Canada Emergency Wage Subsidy Update
Thursday, April 2, 2020
The Canada Emergency Wage Subsidy (CEWS) will offer a 75% wage subsidy to all businesses that have lost 30% of their revenue due to the COVID-19 outbreak. To qualify, companies will have to show proof that their revenue in March 2020 was 30% less than it was in March 2019. They will need to re-apply each month. All companies, regardless of size, can qualify – even sole proprietorships and partnerships can apply. Canadian subsidiaries of international companies are also eligible for CEWS. There may be several exceptions to the CEWS for start-ups and new firms.
Here are some key points of the program:
- The Canada Revenue Agency will administer the CEWS, through the My Business Account portal on the agency’s website. The subsidies will be distributed within the next six weeks. More details about the application process will be made available shortly.
- The subsidy will cover annual earnings up to $58,700, or $1,129 a week in pre-crisis earnings. This means the maximum subsidy for each employee would be $847 weekly. The program is retroactive to cover wages fro,m March 15, 2020. Employers will also be eligible for the subsidy of up to 75 percent of salaries and wages paid to newly hired employees.
- Employers are strongly encouraged to “do the right thing” and pay the remaining 25% of employees’ pre-crisis wages. But if they are unable (due to economic challenges), they must pay the promised 75% amount received through CEWS without any deduction.
- The CEWS and the Canada Emergency Relief Benefit (CERB) are two different things. CERB is only available to workers (including the self-employed) who are collecting no income due to COVID-19. Workers still being paid by an employer or who are part-time workers are not eligible for CERB, but will count for CEWS. Workers who quit or voluntarily leave their jobs are also ineligible for CERB. The application portal for the CERB benefit opens on April 6. More details can be found here: https://www.canada.ca/en/services/benefits/ei/cerb-application.html
- Small businesses can apply for both the CEWS and the 10% wage subsidy previously announced earlier this month. Unlike the CEWS, small businesses can claim the 10% subsidy even if they do not report a drop in revenue. The CEWS benefit will be adjusted downward to account for any payments made through the previous program.
- Non-taxable corporations and public sector entities such as cities, public schools, and hospitals, cannot apply.
- Non-profits and charities are eligible; the government will work with this sector to find criteria consistent with for-profit companies, allowing non-profits to properly gauge whether their revenues declined 30% for the month. Charities may have to show that their donations declined for the month.
- Penalties are being worked on to prevent employers from pocketing the subsidies; new criminal offenses are being considered by the federal government to apply to individuals, employers or business administrators who provide misleading information to obtain access to the benefit, or who misuse the funds.
It is expected that the CEWS will cost about $71 billion over the next three months. This reduces the Canada Emergency Relief Benefit (CERB) expenditure estimate to $24 billion.
The table below outlines each claiming period and the period in which it has a decline in revenue of 30 per cent or more.
|Claiming period||Reference period for eligibility|
|Period 1||March 15 – April 11||March 2020 over March 2019|
|Period 2||April 12 – May 9||April 2020 over April 2019|
|Period 3||May 10 – June 6||May 2020 over May 2019|
More details can be found here: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html