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Important: Learn about the key points to Canada's Economic Stimulus plan

Client Communication:

The Canada Emergency Wage Subsidy

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October 13, 2020

The CEWS program has now been extended until June 2021, with an increased subsidy rate of 65% until December 2020. The legislation for this change should be released soon.

September 24, 2020

CEWS is extended to summer of 2021. Details to follow.

August 14, 2020

Further clarification:

  • Filing deadline: January 31, 2021 (extended)
  • Period 5 applications open August 17
  • CEW is taxable in the period received (deemed received the last day of the period)
  • You MUST use either cash or accrual consistently for Period 1 to 9 (no change in methodology permitted)
  • You can elect per employee per claim period the optimum baseline:
PeriodDefaultElects
1 to 3January to March 15, 2020March 1 to May 31, 2019
4January to March 15, 2020

March 1 to June 30, 2019 or

March 1 to May 31, 2019

5 to 9January to March 15, 2020July 1 to December 31, 2019
 With respect to Period 5 onward:

  • If the Period 1 to 4 rules are better for you than the new proposed method of calculation for Periods 5 & 6, you can use the old method instead. This is per employee per week.

July 30, 2020

All the proposed changes were passed.

July 22, 2020

Proposed changes for period starting in July to December:

  • If in Period 5 & 6 under the period 1 to 4 rules are better for you than the new proposed method of calculation, you can use the old method instead.
  • Rate of CEWs will depend on the level of revenue decline:
    • Base subsidy (49% revenue drop)
    • And the Top-up subsidy (50% and over revenue drop)
  • Base subsidy rate will be as follows:

Period 5Period 6Period 7Period 8Period 9
Max. benefit per employee$677.00$677.00$565.00$452.00$226.00
Revenue drop




50% and over60%60%50%40%20%
0% to 49%1.2 x revenue drop1.2 x revenue drop1.0 x revenue drop0.8 x revenue drop

0.4 x revenue drop

Example 1: 20% decrease in sales and the employee makes $1,129. Available Base CEWs is $1,129 x 1.20 x 20% = $270.96

Example 2: 50% decrease in sales and the employee makes $1,129. Available Base CEWs is $1,129 x 60% = $677.00.

  • Top up Subsidy rate will be as follows:
    • Revenue drop calculated when comparing revenues in the preceding 3 months to the same months in the prior year
    • Top up subsidy CEWs rate: (3-month revenue drop - 50%) x 1.25
3 month average revenue dropTop up CEWs rate
70% and over25%
65%18.75%
60%12.50%
55%6.25%
  • A 70% drop in revenue will result in the maximum base + top-up subsidy
  • Combined base and top-up subsidy rates are as follows:

Period 5Period 6Period 7Period 8Period 9
Max. benefit per employee$960.00$960.00$847.00$734.00$508.00
Revenue drop




50% and over1.25 x (3 month revenue drop - 50%) (Max. 25%)1.25 x (3 month revenue drop - 50%) (Max. 25%)1.25 x (3 month revenue drop - 50%) (Max. 25%)1.25 x (3 month revenue drop - 50%) (Max. 25%)1.25 x (3 month revenue drop - 50%) (Max. 25%)
0% to 49%1.2 x revenue drop (Max. 60%)1.2 x revenue drop (Max. 60%)1.0 x revenue drop (Max. 50%)0.8 x revenue drop (Max. 40%)0.4 x revenue drop (Max. 20%)

July 13, 2020

Program to be extended to December 2020

https://www.ctvnews.ca/politics/feds-to-extend-wage-subsidy-program-until-december-1.5021990

Applications for claim period 4 (June 7 to July 4) are open as of July 8, 2020. The eligibility criteria will be the same as period 1 to 3.
Any potential changes would commence as of periods 5 (July 5 to August 1) and/or 6 (August 2 to August 29).

