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COVID-19 Business Update: Canada Emergency Wage Subsidy

Thursday April 2, 2020

Details on the Canada Emergency Wage Subsidy (CEWS) were announced yesterday by Minister Morneau. While we continue to have many questions regarding CEWS, this is what we understand to be true at this time:

  1. CEWS will provide a 75% wage subsidy to eligible employers for up to 12 weeks retroactive to March 15, 2020 and ending June 6, 2020, with no overall employer limit.
  2. Eligible employers include individuals, corporations, partnerships, non-profit organizations and registered charities. Public entities are not eligible.
  3. Eligible employers need to experience a drop of at least 30% of arm’s length revenue over the eligible periods (see below). The amount of any wage subsidy received by an employer in a given month would be ignored for the purpose of measuring year-over-year changes in monthly revenues.
  4. The subsidy is equal to the greater of 75% of remuneration paid to an employee, to a weekly maximum of $847, or 75% of pre-crisis remuneration paid to an employee, up to the same maximum. An employee earning more than $58,725 per annum will qualify for the maximum subsidy. The subsidy is available for existing, rehired and new employees.
  5. Eligible remuneration does not include severance, stock option benefits or automotive benefits.
  6. Employers will need to apply online for CEWS through the CRA’s My Business Account. This application is many weeks away.
  7. The wage subsidy received by an employer would be considered government assistance and be included in the employer’s taxable income.
  8. The money could start to flow to businesses within the next three to six weeks but Parliament may need to be recalled to pass the necessary legislation.
  9. The Temporary Wage Subsidy (TWS) of $25,000 per employer and $1,375 per employee continues to be available. Note that any amount claimed under the TWS will reduce the CEWS claim. TWS information can be found at: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
  10. Expect there to be anti-abuse measures, penalties for fraudulent claims, and more fine print.
  11. Full details can be found at https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html

Eligible periods

Eligibility is determined by the change in an employer’s monthly revenues, year-over-year, for the calendar month in which the period began.  There are three eligible periods as follows:

Claiming periodReference period
Period 1March 15 – April 11March 2020 over March 2019
Period 2April 12 – May 9April 2020 over April 2019
Period 3May 10 – June 6May 2020 over May 2019

Administration of CEWS will occur online, so if you have not yet registered your business and set up direct deposit through the CRA’s My Business Account online portal – this is the time to do so.  The registration process requires up to 2 weeks and is dependent on receiving certain communication through the mail.

We strongly recommend that you maintain very accurate accounting records during the COVID-19 pandemic in order to support your business, your employees and your applications for government assistance and financing.

S+C Partners is OPEN FOR BUSINESS
S+C Partners is committed to helping our clients, our staff, and our community during this difficult time and our team is ready to assist you with navigating the challenges posed by this crisis.

Please call us at 905-821-9215 or email us at tax@scpllp.com with any questions.

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