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Canada Emergency Wage Subsidy (CEWS)

Canada Emergency Wage Subsidy (CEWS)

What is the CEWS?

  • The CEWS is a massive $73 billion wage subsidy program that will be administered by the Canada Revenue Agency (“CRA”), in an effort to allow eligible employers to keep their employees on the payroll (i.e. to prevent interruptions to their employment status)

Who is eligible for the CEWS?

  • Eligible employers may include individuals, taxable corporations, non-profit organizations, registered charities and partnerships consisting of eligible employers.
  • The subsidy will be available to companies that lost 15% of their revenue in March OR 30% in April or May and the three (3) qualifying periods are outlined below.
  • CEWS coverage will be limited to employees that have been employed by an eligible employer and have not been without remuneration for fourteen (14) or more consecutive days in the applicable qualifying period (as defined below).

 What is “Qualifying Revenue”?

  • Revenue will be calculated using the employer’s normal accounting method, and would exclude revenues from extraordinary items and amounts on account of capital
  • Employers are permitted to calculate revenues under the accrual method or the cash method but not a combination of both. Employers must select an accounting method when first applying for the CEWS and use that method for the entire duration of the program.

What is the amount of the CEWS?

  • The amount of the subsidy is the greater of:
    • 75% of the first $58,700 normally earned by each employee, 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% of the employee’s pre-crisis weekly renumeration, whichever is less.
    • Eligible renumeration may include salary, wages, and other taxable benefits. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.
  • In addition, for employees on paid leave and for which the employer is otherwise eligible to claim the CEWS, the subsidy is increased by 100% of the employer-paid contributions to Employment Insurance (EI), the Canada Pension Plan (CPP) and the Québec equivalents.

When will the CEWS be made available?

  • The program will be available for twelve (12) weeks retroactive to March 15, 2020 to June 6, 2020, with the possible extension by regulation to no later than September 30, 2020.
  • The qualifying periods for remuneration are as follows:

 

  2020 Claiming Period Required Reduction in Revenue Reference period for eligibility
Period 1 March 15 to April 11 15% March 2020 over:

·     March 1- March 31, 2019 or

·     Average of January and February 2020

Period 2 April 12 to May 9 30% Eligible for Period 1

OR

April 2020 over:

·     April 1- April 30, 2019 or

·     Average of January and February 2020

Period 3 May 10 to June 6 30% Eligible for Period 2

OR

May 2020 over:

·     May 1- May 31, 2019 or

·     Average of January and February 2020

  •  Please note, employers will not be required to re-apply. Once an employer is determined to be eligible for a specific period, the employer automatically qualifies for the next period of the CEWS program.

When are employers expected to receive the CEWS?

  • It is expected that funds will be made available in approximately 4 to 6 weeks.

How does the CEWS interact with the 10% Wage Subsidy?

  • Employers that are eligible for both subsidies must reduce the wages for the CEWS by the 10% wage subsidy claimed.

How does the CEWS interact with the Work-Sharing Program?

  • For employers and employees that are participating in a Work-Sharing program, EI benefits received by employees through the Work-Sharing program will reduce the benefit that their employer is entitled to receive under the CEWS.