This enactment amends the Income Tax Act to revise the eligibility criteria, as well as the level of subsidization, under the Canada Emergency Wage Subsidy (CEWS) as part of the response to the coronavirus disease 2019. It also extends the CEWS to June 30, 2021. The enactment further amends the Income Tax Act to introduce the Canada Emergency Rent Subsidy (CERS) in order to support those hardest hit by the coronavirus disease 2019. This subsidy provides relief in respect of rent and interest on debt obligations incurred to acquire real property used by businesses, charities and not-for-profit organizations in the course of their businesses or other activities. The rent subsidy is effective as of September 27, 2020.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

• COVID-19 – wage subsidy

  (g.‍6) for the purposes of section 125.‍7, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation unless it is reasonable to consider that one of the main purposes of the amalgamation is to cause the new corporation to qualify for the deemed overpayment under subsection 125.‍7(2) Insertion start or (2.‍1) Insertion end or to increase the amount of that deemed overpayment;

eligible employee, of an eligible entity in respect of a week in a qualifying period, means an individual employed by the eligible entity Insertion start primarily Insertion end in Canada Insertion start throughout Insertion end the qualifying period ( Insertion start or the portion of the qualifying period throughout which the individual was employed by the eligible entity Insertion end ), other than, if the qualifying period is described in any of paragraphs (a) to (c.‍1) of the definition qualifying period, an individual who is without remuneration by the eligible entity in respect of 14 or more consecutive days in the qualifying period. (employé admissible)

top-up revenue reduction percentage, of an eligible entity for a qualifying period, means

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  (a) for a qualifying period referred to in any of paragraphs (c.‍2) to (c.‍4) of the definition qualifying period, the result (expressed as a percentage) of the formula

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  1 − A ÷ B

  where

  A

  is the average monthly qualifying revenue of the eligible entity for the last three calendar months that ended prior to the current reference period for the qualifying period, and

  B

  is the average monthly qualifying revenue of the eligible entity for

  Insertion start (i) Insertion end  if the prior reference period for the qualifying period is January and February 2020, January and February 2020, and

  Insertion start (ii) Insertion end  in any other case, the last three calendar months that ended prior to the prior reference period for the qualifying period;

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  (b) for a qualifying period referred to in any of paragraphs (c.‍5) to (c.‍7) of the definition qualifying period, the greater of

  • (i) the result (expressed as a percentage) of the formula in paragraph (a), and

  • (ii) the revenue reduction percentage of the eligible entity for the qualifying period; and

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  (c) for a qualifying period referred to in paragraph (d) of the definition qualifying period, the revenue reduction percentage of the eligible entity for the qualifying period. (pourcentage compensatoire de baisse de revenu)

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  (iv) if the eligible employee was on leave for any reason mentioned in subsection 12(3) of the Employment Insurance Act or section 2 of the Act respecting parental insurance CQLR, c. A-29.‍011 throughout the period that begins on July 1, 2019 and ends on March 15, 2020, begins 90 days prior to the date on which the employee commenced that leave and ends on the day prior to the date on which they commenced their leave, in respect of a qualifying period referred to in any of paragraphs (c.‍2) to (d) of the definition qualifying period. (rémunération de base) 

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• (i) if the entity’s revenue reduction percentage is greater than or equal to 50%, Insertion start 40 Insertion end %, and

• (ii) in any other case, Insertion start 0.‍8 Insertion end multiplied by the revenue reduction percentage;

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  (f) for the qualifying period referred to in paragraph (c.‍7) of the definition qualifying period,

  • (i) if the entity’s revenue reduction percentage is greater than or equal to 50%, 40%, and

  • (ii) in any other case, 0.‍8 multiplied by the revenue reduction percentage; and

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• Insertion start (g) Insertion end  for Insertion start a Insertion end qualifying period referred to in paragraph (d) of the definition qualifying period, a percentage determined by regulation in respect of the eligible entity. (pourcentage de base)

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  (c.‍7) for the qualifying period referred to in paragraph (c.‍7) of the definition qualifying period, December 2020; and

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  (x) for the qualifying period referred to in paragraph (c.‍7) of the definition qualifying period, December 2019;

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• (a) it files an application with the Minister in respect of the qualifying period in prescribed form and manner Insertion start on or Insertion end before Insertion start the later of Insertion end

