Canada: Emergency Wage Subsidy Introduced

Canada: Emergency Wage Subsidy Introduced

The Canada Emergency Wage Subsidy (CEWS) has been introduced to help businesses keep their employees on payroll during the coronavirus outbreak.

The CEWS provides all sized businesses who have had a significant decline in revenue as a result of the Covid-19 pandemic keep their employees. Eligible employers can receive up to 75% of the first $58,700 normally earned by employees, representing a benefit of up to $847 per week.

The new programme will be in place for a 12-week period, from 15 March 2020 to 6 June 2020. There is not an overall limit on the subsidy amount an eligible employer may claim. In order to receive the funding, employers will have to apply for the funding each month via their CRA My Business Account portal and/or a web-based application (application process has yet to be announced).

There are currently no final details regarding how funding will be provided, however it is believed that it will either be provided via cheque and/or direct deposit to the employers CRA account or an actual EFT to the company. The wage subsidy received by an employer would be considered government assistance and must be included in the employer’s taxable income.

Who is eligible?

  • Employers who suffer a drop in gross revenue of at least 30% in March, April or May, when compared to the same months in 2019.
  • For eligible employers established after February 2019, eligibility would be determined by comparing monthly revenues to a reasonable benchmark.
  • Employers of all sizes and across all sectors, with the exception of public bodies and agencies, they do not qualify.

Eligible employers to the wage subsidy will be based entirely on the salary and wages actually paid to employees. All employers would be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered.

What about the 10% wage subsidy?

Employers who do not qualify for the 75% subsidy may continue to qualify for the previously announced wage subsidy of 10% of remuneration paid from 18 March to before 20 June, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Eligible companies will be able to utilize both subsidies at the same time, but if a company collects on the 10% subsidy it will affect how much it can receive through the 75% subsidy.