-seventh qualifying period, April 2022;
(c.997) for the twenty-eighth qualifying period, May 2022; and
(4) Subparagraph (i) of the description of A in paragraph (b) of the definition executive compensation repayment amount in subsection 125.7(1) of the Act is replaced by the following:
(i) a percentage assigned to the eligible entity under an agreement in respect of the seventeenth qualifying period to the twenty-third qualifying period if
(A) the agreement is entered into by
(I) the eligible entity,
(II) an eligible entity, shares of the capital stock of which are listed or traded on a stock exchange or other public market, that controls the eligible entity (referred to in this definition as the “public parent corporation”), if the public parent corporation received a deemed overpayment under subsection (2) in respect of any of the seventeenth qualifying period to the twenty-third qualifying period, and
(III) each other eligible entity that received a deemed overpayment under subsection (2) in respect of any of the seventeenth qualifying period to the twenty-third qualifying period and was controlled in that period by the eligible entity or the public parent corporation, if any,
(B) the agreement is filed in prescribed form and manner with the Minister,
(C) the agreement assigns, for the purposes of this definition, a percentage in respect of each eligible entity referred to in clause (A) of this subparagraph,
(D) the total of all the percentages assigned under the agreement equals 100%, and
(E) the percentage allocated to any eligible entity under the agreement would not result in an amount allocated to the eligible entity in excess of the total of all amounts of deemed overpayments of the eligible entity under subsection (2) for any of the seventeenth qualifying period to the twenty-third qualifying period,
(i.1) a percentage assigned to the eligible entity under an agreement in respect of the twenty-fourth qualifying period and any subsequent qualifying period if
(A) the agreement is entered into by
(I) the eligible entity,
(II) the public parent corporation, if the public parent corporation received a deemed overpayment under subsection (2) in respect of the twenty-fourth qualifying period or any subsequent qualifying period, and
(III) each other eligible entity that received a deemed overpayment under subsection (2) in respect of the twenty-fourth qualifying period or any subsequent qualifying period and was controlled in that period by the eligible entity or the public parent corporation, if any,
(B) the agreement is filed in prescribed form and manner with the Minister,
(C) the agreement assigns, for the purposes of this definition, a percentage in respect of each eligible entity referred to in clause (A) of this subparagraph,
(D) the total of all the percentages assigned under the agreement equals 100%, and
(E) the percentage allocated to any eligible entity under the agreement would not result in an amount allocated to the eligible entity in excess of the total of all amounts of deemed overpayments of the eligible entity under subsection (2) for the twenty-fourth qualifying period and any subsequent qualifying period, and
(5) The description of B in paragraph (b) of the definition executive compensation repayment amount in subsection 125.7(1) of the Act is replaced by the following:
- B
- is
(i) for the seventeenth qualifying period to the twenty-third qualifying period, the lesser of
(A) the total of all amounts each of which is an amount of a deemed overpayment under subsection (2) for each of the eligible entities described in clause (i)(A) of the description of A for the seventeenth qualifying period to the twenty-third qualifying period, other than amounts in respect of employees on leave with pay, and
(B) the amount determined by the formula
C − D
where
- C
- is the executive remuneration of the eligible entity, or of the public parent corporation that controls the eligible entity, if any, for the 2021 calendar year (prorated based upon the number of days of the eligible entity’s, or the public parent corporation’s, fiscal periods in the calendar year, if those fiscal periods are not the calendar year), and
- D
- is the executive remuneration of the eligible entity, or of the public parent corporation that controls the eligible entity, if any, for the 2019 calendar year (prorated based upon the number of days of the eligible entity’s, or the public parent corporation’s, fiscal periods in the calendar year, if those fiscal periods are not the calendar year), and
(ii) for the twenty-fourth qualifying period and any subsequent qualifying period, the lesser of
(A) the total of all amounts each of which is an amount of a deemed overpayment under subsection (2) for each of the eligible entities described in clause (i.1)(A) of the description of A for the twenty-fourth qualifying period and any subsequent qualifying period, other than amounts in respect of employees on leave with pay, and
(B) the amount determined by the formula
E + F − G
where
- E
- is the amount, if any, by which the amount determined under clause (i)(B) exceeds the amount determined under clause (i)(A),
- F
- is the executive remuneration of the eligible entity, or of the public parent corporation that controls the eligible entity, if any, for the 2022 calendar year (prorated based upon the number of days of the eligible entity’s, or the public parent corporation’s, fiscal periods in the calendar year, if those fiscal periods are not the calendar year), and
- G
