On April 19, 2021, Deputy Prime Minister and Finance Minister Chrystia Freeland delivered Canada’s 2021 federal budget. The budget provides more supports for small to mid-sized businesses that have struggled due to the COVID-19 pandemic.
With over $100 billion in new spending, the budget will aid in bringing some economic recovery for the country. This article details some of the main measures announced that'll be of interest to small business owners.
Extension of Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy
The Canada Emergency Wage Subsidy (CEWS) has helped more than 5.3 million Canadians keep their jobs by providing monetary help to employers to help cover part of their employee wages.
The Canada Emergency Rent Subsidy (CERS) and Lockdown Support have helped over 100,000 businesses with rent, mortgage payments and other expenses. All three of these programs were scheduled to end in June 2021 but have been extended to September 25, 2021.
The CEWS and CERS will gradually decrease their rates beginning July 4, 2021, for an orderly phase-out of the programs as employees get vaccinated and the economy begins to reopen.
Introduction of the new Canada Recovery Hiring Program
Businesses particularly hard-hit by the pandemic may find it costly to hire new employees they need. To help such businesses take on more staff, the 2021 budget proposed a new program called the Canada Recovery Hiring Program (CRHP).
CRHP is for eligible employers that continue to experience qualifying declines in revenue compared to before the pandemic.
This support will only be available for active employees and will be open from June 6, 2021, to November 20, 2021.
Eligible employers would claim the higher of the CEWS or the CRHP. The goal is to make it easier for employers to hire new workers as the economy reopens.
Launch of the Canada Digital Adoption Program
The pandemic pushed many employers to take their small business online. Through the Canada Digital Adoption Program (CDAP), the government seeks to create thousands of jobs for young Canadians and help as many as 160,000 small and mid-sized businesses adopt new digital technologies.
Starting this year, the program plans to provide $1.4 billion over four years to assist Canadians by:
- Providing access to skills, training, and advisory services for all businesses accessing the program
- Providing micro-grants to smaller, main street businesses to help with costs related to technology adoption
- Creating training and work opportunities for over 25,000 young people to help businesses adopt new technology
Establishing a $15.00 federal minimum wage
The intention to introduce legislation that will establish a federal minimum wage of $15.00/hour was announced during the federal budget. It is important to note that in regions where the provincial or territorial minimum wage is higher than $15.00/hour (the only one being Nunavut at $16.00/hour), the higher wage will prevail.
This will impact hundreds of employers in the federally regulated private sector.
Lowering credit card transaction fees
Online transactions have increased significantly during the pandemic. Small businesses must pay interchange fees for these transactions, which are among the highest in the world.
To reduce the cost of doing business online, the government will involve key stakeholders to:
- Lower the average overall cost of interchange fees for merchants
- Make sure small businesses benefit from pricing that is similar to large businesses
- Protect existing rewards points of consumers
More details on this measure will be provided in the 2021 Fall Economic Statement.
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