Federal budget

2021 Federal Budget details foodservice & hospitality measures

The Government of Canada has unveiled its 2021 Federal Budget and announced it plans to extend the existing wage and rent subsidies and lockdown top-up support until Sept. 25, 2021.

The Budget proposes to gradually decrease the rates for the wage subsidy and rent subsidy, beginning July 4, 2021, with the intention to phase out these programs as vaccinations are completed and the economy reopens.

With Canada firmly in a “third wave” of the COVID-19 pandemic, foodservice and hospitality advocacy groups had been calling for enhanced supports for the industry which has been hit devastatingly hard since March 2020.

The Ontario Restaurant Hotel & Motel Association (ORHMA) noted it is pleased to see some of those advocacy efforts reflected in the Federal Budget.

Emergency Wage Subsidy and Emergency Rent Subsidy

In particular, the Federal Budget pledges to extend the current Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS), as well as lockdown support, beyond June 2021.

Changes to the two subsidies are outlined in the table below:

Period 17
June 6 – July 3
Period 18
July 4 – July 31
Period 19
Aug. 1 – Aug. 28
Period 20
Aug. 29 – Sept. 25
Maximum
weekly benefit
per employee*
$847$677$452$226
≥70% revenue decline
75%
(i.e., Base: 40%
+
Top-up: 35%)

60%
(i.e., Base: 35%
+
Top-up: 25%)

40%
(i.e., Base: 25%
+
Top-up: 15%)

20%
(i.e., Base: 10%
+
Top-up: 10%)
50-69% revenue decline

Base: 40% +
Top-up:
(revenue
decline – 50%) x
1.75
(e.g., 40% +
(60% revenue
decline – 50%) x
1.75 = 57.5%
subsidy rate)


Base: 35% +
Top-up:
(revenue
decline – 50%) x
1.25
(e.g., 35% +
(60% revenue
decline – 50%) x
1.25 = 47.5%
subsidy rate)


Base: 25% +
Top-up:
(revenue
decline – 50%) x
0.75
(e.g., 25% +
(60% revenue
decline – 50%) x
0.75 = 32.5%
subsidy rate)


Base: 10% +
Top-up:
(revenue
decline – 50%) x
0.5
(e.g., 10% +
(60% revenue
decline – 50%) x
0.5 = 15%
subsidy rate)
>10-50% revenue decline
Base: revenue
decline x 0.8
(e.g., 30%
revenue decline
x 0.8 = 24%
subsidy rate)


Base: (revenue
decline – 10%) x
0.875
(e.g., (30%
revenue decline
10%) x 0.875
= 17.5%
subsidy rate)


Base: (revenue
decline – 10%) x
0.625
(e.g., (30%
revenue decline
10%) x 0.625
= 12.5%
subsidy rate)


Base: (revenue
decline – 10%) x
0.25
(e.g., (30%
revenue decline
10%) x 0.25 =
5% subsidy
rate)
0-10% revenue decline
Base: revenue
decline x 0.8
(e.g., 5%
revenue decline
x 0.8 = 4%
subsidy rate)
0%0%0%

Restaurants Canada notes that the maximum weekly benefit per employee is equal to the maximum combined base subsidy and top-up wage subsidy for the qualifying period applied to the amount of eligible remuneration paid to the employee for the qualifying period, on remuneration of up to $1,129 per week.

The 2021 Federal Budget also included plans to introduce:

  • Canada Recovery Hiring Program: Introduced June 6, 2021, this program will provide $595 million in order to offset a portion of the extra costs for businesses to hire new workers, increase the hours of existing workers or hire back laid-off workers. This program will run until the end of November 20, 2021. (This program will not work in conjunction with CEWS. Businesses can claim whichever provides the higher amount).
  • Credit Card Processing Fees: The federal government proposes a reduction to credit card processing fees with the intention of lowering the average overall cost of interchange fees for merchants and ensuring that small businesses benefit from pricing that is similar to large businesses.
  • Enhancing the Small Business Financing Program: The Budget proposes to improve the Canada Small Business Financing Program by expanding loan class eligibility, increasing maximum loan amount from $350,000 to $500,000 and extending the loan coverage period from 10 to 15 year. This enhancement also introduces a new line of credit product that will help with liquidity and cover short-term working capital needs.

Regional Relief and Recovery Fund

  • $500 million Tourism Relief Fund, administered by the regional development agencies to support investments by local tourism businesses in adapting to the pandemic.
  • $200 million through the regional development agencies to support major festivals and $200 million through Canadian Heritage to support local festivals, community cultural events, outdoor theatre performances, heritage celebrations, local museums, amateur sport events, and more.
  • Extension of the application deadline for similar support under the Regional Relief and Recovery Fund and the Indigenous Business Initiative until June 30, 2021. Budget 2021 proposes to provide up to $80 million in 2021-22 on a cash basis, for the regional development agencies, and to shift remaining funds under the Indigenous Business Initiative into 2021-22, to support an extended application deadline for the RRRF and Indigenous Business Initiative until June 30, 2021. This would support small businesses in rural communities so that they can continue to serve local populations.

Support for jobs in the Canadian wine sector

The Federal Budget also notes that the growth of the Canadian wine sector over the last 15 years has been a success story of Canada’s agri-food sector. In recognition of that, the Budget proposes to provide $101 million over two years, starting in 2022-23, to Agriculture and Agri-Food Canada, to implement a program for the wine sector that will support wineries in adapting to ongoing and emerging challenges, in line with Canada’s trade obligations.

Supporting food processors

Since 2016, the Federal Budget notes that $2.7 billion has been made available to compensate eligible dairy, poultry, and egg farmers as a result of CETA and CPTPP. A further $100 million has been provided for dairy processors to adapt to CETA. To date, all import rights created in recent trade agreements have been provisionally allocated to the industry free of charge.

To help processors of all supply-managed agricultural products adapt to
CETA and CPTPP, Budget 2021 proposes a further $292.5 million over seven
years, starting in 2021-22, for a Processor Investment Fund to support private investment in processing plants. These investments are in addition to the accelerated compensation announced in the Fall Economic Statement for producers of supply-managed products.

Industry calls for more support

However, while Restaurants Canada said it welcomes the commitments unveiled in the Federal Budget to extend the rent and wage subsidies and introduce other supports, “the hard-hit foodservice industry needs more sector-specific support.”

“We appreciate that the government has listened to our industry and others and is extending the critically necessary rent and wage subsidies beyond June,” said Restaurants Canada President and CEO Todd Barclay. “These programs are providing a lifeline to restaurants and other small businesses across the country. But our especially hard-hit industry is going to need more sector-specific support to continue reviving main streets and help the government keep its throne speech promise to bring a million Canadians back to work.”

In response to a recent Restaurants Canada survey, nine out of 10 Canadians agreed that restaurants need assistance to stay in business and keep paying staff until the pandemic is over.

Recommended measures

To help the foodservice industry transition from survival to revival, Restaurants Canada has been advocating for evolution from emergency measures to a framework that supports business continuity and favourable economic relaunch conditions for the longer term.

In particular, it recommends:

  • A further extension of the rent and wage subsidies until April 2022 and eligibility criteria that continue to reflect restaurant realities: Eight out of 10 restaurants are still either losing money or barely scraping by, and those still operating at a loss expect to take at least a year to return to profitability. Cutting off these vital sources of support just as restaurants are transitioning from survival to revival would hinder their ability to recover and continue bringing Canadians back to work.
  • Federal tax credits to help defray costs associated with COVID-19 safety protocols: An Employee Retention and Retraining Credit is needed to help restaurants and other hard-hit small businesses cover the costs of the unexpected and extraordinary expenses incurred during the global pandemic.
  • Partial forgiveness for all government-backed loans (including the Highly Affected Sectors Credit Availability Program): Struggling foodservice businesses need more assistance to keep them from closing down due to crushing debt.
  • The creation of a nationwide “Dine In and Save Restaurants” rebate program: Similar to the dine-in rebate initiative implemented on Prince Edward Island, allowing Canadians to save 50 per cent when they dine at restaurants.
  • An expansion of the current “meals and expenses” business tax credit: A temporary expansion of this existing tax credit from 50 per cnet to its original 100 per cent to encourage businesses to boost restaurant spending after more than a year of reduced downtown dining.
  • A culinary tourism incentive for the 2021 and 2022 tax years: Similar to the travel incentive implemented in New Brunswick, which included rebates for restaurant spending, this would encourage Canadians to travel locally and across the country to help support and celebrate our diverse restaurants and the critical role they play contributing to vibrant communities.
  • A freeze on any further excise duty increases on beer, wine or spirits under the Excise Act and Excise Act (2001): Including increases that were scheduled for April 1, 2021, as these ever-escalating alcohol duties contribute to the perception that restaurants are gouging patrons on their drink menus.
  • The removal of merchant fees from the tax portion of restaurant bills: This currently allows credit card companies to profit from the taxes collected by business owners on behalf of the government and needlessly discourages restaurant spending.

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