- is the executive remuneration of the eligible entity, or of the public parent corporation that controls the eligible entity, if any, for the 2019 calendar year (prorated based upon the number of days of the eligible entity’s, or the public parent corporation’s, fiscal periods in the calendar year, if those fiscal periods are not the calendar year). (montant du remboursement de la rémunération de la haute direction)
(6) Paragraph (a) of the definition prior reference period in subsection 125.7(1) of the Act is amended by striking out “and” at the end of subparagraph (xxi) and by adding the following after subparagraph (xxii):
(xxiii) for the twenty-third qualifying period, December 2019,
(xxiv) for the twenty-fourth qualifying period, January 2020,
(xxv) for the twenty-fifth qualifying period, February 2020,
(xxvi) for the twenty-sixth qualifying period, March 2019,
(xxvii) for the twenty-seventh qualifying period, April 2019, and
(xxviii) for the twenty-eighth qualifying period, May 2019;
(7) Subparagraphs (b)(i) and (ii) of the definition prior reference period in subsection 125.7(1) of the Act are replaced by the following:
(i) on March 1, 2019, the eligible entity was not carrying on business or otherwise carrying on its ordinary activities and the qualifying period is any of the first qualifying period to the fourth qualifying period, or
(ii) the qualifying period is any of
(A) the first qualifying period to the fourth qualifying period and the eligible entity elects for all of the first qualifying period to the third qualifying period,
(B) the fifth qualifying period to the qualifying period referred to in paragraph (d) of the definition qualifying period and the eligible entity elects for all of those qualifying periods,
(C) the fourteenth qualifying period to the seventeenth qualifying period, if
(I) on March 1, 2019, the eligible entity was not carrying on business or otherwise carrying on its ordinary activities, and
(II) the eligible entity elects for all of those qualifying periods, or
(D) the twenty-sixth qualifying period to the twenty-eighth qualifying period, if
(I) on March 1, 2019, the eligible entity was not carrying on business or otherwise carrying on its ordinary activities, and
(II) the eligible entity elects for all of those qualifying periods; and
(8) The definition qualifying period in subsection 125.7(1) of the Act is amended by striking out “and” at the end of paragraph (c.991) and by replacing paragraph (d) with the following:
(c.992) the period that begins on November 21, 2021 and ends on December 18, 2021 (referred to in this section as the “twenty-third qualifying period”);
(c.993) the period that begins on December 19, 2021 and ends on January 15, 2022 (referred to in this section as the “twenty-fourth qualifying period”);
(c.994) the period that begins on January 16, 2022 and ends on February 12, 2022 (referred to in this section as the “twenty-fifth qualifying period”);
(c.995) the period that begins on February 13, 2022 and ends on March 12, 2022 (referred to in this section as the “twenty-sixth qualifying period”);
(c.996) the period that begins on March 13, 2022 and ends on April 9, 2022 (referred to in this section as the “twenty-seventh qualifying period”);
(c.997) the period that begins on April 10, 2022 and ends on May 7, 2022 (referred to in this section as the “twenty-eighth qualifying period”); and
(d) a prescribed period that ends no later than July 2, 2022. (période d’admissibilité)
(9) Paragraph (b) of the definition qualifying recovery entity in subsection 125.7(1) of the Act is replaced by the following:
(b) it would be a qualifying entity for the qualifying period if the definition qualifying entity were read without reference to its paragraph (a);
(10) Subparagraph (e)(ii) of the definition qualifying recovery entity in subsection 125.7(1) of the Act is replaced by the following:
(ii) greater than 10% (or a percentage determined by regulation for the qualifying period), if it is any of the eighteenth qualifying period and subsequent qualifying periods. (entité de relance admissible)
(11) Paragraph (d) of the definition recovery wage subsidy rate in subsection 125.7(1) of the Act is replaced by the following:
(d) for any of the twenty-second qualifying period and subsequent qualifying periods, 50% or a percentage determined by regulation for the qualifying period. (taux de subvention salariale de relance)
(12) The portion of paragraph (a.1) of the definition rent subsidy percentage in subsection 125.7(1) of the Act before the formula is replaced by the following:
(a.1) if the qualifying period is any of the eighteenth qualifying period to the twenty-eighth qualifying period, the percentage determined by the formula
(13) Paragraph (b) of the definition rent subsidy percentage in subsection 125.7(1) of the Act is replaced by the following:
(b) for a qualifying period after the twenty-eighth qualifying period, a percentage determined by regulation in respect of the eligible entity or, if there is no percentage determined by regulation for the qualifying period, nil. (pourcentage de subvention pour le loyer)
(14) The description of A in the definition rent top-up percentage in subsection 125.7(1) of the Act is replaced by the following:
- A
- is 25%, or a prescribed percentage, for any of the eighth qualifying period to the twenty-eighth qualifying period and nil, or a prescribed percentage, for any subsequent qualifying period,
(15) Paragraphs (e) and (f) of the definition top-up percentage in subsection 125.7(1) of the Act are replaced by the following:
(e) for the twentieth qualifying period, the lesser of 15% and the percentage determined by the formula
0.75 × (A − 50%)
where
- A
- is the entity’s top-up revenue reduction percentage for the qualifying period;