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    (i) January 31, 2021, and

  • (ii) 180 days after the end of the qualifying period;

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  (c.‍7) the period that begins on November 22, 2020 and ends on December 19, 2020; or

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• (d) a prescribed period that ends no later than Insertion start June 30, 2021 Insertion end . (période d’admissibilité)

• (b) for the qualifying period referred to in Insertion start any of paragraphs Insertion end (b) Insertion start to (c.‍1) Insertion end of the definition qualifying period, 70%; and

top-up percentage, of an eligible entity for a qualifying period, means the Insertion start percentage determined by regulation for the qualifying period or, if there is no percentage determined by regulation for the qualifying period Insertion end , the lesser of 25% and the percentage determined by the formula

public health restriction, in respect of a qualifying property of an eligible entity for a qualifying period, means an order or decision in respect of which the following conditions are met:

• (a) it is made under a law of Canada or a province, or the authority granted under such a law;

• (b) it is made in response to the coronavirus disease 2019 (COVID-19) pandemic;

• (c) it is limited in scope based on one or more factors, such as

  • (i) defined geographical boundaries,

  • (ii) type of business or other activity, or

  • (iii) risks associated with a particular location;

• (d) non-compliance with the order or decision is a federal or provincial offence or can result in the imposition of an administrative monetary penalty or other sanction by the Government of Canada or a province;

• (e) it does not result from a violation by the eligible entity of an order or decision that meets the conditions in paragraphs (a) to (d);

• (f) as a result of the order or decision, some or all of the activities of the eligible entity at, or in connection with, the qualifying property (that it is reasonable to expect the eligible entity would, absent the order or decision, otherwise have engaged in) are required to cease (referred to in this definition as the “restricted activities”) based, for greater certainty, on the type of activity rather than the extent to which an activity may be performed or limits placed on the time during which an activity may be performed;

• (g) it is reasonable to conclude that at least approximately 25% of the qualifying revenues of the eligible entity for the prior reference period that were earned from, or in connection with, the qualifying property were derived from the restricted activities; and

• (h) the restricted activities are required to cease for a period of at least one week. (restrictions sanitaires)

qualifying property, of an eligible entity for a qualifying period, means real or immovable property (other than property that is a self-contained domestic establishment used by the eligible entity or by a person not dealing at arm’s length with the eligible entity, or part of such a self-contained domestic establishment, the land subjacent to the self-contained domestic establishment and such portion of any immediately contiguous land as can reasonably be regarded as contributing to the use and enjoyment of the self-contained domestic establishment as a residence) in Canada used by the eligible entity in the course of its ordinary activities.‍ (bien admissible)

qualifying rent expense, in respect of a qualifying property for an eligible entity for a qualifying period, means the amount determined by the formula

qualifying renter, for a qualifying period, means an eligible entity that meets the following conditions:

• (a) it files an application with the Minister in respect of the qualifying period in prescribed form and manner no later than 180 days after the end of the qualifying period;

• (b) the individual who has principal responsibility for the financial activities of the eligible entity attests that the application is complete and accurate in all material respects; and

• (c) it meets any of the following conditions:

  • (i) it meets the condition in paragraph (d) of the definition qualifying entity,

  • (ii) it had a business number on September 27, 2020 and provides records and other information satisfactory to the Minister in support of its application, or

  • (iii) it meets prescribed conditions. (locataire admissible)

rent subsidy percentage, of an eligible entity for a qualifying period, means

• (a) if the qualifying period is described in any of paragraphs (c.‍5) to (c.‍7) of the definition qualifying period,

  • (i) if the eligible entity’s revenue reduction percentage is greater than or equal to 70%, 65%,

  • (ii) if the eligible entity’s revenue reduction percentage is greater than or equal to 50%, but less than 70%, the percentage determined by the formula

    40% + (A − 50%) × 1.‍25

    where

    A

    is the eligible entity’s revenue reduction percentage, and

  • (iii) if the eligible entity’s revenue reduction percentage is less than 50%, the percentage determined by the formula

