Canada Emergency Wage Subsidy

The Canada Emergency Wage Subsidy ("CEWS") - Does My Business Qualify?

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A 75% emergency wage subsidy for qualifying businesses was passed into law on April 11, 2020, by the Canadian House of Commons and the Senate. New details of the program came out during the week of April 17 with relaxed qualifying requirements.

The 75% applies to a maximum of $847 of remuneration per employee (the equivalent yearly salary would be $58,700. 

Eligibility for, and the amount that can be claimed under, the 75% CEWS are dependent on a number of factors. This subsidy is a temporary measure. The program will be in place for a 12-week period, from March 15 to June 6, 2020.

An eligible business includes individuals, sole proprietors, taxable corporations, partnerships consisting of eligible entities, non profit organizations and registered charities as well as prescribed organizations. Public-sector institutions such as governments, schools, hospitals and public universities and colleges are excluded.

Eligible businesses or “eligible entities” will be able to access the subsidy if they have suffered a drop in gross revenues of at least 15% in March 2020, 30% in April 2020, and/or 30% in May of 2020 as compared to the same month in 2019 or to the average monthly revenue for January and February 2020. We’re highlighting the second method because it is a recent addition to the CEWS plan that has not been widely reported in the media.

Please note that the employer can use only one approach to use throughout the program period not both.

Eligible remuneration may include salary, wages, and other remuneration for which income tax withholdings are generally required. However, it does not include severance pay, or items such as stock-option benefits. It would seem that bonuses would be eligible except bonuses for non arms length staff such as owner-managers.

Owner-managers receiving a salary from their own business may be eligible for the CEWS wage subsidy. The calculation for an owner-manager’s subsidy is based on their “baseline remuneration”, the average weekly remuneration paid between January 1 and March 15, 2020 inclusive.

Unfortunately, there is nothing in the legislation to indicate that dividends could be considered remuneration for purposes of the subsidy. The Government has been criticized for the exclusion of dividend income so this may be subject to change.

The Government introduced some rather harsh penalties if one breaks the rules for receiving a wage loss subsidy or artificially. 

Please consult with us if you have questions about this program


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