Canada Emergency Wage Subsidy (CEWS) – Updated

**Updated** The Government announced this morning they have posted a spreadsheet to the CRA website to help calculate the Canada Emergency Wage Subsidy (CEWS) and that the portal will be live for applications on Monday April 27th.  In adding the spreadhsheet they’ve also fully updated the information page to help employers determine if they qualify and what employees qualify.  You can check it out here.  As we find out more about the actual application process we will update on social media

Changes have been announced to the Canada Emergency Wage Subsidy and the CRA has loaded more details onto their page (which you can read in full here).   In this article I will highlight the significant changes along with clearly outlining how it will work.  There are grey zones and we will continue to unpack this every changing environment and encourage you to call our office if you have specific questions.

Who Qualifies?

To put it simply business, non-profits and registered charities with payroll (employees).  It will be available to employers that see a drop of at least 15% of revenue in March and 30% for the following months.

To address concerns from new companies or companies that were seeing rapid growth companies can opt to use a January February average OR March 2019.  Companies can chose to base their numbers on accrual accounting or cash accounting.  BUT the method chosen must remain consistent.  A company can not use a January  February average for March and then April 2019 for April.  You cannot use cash method one month and accrual the next.

What if I already laid off my employees?

Hire them back.  You can chose to pay them retroactively to March 15 and apply for those funds.  The government will be looking at a process to allow employees to cancel CERB applications.  We would recommend advising your employees to NOT spend CERB funds if they are hired back as there is a high chance they will need to pay that money back.

How much is the subsidy?

The amount for each employee with eligible remuneration paid for the period march 15 – June 6, 2020 would be the greater of:

• 75% of the amount of remuneration paid to a maximum 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, which is less.

Employers are encouraged where possible to maintain their employee’s pre-crisis wage.  Pre-crisis remuneration would be based on the average weekly remuneration paid between January 1 – March 15^th excluding any 7-day periods in which the employee received no pay.

Employers will be eligible for a subsidy of up to 75% of salaries and wages paid to new employees.

I have a corporation and pay myself as an employee  – do I qualify?

Yes.  However, there is a small variation. The Corporation will be limited to eligible remuneration paid in any pay period between March 15 – June 6, 2020 up to a maximum benefit of $847 or 75% of pre-crisis weekly remuneration, whichever is less.    Translation – you may not give yourself a raise or start paying yourself now or suddenly hire your family members.

Is there a maximum subsidy per company?

No, there is no limit to the amount of subsidy per company.

I have no income; I simply can’t afford anything including payroll remittances.

The government is proposing the introduction of 100% refund for some employer paid contributions to EI and CPP.  This refund would cover 100% of the employer paid contributions for eligible employees for each week throughout which the employees are on leave with pay and for which the employer is eligible to claim the CEWS.

On leave with pay translates to your employee being paid and doing NO WORK.

Employers would continue to track payroll and remit but then apply for a refund.

THIS IS PROPOSED AND NOT YET IN PLACE

Would receiving the Wage Subsidy increase my revenue and disqualify me from applying the next month?

No.  It would be considered income but it would NOT affect year over year changes for calculating monthly revenue.

Who is an Eligible Employee?

An individual employed in Canada.  Eligibility for the Canada Emergency Wage Subsidy of an employee’s remuneration will be limited to employees that have not been without remuneration for more than 14 consecutive days in the eligibility period.  (March 15 – April 11, April 12 – May 9 and May 10 – June 6).

Translation:  we are interpreting this to mean that if you laid off your employees due to lack of revenue / work you should hire them back immediately and pay them missed pay for the March 15 – April 11 period in order to qualify for Period 1.  Alternatively hire them back with an April 12 start date to qualify for period 2.

How does CEWS work with the 10% wage subsidy previously announced?  Can I claim both?

Yes, you can continue to claim the 10% wage subsidy.  Your CEWS benefit will be reduced by that amount.

Is this a situation where it’s better to apologize later?

No.  As a country we all need to pull together to keep our economy and our employees and our businesses as safe and healthy as possible.  To maintain the integrity of this program the government will require repayment of CEWS if it’s determined a Corporation is not eligible.  They are considering steep finds and possibly imprisonment.  Employers found to engage in adjusting their books to reduce revenue for the purpose of claiming CEWS would be subject to a penalty of 25% of the funds received.

How to Apply

You can apply through your My Business Account portal.  It is also important that you keep records that support your claim.

How do I pay wages prior to receiving CEWS if I have no income?

If you have no cash or cash flow to pay wages you can make use of the Canada Emergency Funds of $40,000 interest free loan (for up to 1 year).  You need to apply through your bank.  Each bank is handling this differently and we encourage you to reach out to your banker.

Still have questions – contact us.