Canada Emergency Wage Subsidy

The Canada Emergency Wage Subsidy (CEWS)

What is it?

An emergency relief fund covering 75% of an employee’s wages—up to a maximum of $847 per week—for eligible employees.

 How long will the program be in place for?

 If eligible, you can collect the subsidy for a period of 24 weeks, retroactive from March 15, 2020 to August 29, 2020.

 Who is eligible?

 Employers: to be eligible for the wage subsidy, you must: 1) be an eligible employer, 2) have experienced an eligible reduction in revenue and 3) have had a CRA payroll account on March 15, 2020.

  • Types of eligible employers include:
    • Individuals (including trusts)
    • Taxable corporations
    • Persons that are exempt from corporate tax (Part I of the Income Tax Act), other than public institutions
    • Registered charities
    • Certain indigenous government-owned corporations that carry on a business
    • Partnerships consisting of eligible employers and certain indigenous governments
    • Registered Canadian amateur athletic associations
    • Registered journalism organizations
    • Private schools or private colleges, and
    • Partnerships consisting of eligible employers
  • Determining an eligible reduction in revenue:

Eligible revenue generally includes revenue earned in Canada from selling goods, rendering services and others’ use of your resources. You can use either the cash method or the accrual method when calculating revenue, but you must use the same approach throughout.

Calculate your reduction by comparing your eligible revenue for the starting month of the claim period with your baseline revenue. Baseline revenue is either:

  • the revenue you earned in the corresponding month in 2019, or
  • the average of the revenue you earned in January and February, 2020
    • NOTE: You must chooseone of these baseline revenue options for your method of comparison and will not be able to change it for your subsequent calculations for the other 2 periods.

Eligibility period

Start and end dates

Baseline revenue

Eligibility period revenue

Required
reduction

1

March 15, 2020 to April 11, 2020
  • March 2019, or
  • Average of January and February 2020

March 2020

15%

2

April 12, 2020 to May 9, 2020
  • April 2019, or
  • Average of January and February 2020

April 2020

30%

3

May 10, 2020 to June 6, 2020
  • May 2019, or
  • Average of January and February 2020

May 2020

30%

Employees: An eligible employee is an individual employed in Canada by you (the eligible employer) during the claim period, except if there was a period of 14 or more consecutive days in that period in respect of which they were not paid eligible remuneration by you.

How do I calculate the subsidy?

The subsidy amount for arm’s length employees on eligible remuneration paid for the period between March 15 and June 6, 2020 would be the greater of:

  • 75% 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% of the employee’s pre-crisis weekly remuneration, whichever is less.

The subsidy amount for non-arm’s length 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 the lesser of:

  • $847 per week or
  • 75% of the employee’s pre-crisis weekly remuneration

The pre-crisis remuneration for a given employee is based on the average weekly remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in respect of which the employee did not receive remuneration.

To assist with your subsidy amount calculation, the CRA has launched a CEWS Calculator for Employers, which can be accessed here.

What about the 10% Wage Subsidy and Work-Sharing Program?

For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10% Wage Subsidy for a period, any benefit from the 10% Wage Subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.

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

How do I apply?

There are three ways to apply:

  1. Apply using My Business Account.
  2. Business representatives may apply using Represent a Client.
  3. If neither are an option for you, use the Web Forms application with your web access code. If you do not have a web access code, you will need to provide the date of registration or the total income tax reported in box 22 of the most recent original 2018 tax year submitted T4 summary.

Before applying—application checklist:

  • Make sure your business details and direct deposit information for your payroll accounts (RP) are up to date. This will ensure that any payments to you will be processed quickly and easily. The CRA may contact you by phone to confirm your information.
  • You need to calculate the estimated subsidyfor your business.

 

For more information: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html