The Federal Government proposed new targeted, direct supports for businesses, non-profits and charities facing ongoing economic challenges amidst the second wave of the COVID-19 pandemic. For organizations that are subject to a lockdown and must shut their doors or significantly limit their activities under a public health order issued under the laws of Canada, a province or territory (including orders made by a municipality or regional health authority under one of those laws), a top-up under the new Canada Emergency Rent Subsidy is available to provide additional support.
The Lockdown Support would be available retroactive to September 27, 2020, until June 2021, during periods when businesses are facing eligible public health restrictions. The government is providing the proposed details for the first 12 weeks of the program, until December 19, 2020. The proposed program would align with many aspects of the Canada Emergency Wage Subsidy.
To be eligible for the Lockdown Support a business must also qualify for the base Canada Emergency Rent Subsidy.
Effective September 27, 2020, property owners that rent to non-arm’s length tenants whose operations have been impacted by public health orders are eligible for the Lockdown Support providing all other conditions for the program are met.
If your organization is not subject to qualifying public health lockdown restrictions, but you are currently experiencing a decline in revenues, you may still be eligible for the Canada Emergency Rent Subsidy.
Lockdown Support for Locations Significantly Affected by Public Health Restrictions
The Lockdown Support of 25% would be available to organizations with locations that are temporarily forced to close or temporarily have their business activities significantly restricted by a public health order issued under the laws of Canada or a province or territory.
Specifically, a public health restriction would be an order that meets the following conditions:
- it is made under the laws of Canada, a province or territory (including orders made by a municipality or regional health authority under one of those laws) in response to the COVID-19 pandemic;
- it is limited in scope based on factors such as defined geographical boundaries, type of business or other activity, or risks associated with a particular location;
- non-compliance with the order is a federal, provincial or territorial offence or can result in the imposition of an administrative monetary penalty or other sanction imposed by the Government of Canada or a province or territory;
- it cannot result from a violation of an order that meets the above conditions; and
- it must be in effect, for a period of at least a week, so that some or all of the activities of the eligible entity at, or in connection with, the qualifying property are required to completely cease. In other words, limitations would be 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.
For an organization to qualify for the Lockdown Support for a qualifying property, the following conditions must apply:
- the organization qualifies for the base Canada Emergency Rent Subsidy; and
- the public health order requires that the organization
- completely shut down the location; or,
- cease some or all of the activities at the location and it is reasonable to conclude that the ceased activities, in the appropriate pre-pandemic prior reference period, were responsible for at least approximately 25% of the revenues of the entity at that location.
If the organization is subject to a public health restriction and has to cease activities for only part of a qualifying period, the Lockdown Support would be pro-rated for the number of days in the period during which the relevant location was affected.
The following examples illustrate some common circumstances where an organization qualifying for the base subsidy may have qualifying property (i.e., a location) that would be eligible for the Lockdown Support.
- Restrictions on indoor dining: a restaurant that normally earns approximately 25% or more of its revenues in connection with indoor dining could qualify due to its dining room being shut down even if it shifts its activities to take-out orders to make up some of the lost revenues from indoor dining.
- Closure of bars: a bar that is ordered to close down due to a regional public health restriction, and, anticipating low demand for take-out, does not continue operating, could qualify.
- Closure of fitness centres: a fitness center providing group fitness classes that is ordered to close down could qualify, even if, for instance, it moves to online instruction.
- Closure of retail stores: a retail store that is ordered to close down its location in a shopping mall, but that continues to operate providing online sales and curbside pick-up, could qualify so long as its in-store sales normally accounted for at least approximately 25% of its revenues.
- Restrictions on types of personal services: an esthetics studio that earned most of its pre-pandemic revenues from services that cannot be performed while wearing a mask and can no longer be provided due to a public health restriction, could qualify.
- Other closures of certain indoor activities: a theater or an interactive museum that is ordered to close down would qualify.
- Closure in relation to a COVID-19 outbreak on the premises: a soup kitchen that is ordered to close down due to a specific public health restriction arising from a number of its employees contracting COVID-19 would qualify.
The following examples illustrate some common circumstances where an organization would generally not be eligible for the Lockdown Support:
- Reduction in business hours: a bar that is subject to a restriction requiring bars in a region to shut down by 10:00 pm each day would not qualify, as their activities would not be required to cease for a period of at least one week.
- Requirements for physical distancing: a restaurant that earns most of its revenues in connection with indoor dining would not qualify due to a public health restriction limiting patrons to six persons per table, as it could continue to carry on its indoor dining activities.
- Restrictions on travel: a bed and breakfast that sees a decrease in the number of clients due to travel restrictions would not qualify as it can continue to operate, and there is no order to cease its activities.
- Reduction in the number of clients at any one time: a movie theater that is required to limit the number of clients would not qualify, as it would not be required to cease any of its activities.
- Violation of a public health order: a factory that is required to close down due to violating a public health restriction would not qualify because the shut-down resulted from a contravention of public health orders.