Canada Emergency Wage Subsidy (CEWS)
On April 11, 2020, the government passed the Canada Emergency Wage Subsidy Bill as part of the COVID-19 Emergency Response Act, No. 2.
What does the Canada Emergency Wage Subsidy (CEWS) mean for my business?
- The CEWS is a 75% subsidy available to non-publicly funded companies, charities, and not-for-profits.
How does a business qualify?
- Entities must have a 15% decline in revenue in March 2020 and 30% decline for the following months
- This is determined by comparing revenues to the same month last year for March, April or May.
- On April 8th the government announced additional changes, including an alternative testing method that is helpful for start-ups or businesses without 2019 revenues;
- Businesses may apply the calculation of average revenues in January and February 2020 as a comparable to each of March, April and May 2020 revenues for the purposes of the revenue decline.
- The comparable revenue decline remains at 30% for the April and May 2020 periods but has been reduced to 15% for the March 2020 period.
- Employers will be required to attest to the decline in revenue and must reapply each month, however, once you qualify for one period, you automatically qualify for the next one, without the decline in revenues
- Should an employer choose a testing method (prior year or an average of Jan/Feb 2020), they must apply the same method for the entire period
- This applies to a cash or accrual method of determining revenues; if chosen, this method has to keep the same throughout the entire period
Case Example for Periods 1-4:
If revenues for March 2020 are 15% lower than March 2019, the company will qualify for the subsidy for March and for April. For May will have to recalculate using same method, 30% decline compared to May 2019.
For each qualifying month, subject to the March 15-June 6 claim period outlined by CRA, the subsidy per employee is calculated as the greater of:
a) 75 percent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
b) The amount of remuneration paid, up to a maximum benefit of $847 per week or 75 percent of the employee’s pre-crisis weekly remuneration, whichever is less
Employers must attest that they are doing everything that they can to pay wages that are not covered by the subsidy.
Note: On April 8th, the Government proposed to expand the CEWS by introducing a new 100 percent refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This refund covers 100% of employer-paid contributions ONLY for employees that are on leave with pay. This refund is not available for employees that are partially though the week without pay. Also, this refund does not reduce the 75% wage subsidy amount.
A special rule will apply to employees that do not deal at non-arm’s length with the employer. The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75 percent of the employee’s pre-crisis weekly remuneration. Basically, the subsidy does not apply for any related persons hired after March 15, 2020.
Do not-for-profits and charities qualify?
- Yes. Not-for-profits and charities are eligible for the same subsidy.
Where do I apply?
- Application may be made online here
- Funds will be available in approximately 6 weeks.
Other Important Information:
- Stiff and severe penalties for those that take advantage of the system.
- Employers are encouraged to rehire recently laid-off employees.
- Employers who do qualify for this program remain eligible for the 10% wage subsidy The amount claimed or intended to be claimed under the 10% subsidy program will reduce the amount receivable for the 75% program.
- The government recommends businesses set-up direct deposit
- A proposed application extension to August 29, 2020, is
Please follow the link to access CRA FAQ: