To support businesses that are facing revenue losses and to help prevent lay-offs, the government is providing eligible small employers with a temporary wage subsidy for a period of three months. The subsidy will be equal to 10 percent of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. On April 1, 2020, the government added to the 10% wage subsidy, the Canada Emergency Wage Subsidy program (75% wage subsidy).
On Saturday, April 11, 2020, the House of Commons and the Senate approved the $73-billion wage subsidy program aimed at helping businesses survive the economic downturn created by the COVID-19 pandemic. Under A second Act respecting certain measures in response to COVID-19 (introduced as Bill 14), the federal government will pay companies a wage subsidy under the Canada Emergency Wage Subsidy of 75 percent of the total eligible remuneration paid during the eligible period. To qualify for the subsidy, eligible employers must see a decline in revenues of at least 15 percent in March 2020, and at least 30 percent in April 2020 and May 2020.
The program along with the 10 percent temporary wage subsidy will cost the federal government $73 billion.
As announced on Tuesday, April 21, 2020, beginning Monday April 27, applications will be open for the Canada Emergency Wage Subsidy (CEWS).
- Most businesses may apply using My Business Account
- If you represent a business, you may apply using Represent a Client
- Alternatively, you may apply using a separate online application form (available April 27)
The CEWS will be processed at the payroll program (RP) account level, so you will have to file a separate application for each RP account.
To be eligible to receive the wage subsidy, you must:
- be an eligible employer
- have experienced an eligible reduction in revenue, and
- have had a CRA payroll account on March 15, 2020
Employers will need to determine eligible employees’ remuneration.
The government has provided a tool to help you calculate your subsidy amount. The calculator is also meant to help employers determine the specific items that they will need for a CEWS application once applications are open. By using the calculator the application process will be made much easier.
After April 27, 2020, the government posted a Frequently asked questions – Canada emergency wage subsidy (CEWS) page to assist employers. The government has also provided the Web Forms for a applications. To use the Web Forms application, or if you have misplaced or do not have a web access code, go to canada.ca/taxes-iref.
On May 7, 2020, the federal government announced an agreement with all provinces and territories to share the cost of wage top-ups for essential workers. The federal government will provide up to $3-billion for this new benefit, and the provinces and territories will contribute up to $1-billion. Each provincial and territorial government will determine the eligibility criteria for essential workers and how the benefit will be distributed in their respective jurisdictions.
On May 8, 2020, Prime Minister Trudeau announced that the Canada Emergency Wage Subsidy (the CEWS) will be extended beyond June 2020. The government has not confirmed how much longer the subsidy will be available to employers. The Prime Minister reported that since the CEWS launched on April 27, 2020, employers have applied for subsidies for almost 2 million workers.
On May 15, 2020, the federal government announced a number of updates to the Canada Emergency Wage Subsidy (CEWS), including:
- the CEWS will be extended for another 3 months to August 29, 2020; and
- the government has approved regulations to extend eligibility for the CEWS to the following groups:
- partnerships that are up to 50 percent owned by non-eligible members;
- Indigenous government-owned corporations that are carrying on a business, as well as partnerships where the partners are Indigenous governments and eligible employers;
- registered Canadian amateur athletic associations;
- registered journalism organizations; and
- non-public colleges and schools, including institutions that offer specialized services, such as arts schools, driving schools, language schools, or flight schools.
The government announced further proposed changes to the CEWS which will require legislation, including:
- providing flexibility for employers of existing employees who were not regularly employed in early 2020, such as seasonal employees;
- ensuring that the CEWS applies appropriately to corporations formed from the amalgamation of two predecessor corporations; and
- better aligning the treatment of trusts and corporations for the purpose of determining CEWS eligibility.
The government expects to make further changes as a result of its ongoing consultations with business and labour stakeholders. The government did not confirm when it would introduce the necessary legislation to implement these proposed changes.
On May 25, 2020, the federal government started a consultation on how to go forward Canada Emergency Wage Subsidy (CEWS). This consultation will help inform potential changes to the CEWS to help maximize employment and best meet the needs of businesses and workers during these challenging times, including potential adjustments to the 30-percent revenue reduction threshold and extension to the program. The consultation will close to input on June 5, 2020.
On May 28, 2020, the federal government published additional details on its Canada Emergency Wage Subsidy (CEWS) consultations. The government is seeking information and feedback from businesses, labour representatives, not-for-profits, and charities on eight questions. Feedback may be provided by taking a short online survey, or by sending an email to [email protected]. Comments must be submitted by June 5, 2020.
This consultation will help inform potential changes to the CEWS to help maximize employment and best meet the needs of businesses and workers during these challenging times including the potential adjustments to the 30-percent revenue reduction threshold and extension to the program.
On June 10, 2020, the federal government tabled Bill C-17, An Act respecting additional COVID-19 measures that, if enacted, would revise the eligibility criteria for the Canada Emergency Wage Subsidy in order to support those employers hit the hardest by the coronavirus disease 2019 (COVID-19).
However, opposition parties have refused to give unanimous consent to speedily pass the Bill. They have also rejected the government’s bid to split the bill in two in order to allow promised benefits for Canadians with disabilities to go ahead. The House adjourned and the Government House Leader Pablo Rodriguez says the government is ready to find other ways to deliver on some of the measures that are included in its latest COVID Bill.
Soon thereafter, the Canada Revenu Agency sent out a press release that the Government is introducing regulations to maintain the same Canada Emergency Wage Subsidy (CEWS) eligibility criteria. The press release stated that the Government of Canada has recently completed consultations with business and labour representatives on potential adjustments to the CEWS program to continue to protect jobs and promote growth, including the 30 percent revenue decline threshold. The key objectives of any potential changes will be to maximize employment, to ensure that the CEWS reflects the immediate needs of businesses and to support the post-crisis economic recovery. Any potential changes would commence as of periods 5 (July 5 to August 1) and/or 6 (August 2 to August 29). Further details on this will be forthcoming.
On June 15, 2020, the CRA has now confirmed that the subsidy will maintain the 30 percent revenue drop threshold for the current June 2020 period, which relates to the period from June 7 to July 4, 2020. Employers that experience a 30 percent decline in revenue in June 2020 will be eligible for the 75 percent Canada Emergency Wage Subsidy during the related claim period. The CRA notes that further changes to the subsidy, including changes to this threshold, would only commence for later claim periods.
The reference period for eligibility to calculate the 30 percent required reduction in revenue is June 2020 over either June 2019; or average of January and February 2020.
The remaining subsidy claim periods are from July 5 to August 1, 2020 (in reference to July 2020) and from August 2 to August 29, 2020 (in reference to August 2020).
The CRA previously noted that certain employers may be required to provide a full list of employees and their Social Insurance Numbers (SIN) for verification after applying.
On June 16, 2020, the CRA confirmed that the extension will be broken down into three separate four week qualifying periods (i.e., Period 4 – June 7, 2020 to July 4, 2020; Period 5 – July 5, 2020 to August 1, 2020; and Period 6 – August 2, 2020 to August 29, 2020).
The eligibility criteria will apply for the current period, meaning, presumably, that the criteria (including the 30 percent revenue decline threshold) for Period 4 will be the same as for Period 3, subject to the “prior reference period” for Period 4 being June 2019 rather than May 2019.
Any potential changes to the eligibility criteria would commence as of Period 5 and/or Period 6. The CRA also stated that more information about the CEWS extension will be coming soon.
On June 19, 2020, the Canada Revenue Agency (CRA) released another update to its series of frequently asked questions (FAQs) on the Canada emergency wage subsidy (CEWS), which are intended to provide more in-depth technical information on the most commonly anticipated technical questions from businesses and tax professionals. The FAQs continue to be updated periodically as new questions arise.
On June 23, 2020, in two external interpretations, the CRA provided general comments on the determination of whether a Crown corporation or registered charity is a “public institution” for the purposes of the exclusion under the Canada Emergency Wage Subsidy (CEWS). For more click here (subscription required).
As of July 5, just under 19 million Canadians had applied for the benefit and more than $54 billion had been paid out. As of July 6, 581,800 out of a total of 587,060 submissions had been approved. This equates to slightly more than $18 billion. The government’s fiscal and economic “snapshot” last week boosted the budget of the wage subsidy program to $82.3 billion, in a sign of impending changes.
On July 9, 2020, the Canada Revenue Agency (CRA) released another update to its series of frequently asked questions (FAQs) on the Canada emergency wage subsidy (CEWS), which are intended to provide more in-depth technical information on the most commonly anticipated technical questions from businesses and tax professionals. The FAQs continue to be updated periodically as new questions arise.
On July 13, 2020, the federal government announced that it will extend the CEWS wage subsidy program again until December 2020 (a specific date yet to be announced). This marks an additional extension of the Canada Emergency Wage Subsidy (CEWS). The CEWS initially commenced March 15, 2020 and provided support through to June 6, 2020. On May 15, the government added an additional 12 weeks to the program, extending eligibility to August 29.
The government has not yet indicated how they intend to reshape the eligibility rules for the program that critics have said stop some employers from getting aid they need. The government has hinted at changes to revenue-reduction thresholds that may discourage companies from growing, lest they find themselves suddenly cut off from federal aid.
On July 17, 2020, the federal government introduced proposed changes to the Canada Emergency Wage Subsidy (CEWS) that will open the program to more Canadian businesses. But before discussing the upcoming changes, the federal government has extended the Canada Emergency Wage Subsidy (CEWS) until December 19, 2020, with the new changes available until November 21. The estimated total fiscal cost in 2020-21 for the CEWS program that is being announced July 17 is $83.6 billion. The changes still need to be approved through Parliament when it reconvenes next week. A draft of the proposals outlined below can be found here.
The changes when enacted will come into force retroactively to July 5, 2020, and include:
- Eliminating the 30-percent revenue decline requirement. Employers will be able to receive wage subsidy amounts in proportion to any revenue loss.
- Offering a base subsidy based on drop in revenue
- Adding a top-up subsidy to an additional 25 percent
More information on the changes can be found here.
The CEWS covers 75% of wages, up to a weekly maximum of $847, for eligible companies and non-profits.