Canada Emergency Wage Subsidy Details
- Is my business eligible for the Canada Emergency Wage Subsidy?
- How do I calculate my revenues for CEWS?
- What’s the new subsidy amount?
- How do I apply to the CEWS?
- How does it work with the 10 per cent Wage Subsidy?
On April 1st, 2020, Prime Minister Justin Trudeau, proposed the new Canada Emergency Wage Subsidy (CEWS). The Emergency Subsidy was introduced to prevent further job losses, help employers who have had a significant decline in revenue as a result of the COVID-19 pandemic, and better position Canadian companies to resume normal operations following the crisis.
The updated Emergency Wage Subsidy Program provides a 75 per cent wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020.
This program is in addition to the previously announced 10 per cent Temporary Wage Subsidy (TWS), with details found at the CRA website (FAQ).
Is my business eligible?
Eligible employers include individuals, taxable corporations, and partnerships consisting of eligible employers, as well as non‑profit organizations and registered charities. This subsidy would be available to eligible employers that see a drop of at least 30 per cent in the month(s) of March, April or May 2020, compared to the same months in 2019.
In applying for the subsidy, employers would be required to attest to the decline in revenue.
Note: Public bodies are not be eligible for this subsidy, including municipalities, local governments, Crown corporations, public universities, colleges, schools and hospitals.
Calculating your revenues
Your revenue for this purpose would be revenue from business carried on in Canada earned from arm’s-length sources.
Using your businesses’ normal accounting method, you would exclude revenues from extraordinary items and amounts on account of capital.
For non-profits and charities, the government will continue to work with the sector to ensure the definition of revenue is appropriate to their specific circumstances.
What’s the new subsidy amount?
The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:
75 per cent 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 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.
Further guidance with respect to how to define pre-crisis weekly remuneration for a given employee will be provided in the coming days.
Employers may be eligible for a subsidy of up to 100 per cent of the first 75 per cent of pre-crisis wages or salaries of existing employees. These employers would be expected where possible to maintain existing employees’ pre-crisis employment earnings.
Employers will also be eligible for a subsidy of up to 75 per cent of salaries and wages paid to new employees.
Eligible remuneration may include salary, wages, and other remuneration. These are amounts for which employers would generally be required to withhold or deduct amounts to remit to the Receiver General on account of the employee’s income tax obligation. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.
A special rule will apply to employees that do not deal at 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 per cent of the employee’s pre-crisis weekly remuneration.
There would be no overall limit on the subsidy amount that an eligible employer may claim.
Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.
How to Apply
Eligible employers would be able to apply for the Canada Emergency Wage Subsidy through the Canada Revenue Agency’s My Business Account portal, as well as a web-based application. Employers would have to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees. More details about the application process will be made available shortly.
How does it work with the 10 per cent Wage Subsidy?
If you are eligible for both wage the 10% and 75% subsidies, or are not sure which you are eligible for, please see the CRA website (Emergency Wage Subsidy).
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