    0.‍8 × B

    where

    B

    is the eligible entity’s revenue reduction percentage; and

• (b) for a qualifying period referred to in paragraph (d) of the definition qualifying period, a percentage determined by regulation in respect of the qualifying period. (pourcentage de subvention pour le loyer)

rent top-up percentage, of an eligible entity in respect of a qualifying property for a qualifying period, means the percentage determined by the formula

COVID-19 — rent subsidy

(2.‍1) For a qualifying renter for a qualifying period referred to in any of paragraphs (c.‍5) to (d) of the definition qualifying period in subsection (1), an overpayment on account of the qualifying renter’s liability under this Part for the taxation year in which the qualifying period ends is deemed to have arisen during the qualifying period in an amount determined by the formula

When assistance received

(3) For the purposes of this Act other than this section, and for greater certainty, Insertion start an Insertion end amount that a qualifying entity Insertion start or qualifying renter Insertion end is deemed under subsection (2) Insertion start or (2.‍1) Insertion end to have overpaid is assistance received by it from a government immediately before the end of the qualifying period to which it relates.

• (c) if all of the interests in an eligible entity are owned by participants in a joint venture and all or substantially all of the qualifying revenue of the eligible entity for a qualifying period is in respect of the joint venture, then the eligible entity may use the qualifying revenues of the joint venture (determined as if the joint venture were an eligible entity) Insertion start as Insertion end its qualifying revenues for the Insertion start qualifying period for Insertion end the purposes of Insertion start this section Insertion end ;

• (d) if all or substantially all of an eligible entity’s qualifying revenue — determined without reference to paragraph (d) of the definition qualifying revenue in subsection (1) — for a qualifying period is from one or more particular persons or partnerships with which it does not deal at arm’s length and each particular person or partnership jointly elects with the eligible entity, for the purposes of Insertion start this section Insertion end

• (b) immediately prior to the acquisition, the fair market value of the acquired assets constituted

  • Insertion start (i) Insertion end  all or substantially all of the fair market value of the property of the seller used in the course of carrying on business, Insertion start or Insertion end

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    (ii) if the seller and the eligible entity deal with each other at arm’s length, all or substantially all of the property of the seller that can reasonably be regarded as being necessary for the eligible entity to be capable of carrying on a business of the seller, or part of a business of the seller, as a business;

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  (e) for the purposes of subparagraph (b)‍(i) of the definition prior reference period in subsection (1) and the description of C in subparagraph (c)‍(ii) of the definition qualifying entity in subsection (1), the eligible entity is deemed to have commenced carrying on the business in which the acquired assets are used at the earlier of

  • (i) the date on which the eligible entity commenced carrying on that business, and

  • (ii) the date on which the seller commenced carrying on the business in which the acquired assets were used.

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• (a) the amount of any deemed overpayment by an eligible entity under subsection (2) Insertion start or (2.‍1) Insertion end in respect of a qualifying period cannot exceed the amount claimed by the Insertion start eligible Insertion end entity — in the application referred to in paragraph (a) of the definition qualifying entity in subsection (1) Insertion start or paragraph (a) of the definition qualifying renter in subsection (1) Insertion end — in respect of that qualifying period; and

Anti-avoidance — qualifying revenues

(6)  Insertion start Notwithstanding any other provision in this section Insertion end , the qualifying revenue of an eligible entity for a current reference period for a qualifying period is deemed to be equal to the qualifying revenue of the eligible entity for the relevant prior reference period, if

• (a) the eligible entity, or a person or partnership not dealing at arm’s length with the eligible entity, enters into a transaction or participates in an event (or a series of transactions or events) or takes an action (or fails to take an action) — other than, for greater certainty, a decision under subparagraph (a)‍(ii) or (b)‍(ii) of the definition qualifying revenue in subsection (1) or the decision to use one of the methods of computing qualifying revenues under subsection (4) — that has the effect of

  • Insertion start (i) Insertion end  reducing the qualifying revenues (determined without reference to this subsection) of the eligible entity for the current reference period, or

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    (ii) increasing the qualifying rent expenses of the eligible entity for the qualifying period; and

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• (b) it is reasonable to conclude that one of the main purposes of the transaction, event, series or action in paragraph (a) is to

  • (i) cause an eligible entity to qualify for the deemed overpayment under subsection (2) in respect of that qualifying period,

  • (ii) in respect of qualifying periods described in any of paragraphs (c.‍2) to (d) of the definition qualifying period in subsection (1), increase the amount of a deemed overpayment under subsection (2), Insertion start or Insertion end

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    (iii) increase the amount of a deemed overpayment under subsection (2.‍1).

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• (a) for the purposes of Insertion start subsections Insertion end (2) Insertion start and (2.‍1) Insertion end and subsections 152(3.‍4) and 160.‍1(1), to be a taxpayer; and

• (b) for the purposes of Insertion start subsections Insertion end (2) Insertion start and (2.‍1) Insertion end , to have a liability under this Part for a taxation year in which a qualifying period ends.

Prescribed amounts

(8) The following may be prescribed Insertion start for the purposes of Insertion end :

• (a) the definition base percentage in subsection (1),

  • Insertion start (i) Insertion end  the percentages in subparagraphs (a)‍(i), (b)‍(i), (c)‍(i), (d)‍(i), (e)‍(i) Insertion start and (f)‍(i) Insertion end , and

  • Insertion start (ii) Insertion end  the factors in subparagraphs (a)‍(ii), (b)‍(ii), (c)‍(ii), (d)‍(ii), (e)‍(ii) Insertion start and (f)‍(ii) Insertion end ;

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  (b) the definition rent subsidy percentage in subsection (1), the factors and percentages in paragraph (a) of that definition; and

• (c) the definition qualifying rent expense in subsection (1), specific, or classes of, expenses that are included or excluded as qualifying rent expenses under paragraph (a) or (b) of that definition.

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Amending or revoking elections

(10) An eligible entity may amend or revoke an election made under this section on or before the date that the application is due for the first qualifying period in respect of which the election is made.

Affiliated entities

(11) For the purposes of the description of E in subsection (2.‍1), if two eligible entities are affiliated with the same eligible entity, they are deemed to be affiliated with each other.

• (b) the amount of tax, if any, deemed by subsection 120(2) or (2.‍2), 122.‍5(3) or (3.‍001), 122.‍51(2), 122.‍7(2) or (3), 122.‍8(4), 122.‍9(2), 122.‍91(1), 125.‍4(3), 125.‍5(3), 125.‍6(2), 125.‍7(2) Insertion start or (2.‍1) Insertion end , 127.‍1(1), 127.‍41(3) or 210.‍2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.

COVID-19 — notice of determination

(3.‍4) The Minister may at any time determine the amount deemed by subsection 125.‍7(2) Insertion start or (2.‍1) Insertion end to be an overpayment on account of a taxpayer’s liability under this Part that arose during a qualifying period (as defined in subsection 125.‍7(1)), or determine that there is no such amount, and send a notice of the determination to the taxpayer.

• (i) the amount that would be deemed by subsection 125.‍7(2) Insertion start or (2.‍1) Insertion end to have been an overpayment by the person or partnership if that amount were calculated by reference to the information provided in the application filed pursuant to Insertion start paragraph (a) of the definition qualifying entity in subsection 125.‍7(1) or paragraph (a) of the definition qualifying renter in subsection 125.‍7(1), as the case may be Insertion end

Penalty — COVID-19

(2.‍901) Every eligible entity that is deemed by subsection 125.‍7(6) to have an amount of qualifying revenue — for a current reference period for a qualifying period — is liable to a penalty equal to 25% of the amount that would be deemed by subsection 125.‍7(2) Insertion start or (2.‍1) Insertion end to have been an overpayment by the eligible entity during that qualifying period if that amount were calculated by reference to the information provided in the application filed pursuant to paragraph (a) of the definition qualifying entity in subsection 125.‍7(1) Insertion start or paragraph (a) of the definition qualifying renter in subsection 125.‍7(1), as the case may be Insertion end .

COVID-19 refunds

(1.‍6) Notwithstanding subsection (2.‍01), at any time after the beginning of a taxation year of a taxpayer in which an overpayment is deemed to have arisen under subsection 125.‍7(2) Insertion start or (2.‍1) Insertion end , the Minister may refund to the taxpayer all or any part of the overpayment.

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  (vii.‍10) to an official of a department or agency of a provincial government solely for the purposes of the administration and enforcement, or evaluation or formulation of policy, of a program that provides financial assistance in respect of rent or interest payments in the context of the coronavirus disease 2019 (COVID-19) pandemic,

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