The Government of Canada passed the Canada Emergency Wage Subsidy bill on Saturday, April 11. We are waiting for the announcement as to when applications will open, but in the meantime, we recommend getting your business ready to apply.
Applications will be submitted through a CRA Online Portal
, so make sure you have set up a
CRA My Business Account
. We encourage you to take this time to familiarize yourself with the program details and eligibility.
---------
The program provides a
75% wage subsidy
to eligible employers for up to
12 weeks, retroactive to March 15, 2020.
The CEWS prevents further job losses, encourages employers to re-hire workers previously laid off as a result of COVID-19, and help better position Canadian companies and other employers to more easily resume normal operations following the crisis.
Amount of Subsidy
“The subsidy is designed to encourage eligible entities to pay employees at least 75% of their pre-crisis wages because they can recover it through the subsidy.
The amount of the subsidy for an eligible employee on eligible remuneration paid between March 15 and June 6, 2020 is the
greater of
:
- 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee’s baseline remuneration, whichever is less.
‘Eligible remuneration’ includes salary, wages and other remuneration like taxable benefits paid to an eligible employee. It does not include items like severance pay or stock options benefits. How irregular payments, such as bonuses or commissions, will be adjusted for is still unclear.
‘Baseline remuneration’ is essentially the employee’s pre-crisis remuneration and is the average weekly remuneration paid to the employee between January 1 and March 15, excluding any seven-day periods for which the employee was not paid.
There is
no cap on the amount of CEWS
an employer can claim. The government has asked employers to do their best to top up employee’s salaries and bring them to pre-crisis wage levels.”
The usual treatment of tax credits and other benefits provided by the government applies. As a consequence, the wage subsidy received by an employer is considered government assistance and is
included in the employer's taxable income.
Eligibility for Employers and Employees
Eligible
employers
include:
- individuals
- taxable corporations
- partnerships consisting of eligible employers, non‑profit organizations and registered charities
Eligible employers must see a drop of at least 15% of their revenue in March 2020 and 30% for the following months.
Employers are allowed to calculate their revenues under the
accrual method or the cash method, but not a combination of both. Employers select an accounting method when first applying for the CEWS and require to use that method for the entire duration of the program.
For
registered charities and non-profit organizations, the calculation includes most forms of revenue, excluding revenues from non-arm's length persons. These organizations are allowed to choose whether or not to include revenue from government sources as part of the calculation. Once chosen, the same approach applies throughout the program period.
Eligible
employees
are:
- individuals employed in Canada
- employees who have not been without remuneration for 14 or more consecutive days in the eligibility period
The latter criteria replaces the previously announced restriction that an employer would not be eligible to claim the CEWS for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the Canadian Emergency Response Benefit.
Employers are also eligible for a subsidy of up to 75% of salaries and wages paid to new employees.
