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CEWS - Canada Emergency Wage Subsidy Posted on Oct 20, 2020

Updated Oct 20 2020

The program is to provide employers with subsidy to pay employees. Employers need to show that they experienced revenue drop. Revenue drop calculation drives the amount of subsidy. Subsidy is % of wages. For all claim periods 1 to 9, employer can claim a 100% refund of the employer-paid part of contributions made for a week on behalf of any eligible employees who are on leave with pay for that full week in the claim period.

Who can apply?

Employers – incorporated and unincorporated.
For the second to fourth claiming period (April 12 – July 4) – employer that suffered over 30% reduction in gross revenues.
For the fifth to ninth claiming periods (July 5-Nov 21) – no minimum gross revenue reduction required. Any employer that can show a revenue decline, can receive a base subsidy. If an employer can show a decrease of more than 50% to revenues, then they will receive an additional “top-up” subsidy of up to 25%. The maximum subsidy for these claiming periods will decrease over time. But the government froze the declining scale till Dec 19, 2020. So, the base subsidy (including the top up) will remain at the current rate of up to a maximum of 65% of eligible wages.

Eligible employees

Employees employed in Canada.
From period 5 - Employees who were unpaid for 14 or more days can now be included.

Arms and non-arms length employees. But the calculation is different.

Baseline remuneration

In other words, it is a pre-crisis pay – average amount of remuneration employee received prior to March 15. Pre-crisis pay period to use depends on the claim period for which apply for the subsidy.

How to calculate base revenue drop

  1. General prior reference period – calculate drop using same month from last year. Calculate for current month and previous month and choose the highest drop.
  2. Alternate prior reference period – calculate drop using average of revenues from Jan and Feb 2020 and compare the current month and prior month to that average. Choose the highest drop.

What is the “safe harbour” rule

To ensure that the change in the revenue-decline test does not lead to a less generous wage subsidy, the wage subsidy program would include a “safe harbour” rule for periods 5 and 6. This rule would entitle an eligible employer to a top-up subsidy rate that is no less (75% up to $847 for employee per week) than it would have received under the three‑month revenue-decline test.

 

Periods you can apply for

Extended until June 2021

https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

Calculator is very useful: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-calculate-subsidy-amount.html