We caution readers that due to the fluidity of the situation that the information may change on a daily basis. We will continue to update the examples as new information is provided. This post was revised on April 5th, 2020.
On April 1, 2020, the Federal Government provided details on two subsidy programs connected to COVID-19, the Canada Emergency Wage Subsidy and the previously announced Temporary Wage Subsidy.
The FAQ below is intended to provide further guidance on the Canada Emergency Wage Subsidy, also known as CEWS.
Emergency Wage Subsidy Summary
- Canada Emergency Wage Subsidy (CEWS) • Retroactive to March 15, 2020 and available for 12 weeks to June 6, 2020.
- CEWS will be equal to 75% of the first $58,700 normal earnings of each employee or a benefit of up to $847 per week to be received by employers.
- Eligible employers have to demonstrate a gross revenue decrease of at least 30% compared to the same month in 2019 to qualify.
- Eligible employers include corporations, non-profit organizations, charities, partnerships and proprietors. Business of all sizes and sectors (except public sector entities).
- CEWS will be based entirely on salary or wages actually paid to employees. This means that employers will pay employees normal earnings in March, apply for the benefit in April and receive a CEWS reimbursement if eligible shortly thereafter.
- Employers will apply for the CEWS through a CRA portal to be created, on a monthly basis.
- Employers can expect payments of CEWS to start in approximately 3-6 weeks.
- Payments to non-arm’s length individuals are eligible for the subsidy, however, the benefit will be limited to a maximum of $847 per week or 75% of the employee’s pre-crisis weekly remuneration.
Please note that at as of April 2nd, 2020, the government has not provided information on the following related matters:
- Definition of normal earnings for employees, uncertain if this is based on historical earnings or actual.
- New businesses without historical comparative figures.
- Frequency of payments.
- Penalties towards those who do not comply.
Emergency Wage Subsidy FAQ
1. What is the Canada Emergency Wage Subsidy?
The Canada Emergency Wage Subsidy is a three-month measure that will provide a subsidy of up to 75% of the first $58,700 of normal earnings paid in remuneration per employee. This equates to a maximum payment of $847 weekly to the employer (equates to a total maximum eligible wage paid of $1,129 per week paid to the employee). The measure will be retroactive to March 15, 2020, end date of June 6, 2020.
Eligible employers would first be required to pay the wages to the employees and report back to CRA on a monthly basis. Currently, the Minister has announced that the first payments will be expected in 6 weeks. No announcement yet on a payment timeline for subsequent submissions.
2. What should I do if I previously reduced my payroll remittances under the former Temporary Wage Subsidy program?
CRA has not disclosed if both programs can be applied to concurrently, however they did note that if you are not eligible for the Canada Emergency Wage Subsidy, you could continue to apply for the 10% Temporary Wage Subsidy. Further information is noted here.
3. Which employers are eligible?
At this time the eligibility criteria appears to include all Canadian businesses both small and large, non-profit organizations and registered charities, individuals and partnerships who have experienced a loss in revenues of at least 30%. Publicly funded businesses are not eligible.
The measure for the 30% increase will be based on the revenues in the same month of the prior year for the months of March, April and May. For example, if you had revenues of $25,000 in March of 2019, your revenues would have to decrease to at least $17,500 in March of 2020 to be eligible.
4. What if my revenues losses are less than 30% and I receive the subsidy?
Employers who participate in the subsidy and who do not meet the eligibility criteria will be subject to severe actions which are likely to include repayment and penalties.
5. What if I can’t pay the other 25% or the full regular salary amount?
If the business is experiencing limited cash flow, it appears that the business can apply for the subsidy without having to pay the employee the 25% not covered by the subsidy.
An attestation at a minimum will be required from the employer to evidence that the employer is doing everything they can to pay their employees. Further requirements to evidence this have not been provided.
6. What if my business is closed?
It appears that any employees previously let go or laid off due to COVID-19 may be re-hired and eligible for the subsidy on wages paid in the future.
7. How do I apply for the benefit?
The employer will be able to apply on the Canada Revenue Agency website by accessing their business account on-line. At this time the program is not yet open for applications.
The employer will be obligated to re-apply each month in March, April and May.
The first subsidy is believed to take an estimated 3 to 6 weeks.