Proposed Business Income Tax Measures in 2021 Federal Budget

The Federal Finance Minister and the Canadian Deputy Prime Minister, Chrystia Freeland, formally presented the Federal Budget of 2021 on 19 April 2021. This annual budget contains many tax measures that will affect both individual taxpayers as well as large corporations.
Let’s look at some highlights of the proposed business tax measures in the 2021 budget.

Canada Emergency Wage Subsidy (CEWS)

In the Federal Budget 2021, there were no changes to general corporate tax rates, but the budget proposed extending the Canada Emergency Wage Subsidy (CEWS) till September 2021.
Furthermore, the addition of qualifying periods was proposed for wage subsidy till 20 November 2021 if the public health environment and the economic climate necessitate the need for such action.

The budget proposed that the wage subsidy rates would slowly decrease from July to September and eventually be phased out from 4 July 2021. After this date, only employers who had a decline in the revenue of their business that exceeded 10% would be qualified for the wage subsidies.

Canada Emergency Rent Subsidy (CERS) and Lockdown Support

The 2021 budget further proposed that the rent subsidy and lockdown support should be extended till September 2021. The rent subsidy rates would steadily decline from July to September, and they would begin to be phased out from 4 July 2021 onwards.
It was also proposed that the current lockdown support of 25% should be extended for a qualifying period beginning from 6 June 2021 and ending on 25 September 2021.

Canada Recovery Hiring Program

Apart from extending the current subsidy programs, the federal budget also introduced a new program called the Canada Recovery Hiring Program. This program would offer eligible employers a subsidy amounting to 50% on their incremental remuneration.
Incremental remuneration is the difference between the remuneration for the baseline period and the qualifying period. The amount of incremental remuneration would be awarded to employers between 6 June 2021 and 20 November 2021.
Suppose you’re an employer and eligible for this remuneration. In that case, you can claim either the emergency wage subsidy or the hiring subsidy for the qualifying period, but you can’t claim both subsidies.

To know more about the tax measures proposed in the federal budget of Canada, get in touch with us at Faber LLP. We’re a tax consultancy firm in Edmonton, and we offer tax planning and tax advisory services to all individuals and businesses in West Edmonton. Contact us today.