Published: April 3, 2020.
Updated: April 8, 2020 (See bottom of post)
Many employers are relying on benefits like the Canada Emergency Wage Subsidy to help get their business through the COVID-19 crisis. And with new information and changes being introduced each day, it can be hard to keep up.
We’ve been receiving a lot of questions about the Canada Emergency Wage Subsidy. As of April 2nd, 2020, here is what we know:
What is the Canada Emergency Wage Subsidy?
The Canada Emergency Wage Subsidy will provide a 75% wage subsidy to employees’ wages for up to 3 months for all qualifying businesses, non-profits, and charities. The subsidy applies up to the first $58,700 normally earned by an employee – up to a weekly maximum benefit of $847. Businesses who can afford to top up the remaining 25% of employees’ wages are highly encouraged to do so. The program will be in place for 12 weeks from March 15 – June 6, 2020.
Who is Eligible:
- Employers who have suffered a drop in gross revenues of at least 30% in March, April or May are eligible.
- How to assess? Compare the revenue for each eligible month in 2020 to the revenue from that same month in 2019. If there is a 30% decrease, employers will be able to access the subsidy for their employees for that claiming period.
- Eligible employers currently include employers of all sizes and across all sectors of the economy, excluding public sector entities.
- For non-profit organizations and registered charities similarly affected by a loss of revenue, the government will work with the sector to ensure that the definition of revenue is appropriate to their circumstances. They are also working to develop additional assistance for those on the front-line helping out in this crisis.
Note: Businesses who have claimed the 10% Temporary Wage Subsidy can still claim the Canada Emergency Wage Subsidy as well. If an employer does not qualify for the CEWS, they may still qualify for the Temporary Wage Subsidy.
How to Apply:
Businesses will apply for the Canada Emergency Wage Subsidy through the Canada Revenue Agency’s My Business Account online portal. More details regarding how to apply for the program will follow.
How it Works:
The wage subsidy will be claimed against wages in three claiming periods:
- March 15 – April 11, 2020 (for March)
- April 12 – May 9, 2020 (for April)
- May 10 – June 6, 2020 (for May)
As an example, if revenues in March 2020 were down 40% compared to March 2019, the employer would be able to claim the Canadian Emergency Wage Subsidy on wages paid out to employees between March 15 and April 11, 2020 (the March claiming period).
- Employers must reapply for this wage subsidy each month.
- Employers must pay their employees’ wages first, then apply for the subsidy through the CRA’s My Business Account portal. Payments will be provided through direct deposit, where possible. Employers must keep records of their arm’s length revenues and employee remuneration.
- It is estimated that the funds for the Canada Emergency Wage Subsidy will be available 3-6 weeks after the application is received.
It is not yet known how companies who do not have the ability to compare their operations to the previous year, e.g. a startup, will prove their eligibility for this benefit. More information on this is likely to come.
Additional details for this program are still pending, and will be shared once they are made available.
Updates as of April 8th, 2020:
Justin Trudeau announced changes to the 75% Canada Emergency Wage Subsidy this morning. Here are some highlights of the updates:
‘Financial Test’ Updates:
- Decline of 15% in revenue for March 2020 (previously 30%)
- Decline of 30% in April & May 2020
- Decline benchmark can be either year over year for the same month in 2019 OR compared to January & February 2020
- Either accrual or cash accounting methods can be used, but not a combination of both
- Non-Profits can choose whether or not to include government funding in their ‘financial test’
‘Calculating Employee Wages’ Updates:
- UP to 75% of each employee’s weekly gross pay is eligible
- Employee pay calculation: Based on the average weekly pre-crisis renumeration paid between January 1 and March 15 inclusively, excluding any seven-day periods where the employee did not receive remuneration
- “Arm’s Length” employees on payroll (eg. Company Owner) must use their pre-crisis remuneration to a max of $847 per week, and must have been employed prior to March 15th, 2020
- Government refund on EI & CPP premiums – more information to come
- Tax returns must be filed by June 1, 2020 to avoid interruption in benefits & credits
Note: CEWS still not approved by parliament and CRA portal hasn’t been updated or configured yet. More to come.