Thank you, Mr. Chair.
I will speak in English, knowing that interpretation services are being provided.
My name is Max Baylor. I represent the business income tax division at the Department of Finance. I'll provide a brief overview of part 1 of the bill.
Part 1 proposes amendments to the Income Tax Act and related amendments to the income tax regulations. The proposals reflect the government's October 21 announcement of its intention to move away from the broad-based COVID-19 business support programs to a more targeted approach. Three new targeted wage and rent subsidy programs are being proposed to replace the previous broad-based programs.
The first program, the tourism and hospitality recovery program, would provide select tourism and hospitality organizations, such as hotels, tour operators, travel agencies and restaurants, with a subsidy of up to 75%. Eligible organizations would be required to meet two conditions to qualify for the program. The first condition would be an average monthly revenue reduction of at least 40% over the first 13 qualifying periods, or the first 12 months, of the Canada emergency wage subsidy. The second condition would be a current-month revenue loss of at least 40%.
In terms of the subsidy rate, it's proportional to the current-month revenue loss. A 40% current-month revenue loss provides a 40% subsidy rate. It increases one for one, but up to a maximum of 75%. Therefore, a current-month revenue loss of 75% or above provides a 75% subsidy rate.
It should be noted that at the time of the October 21 announcement, the government had indicated that the definition of qualifying businesses for the tourism and hospitality recovery program would be forthcoming and would be released at a later date. The bill, this legislation, now includes the definition of the types of businesses eligible for the program.
The second program, the hardest-hit business recovery program, would provide other organizations that have faced deep losses with a subsidy rate of up to 50%. Eligible organizations would be required to meet two conditions to qualify for this program. The first condition is an average monthly revenue reduction of at least 50% over the first 13 qualifying periods, or the first 12 months, of the Canada emergency wage subsidy. The second condition is a current-month revenue loss of at least 50%.
In terms of the subsidy rate, again, it is proportional to the current-month revenue loss but not one for one. For a 50% current-month revenue loss, the subsidy rate is 10%. It increases, linearly, up to a current-month revenue loss of 75%, which corresponds to a 50% subsidy rate.
The third program, the local lockdown program, would provide the same level of support as under the tourism and hospitality recovery program to organizations that face new local lockdowns. In terms of eligibility, this program would be available to eligible organizations that are subject to a local health order and that are experiencing a current-month revenue loss of at least 40%. This is regardless of losses that occurred over the course of the pandemic.
These three programs would be available from October 24, 2021, until May 2022, with the proposed subsidy rates available until March 12, 2022. From March 13 to May 7, 2022, the subsidy rates would decrease by half. The government would also have the authority to extend these measures by regulation until July 2, 2022.
Also, as part of the proposal, the existing lockdown support would continue to be available under these three programs at the current fixed rate of 25%. It's also proposed to increase the aggregate monthly cap on eligible rent expenses from $300,000 to $1 million starting on October 24 of this year for all eligible employers and organizations receiving rent support under the new programs.
Finally, the proposed amendments would enhance and extend the Canada recovery hiring program for all eligible employers with current revenue losses above 10%. The subsidy rate would be increased to 50%, and the program would be extended until May 7, 2022, with the authority to extend by regulation until July 2, 2022.
That concludes the summary of part 1.