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

June 22, 2020

Proposed period 4 (June 2020) reduction is 30%
Period 5 & 6 are being reviewed
https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-frequently-asked-questions.html

May 20, 2020:

  • The CEWS program will be extended three months to the end of August 2020 and the 30% required revenue decrease is being reviewed for the expanded period
  • Can elect the 10% Temporary Wage Subsidy to be 0% on CEWs to receive a 100% of the subsidy. Must indicate the 0% election on the self-identification form under the 10% temporary wage subsidy program. 
The following legislative amendments have been proposed as well:
  • flexibility for employers of existing employees who were not regularly employed in early 2020, such as seasonal employees. This includes a proposal that an option would be added to calculate baseline remuneration as the average weekly remuneration paid to the employee from March 1 to May 31 of 2019;
  • to have CEWs apply to corporations formed on the amalgamation of two predecessor corporations

May 8, 2020

Program to be extended past June 6 expiry date.

CBC Article: Click Here

April 21, 2020

Applications to be released April 27, 2020.

We (JRA) can make the application for you via Represent a Client.

CRA has launched a CEWS Calculator for Employers, this can be accessed at: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-calculate-subsidy-amount.html

April 16, 2020

Applications will be due September 30, 2020.

April 9, 2020

For cash flow purposes it might make sense for you to commence by taking the 10% Wage Subsidy.

The CEWS application is set to take 3-6 weeks to be rolled out and the CEWS subsidy will be reduced by the 10% subsidy dollar for dollar.

April 13, 2020

This would provide a 75% wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020.

Am I Eligible?

Eligible employers would 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 15% of their revenue in March and 30% for the following months (see Eligible Periods).

How is the drop in revenue calculated?

An employer’s revenue for this purpose would be its revenue from its business carried on in Canada earned from arm’s-length sources. Revenue would be calculated using the employer’s normal accounting method and would exclude revenues from extraordinary items and amounts on account of capital.

Employer can calculate revenues under the accrual or cash method, but not a combination of both.

Special rules for the computation of revenue are provided to take into account certain non-arm's length transactions, such as where an employer sells all of its output to a related company that in turn earns arm's length revenue. As well, affiliated groups are able to compute revenue on a consolidated basis.

Eligibility period:

Claiming periodRequired reduction in revenueReference period for eligibility
Period 1
March 15 – April 11

15%

March 2020 over:

  • March 2019 or

  • Average of January and February 2020
Period 2
April 12 – May 9
30%

Eligible for Period 1 OR

April 2020 over:

  • April 2019 or
  • Average of January and February 2020

Period 3
May 10 – June 6

30%

Eligible for Period 1 OR

May 2020 over:

  • May 2019 or
  • Average of January and February 2020

Hence the options available are:

1. calculate revenues under the accrual or cash method 2. And either compare: a. Monthly revenue year-over year or b. Each month with the average of January and February 2020

Once the method is selected you are required to use the same approach for the entire duration of the program. The application will likely be available in May hence you will be able to calculate which option works best for you.

How do I calculate the Subsidy?

The subsidy amount for a given employee 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.

In effect, employers may be eligible for a subsidy of up to 100% of the first 75% of pre-crisis wages or salaries of existing employees.

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.

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 the lesser of:

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

What about the employer-paid contributions?

A new 100% refund for certain employer-paid contributions to Employment Insurance and the Canada Pension Plan has been introduced. This refund covers 100% of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay and for which the employer is eligible to claim for the CEWS for those employees.

For greater certainty, employers are required to continue to collect and remit employer and employee contributions to each program as usual. Eligible employers apply for a refund, as described above, at the same time that they apply for the CEWS.

Which employees are eligible?

An eligible employee is an individual who is employed in Canada.

Employees who have been without remuneration for 14 or more consecutive days in the eligibility period, i.e., from March 15 to April 11, from April 12 to May 9, or from May 10 to June 6 are NOT eligible.

Where do I Apply?

Apply through the Canada Revenue Agency’s My Business Account portal.

Follow instruction on setting this up here: https://www.jarvisryan.com/help/categories/1/articles/12

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.

What about the 10% Wage Subsidy?

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.

What about 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 reduce the benefit that their employer is entitled to receive under the CEWS.

How does the subsidy get treated?

The subsidy received is considered government assistance and is included in the employer’s income.

Source: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html

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