Our previous blog advised of Prime Minister Trudeau's announcement of a 75% wage subsidy to help businesses affected by the COVID-19 pandemic. The Canada Emergency Wage Subsidy ("CEWD") was approved by the Senate this weekend following an emergency vote of Parliament. It is expected to receive Royal Assent shortly.
Eligibility
When first announced, the government stated the subsidy would be available to "small and medium" businesses. However, it is now clear the subsidy is available to employers of all sizes, including large employers. In addition:
Eligible employers include individuals, taxable corporations, and partnerships of eligible employers, as well as non-profit organizations and registered charities.
Pubic bodies (e.g. municipalities, local governments, schools, hospitals) are not eligible for the subsidy.
The subsidy is available to eligible employers that demonstrate a drop of at least 15% of their revenue in March 2020 and 30% for the following eligible periods. For further detail on how revenue is calculated, please see the link at the end of this post.
Refund for Certain Payroll Contributions
To help simplify the process for rehiring employees, employers eligible for the CEWS are entitled to a 100% refund for certain employer-paid payroll contributions including to Employment Insurance and the Canada Pension Plan. This refund covers 100% of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay (i.e. does not perform any work for the employer) and for which the employer is eligible to claim for the CEWS for those employees.
Employers can apply for the refund at the same time as applying for the CEWS.
Amount of Subsidy
The subsidy amount will be per employee, on eligible amounts paid between March 15 and June 6, 2020, and will be the greater of:
75 per cent 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 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.
How to Apply
Eligible employers will be able to apply for the CEWS through the CRA My Business Account portal. If an employer is eligible based on one month’s revenue, it it will automatically qualify for the subsequent period.
Finance Minister Bill Morneau said Saturday he hopes the funding will be rolled out in two to five weeks.
Interaction with the 10% Temporary Wage Subsidy
The government also previously announced a temporary 10% wage subsidy which allows eligible businesses to reduce the amount of payroll deductions required to be remitted to CRA. For more information on this subsidy, click here.
For employers eligible for both the CEWS and the 10% wage subsidy, any benefit from the 10% wage subsidy will generally reduce the amount available to be claimed under the CEWS in that same period.
Protecting Integrity of Program
The government is asking employers to assist, where possible, with paying the remaining 25% of employee wages. Employers will be asked to attest to this when making an application.
As well, penalties, including fines and imprisonment, may apply in cases of fraudulent claims.
Click here for Government of Canada complete details on the CEWS.
For a comprehensive list of the various federal government supports available to businesses and individuals, please see Canada’s COVID-19 Economic Response Plan.