On Saturday, Parliament passed bill C-14 which included the details of the Canada Emergency Wage Subsidy (CEWS) for businesses across Canada. Below is our overview of the program and how it can help businesses.
The program is a 75% wage subsidy for a 12 week period, retroactive to March 15, 2020.
Eligible Employers are:
Individuals;
Taxable Corporations;
Partnerships;
Non Profits and Registered Charities.
Revenue Test and How to Calculate Revenues
Revenue is considered to be the revenue in Canada from arm’s length sources. The employer must use its normal accounting method and will exclude any extraordinary items and amounts on account of capital. The accrual or cash method of accounting for revenues is acceptable. The method selected by the employer for their first application under the program must remain the same for them throughout subsequent applications for the CEWS.
The definition of revenue is now more clear and will help business owners be able to calculate their revenues for the test related to application. There are special rules around revenue earned through non-arms length transactions. These are transactions with a related party or another company owned by the same shareholders.
The Subsidy
The Subsidy is a calculation of the greater of:
75% of the 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, whichever is less.
The two criteria sound the same, however there could be an opportunity to recover 100% of an employee’s wages if the pre-crisis weekly wages is less than $847.
As a business, any new employee that you hire, is eligible for the wage subsidy of 75%.
Many business owners have had questions as whether their wages that they take from the business would be considered for the program. The answer is yes, the wages are eligible for the program, but there some specifics that you have to be aware of.
The subsidy amount for business owners is limited to the amount of wages paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of the lesser of $847 per week and 75% of the employee’s pre-crisis weekly wages. The subsidy is only available in respect of non-arm’s length employees employed prior to March 15, 2020, so if you hire family after March 15, 2020, their wages would not be eligible.
Eligible Period
I think the table included on the CEWS website from the Government of Canada does a great job at outlining this. The table below is directly from that website.
| Claiming period | Required reduction in revenue | Reference period for eligibility | |
|---|---|---|---|
| Period 1 | March 15 to April 11 | 15% | March 2020 over: March 2019 or Average of January and February 2020 |
| Period 2 | April 12 to May 9 | 30% | Eligible for Period 1 OR April 2020 over:April 2019 orAverage of January and February 2020 |
| Period 3 | May 10 to June 6 | 30% | Eligible for Period 2 OR May 2020 over:May 2019 orAverage of January and February 2020 |
How to Apply
Applications for the program are to be completed under your CRA My Business Account. The application process is coming within the next week or so, as per news sources. If you do not have a CRA My Business Account, then it is important to apply for one immediately.
Overall, business owners will be responsible for keeping records that reflect their eligibility for the program and how you qualify. There are some stiff penalties associated with the program, so you want to ensure your records are in order.
As always, we recommend that you discuss the information provided with your Professional Services provider. We encourage businesses to review this program as it is the most significant assistance provided by the Federal Government at this time.
The ANR team is ready to assist our clients and any business owner that may have some questions or need assistance to in getting ready to apply for this program. Feel free to reach out to either the St. Stephen or St. George office and any of our team members for more information.
Until next time,
Jason