UPDATE: Canada Emergency Wage Subsidy
Original Published date: April 11, 2020
Most recent update: April 27, 2020
IMPORTANT UPDATES
Canada Emergency Wage Subsidy: For Employers
On April 11th Bill C-14 was passed by the House of Commons and Senate which now provides draft legislation for the implementation of the Canada Emergency Wage Subsidy.
The information contained in this post is current as of April 21st at 3:00 p.m. and includes our interpretations of publicly-available information that is subject to change during this rapidly-evolving pandemic. As more information becomes available from the Department of Finance and/or the Canada Revenue Agency, we will continue to provide you updates. Please ensure you are relying on the most current information possible for any government assistance plans relating to the COVID-19 pandemic. Not all government legislation relating to these programs has been finalized and enacted, so some important details may be lacking but we continue to monitor these matters and can assist you with applying the information available to your circumstances. Contact your Ford Keast advisor if you are unsure about any items contained in these updates or if you wish to discuss how these items relate to your specific situation.
Changes of Note:
| Previous | New | |
| Eligibility requirement regarding decline of revenue | Gross revenues were required to decrease by 30% in comparison to the same month in 2019 to be determined monthly for each of March, April and May | Gross revenues are required to drop by 15% in March 2020 and 30% in April or May 2020. Measurement of decline: Flexibility to allow decline in revenues to be measured against the same month in the previous year OR an average of the revenues earned in January and February 2020. (quick reference table below) Once employers choose if they will use the month to month comparison or a comparison to the average of January and February 2020 revenues, they are required to use the same approach for the entire duration of the program Special rules have been introduced for affiliated corporate groups and non-arm’s length entities who would not otherwise meet the revenue test if each corporation was considered in isolation. For additional information, please contact your Ford Keast advisor. |
| Method of Calculating Revenues | Normal method of accounting | Employers will be allowed to calculate their revenues under the accrual method or the cash method, but not a combination of both. Once an accounting method has been selected, that method must be used for the entire duration of the program Special rules have been introduced for affiliated corporate groups and non-arm’s length entities who would not otherwise meet the revenue test if each corporation was considered in isolation. For additional information, please contact your Ford Keast advisor. |
| Eligible Periods | NEW | In order to provide certainty to employers, once an employer is found eligible for a specific period, the employer automatically qualifies for the next period |
| Registration | My Business Account | Eligible employers are able to apply through CRA’s My Business Account, OR a separate web-based application portal starting April 27, 2020 Additional information regarding the application is available at the CRA Website Linked Here |
| Interaction with CERB | Employers cannot claim the wage subsidy for employees during a period in which the employee is receiving the CERB | Eligibility to claim the CEWS in relation to 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, i.e., from March 15 to April 11, from April 12 to May 9, and from May 10 to June 6 |
| Calculation of 75% wage subsidy | the greater of: 75% of the amount of remuneration paid, up to a maximum benefit of $847/week; and The amount of remuneration paid, up to a maximum of $847/week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less | Clarification: 1.) The pre-crisis remuneration for a given employee would be 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 2.) Also eligible for a subsidy of up to 75% of salaries and wages paid to new employees CRA has provided an online calculator to be used to assist in the calculation of the wage subsidy. Linked Here |
| Interaction with 10% Temporary Wage Subsidy | The 75% wage subsidy must be reduced by the amount that the employer is eligible to claim under the 10% temporary wage subsidy program The 10% wage subsidy is a deemed payroll remittance and therefore, there is a mandatory reduction to the 75% subsidy calculation if the employer is eligible, even if it was not claimed. | |
| Eligible Wages | Eligible remuneration paid for the period between March 15 and June 6, 2020 | Draft legislation has now provided clarification regarding what wages will be eligible for the subsidy. Eligible wages include: Amounts paid in respect of a week within the eligibility period. Therefore, the wages eligible for the subsidy appear to be based on the date earned, rather than the payment date |
| Refund for Certain Payroll Contributions | NEW | Government is proposing to expand the CEWS by introducing a new 100% refund for certain employer-paid contributions to EI, CPP, QPP and QPIP This refund would cover 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 This refund would not be subject to the weekly maximum benefit per employee of $847 that an eligible employer may claim in respect of the CEWS There would be no overall limit on the refund amount that an eligible employer may claim |
| 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 & February 2020 |
| Period 2 | April 12 to May 9 | 30% | Eligible for Period 1 OR April 2020 over: – April 2019 or – Average of January & February 2020 |
| Period 3 | May 10 to June 6 | 30% | Eligible for Period 2 OR May 2020 over: – May 2019 or – Average of January & February 2020 |
Ford Keast LLP will continue to monitor government releases and will share information that impacts your personal and business income tax matters. We encourage clients to continue submitting documents to us ELECTRONICALLY, where possible. Our staff remain working on files and we will process your documents as timely as possible.
Please contact your Ford Keast representative to discuss this article or address any other concerns you may have at this time.
Sources the information above are:
https://www.canada.ca/en/department-finance/news/2020/04/the-canada-emergency-wage-subsidy.html