(f) for the twenty-first qualifying period, the lesser of 10% and the percentage determined by the formula
0.5 × (A − 50%)
where
- A
- is the entity’s top-up revenue reduction percentage for the qualifying period; and
(g) for each qualifying period after the twenty-first qualifying period, nil. (pourcentage compensatoire)
(16) Subsection 125.7(1) of the Act is amended by adding the following in alphabetical order:
- prior year revenue decline
prior year revenue decline, of an eligible entity means, the average of all percentages each of which would, if the Act were read without reference to subsection 125.7(9) and section 257, be the revenue reduction percentage of the eligible entity for a qualifying period
(a) that is any of the first qualifying period to the thirteenth qualifying period (but including only one of the tenth qualifying period or the eleventh qualifying period); and
(b) throughout which the eligible entity was
(i) carrying on its ordinary activities, or
(ii) not carrying on its ordinary activities because of a public health restriction. (réduction du revenu d’une année antérieure)
- qualifying public health restriction
qualifying public health restriction, of an eligible entity for a qualifying period, means that
(a) one or more qualifying properties of the eligible entity — or of one or more specified tenants (within the meaning of the definition public health restriction) of the eligible entity — is subject to a public health restriction for at least seven days in the qualifying period; and
(b) it is reasonable to conclude that at least approximately 25% of the qualifying revenues of the eligible entity — together with the qualifying revenues of any specified tenants of the eligible entity — for the prior reference period were derived from the restricted activities. (restrictions sanitaires admissibles)
- qualifying tourism or hospitality entity
qualifying tourism or hospitality entity, for a qualifying period, has the meaning assigned by regulation. (entité touristique ou d’accueil admissible)
(17) The portion of paragraph (a) of the description of D in subsection 125.7(2) of the Act before subparagraph (i) is replaced by the following:
(a) nil, if the qualifying period is any of the fifth qualifying period to the nineteenth qualifying period, unless
(18) The description of D in subsection 125.7(2) of the Act is amended by striking out “and” at the end of paragraph (a) and by adding the following after that paragraph:
(a.1) nil, if the qualifying period is after the nineteenth qualifying period, and
(18.1) Section 125.7 of the Act is amended by adding the following after subsection (2):
Marginal note:Exception
(2.01) Despite subsection (2), no overpayment on account of a qualifying entity’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen with respect to a qualifying entity that is a publicly traded company or a subsidiary of such a company if, in the qualifying period, it paid taxable dividends to an individual who is a holder of common shares of the company or of the subsidiary of the company.
(19) The formula in paragraph (b) of the description of D in subsection 125.7(2.1) of the Act is replaced by the following:
E × E.1
(20) Paragraph (b) of the description of D in subsection 125.7(2.1) of the Act is amended by adding the following after the description of E:
- E.1
- is
(i) $300,000 for the eighth qualifying period to the twenty-first qualifying period, and
(ii) $1,000,000 for the twenty-second qualifying period and subsequent qualifying periods; and
(21) The portion of subsection 125.7(14) of the Act before the formula is replaced by the following:
Marginal note:Executive compensation
(14) The amount of a refund made by the Minister to an eligible entity in respect of a deemed overpayment under subsection (2) on a particular date under subsection 164(1.6), in respect of any of the seventeenth qualifying period to the twenty-third qualifying period, is deemed to be an amount that has been refunded to the eligible entity on that particular date (for the taxation year in which the refund was made) in excess of the amount to which the eligible entity was entitled as a refund under this Act to the extent of the lesser of the amount of the refund and the amount determined by the formula
(22) Section 125.7 of the Act is amended by adding the following after subsection (14):
Marginal note:Executive compensation
(14.1) The amount of a refund made by the Minister to an eligible entity in respect of a deemed overpayment under subsection (2) on a particular date under subsection 164(1.6), in respect of any of the twenty-fourth qualifying period and any subsequent qualifying period, is deemed to be an amount that has been refunded to the eligible entity on that particular date (for the taxation year in which the refund was made) in excess of the amount to which the eligible entity was entitled as a refund under this Act to the extent of the lesser of the amount of the refund and the amount determined by the formula
A − B
where
- A
- is the greater of
(a) the executive compensation repayment amount of the eligible entity, and
(b) with respect to a qualifying entity that is a publicly traded company or a subsidiary of such a company, the amount of taxable dividends paid by the company or its subsidiary to an individual who is a holder of common shares of the company or of the subsidiary of the company; and
- B
- is the total of all amounts deemed to be an excess refund to the eligible entity under this subsection in respect of refunds made after the particular date.
(23) Subsections (17) and (18) are deemed to have come into force on August 29, 2021.
- Date modified: