In a press conference today, Minister Morneau announced details of the new Canada Emergency Wage Subsidy (CEWS). The announcement by Minister Morneau, followed by details from Department of Finance, provides some important information about this new wage subsidy program.
The 75 per cent wage subsidy will be available to qualifying businesses for a twelve-week period, March 15, 2020 to June 6, 2020, and is intended to support employers who have experienced a decrease in gross revenues of at least 30 per cent in March, April or May of 2020 (compared to the same period in 2019). The CEWS will be retroactive to March 15, 2020. Employers will be required to attest to the decrease in revenue and maintain records demonstrating this decline.
Employers can be structured as sole proprietors, taxable corporations, partnerships, non-profit organizations or charities. Public sector entities such as municipalities, local governments, Crown corporations, public universities, colleges, schools and hospitals are excluded from this program.
For the purpose of the subsidy, revenue will be defined as earnings from arm’s length sources for business carried on in Canada based on the business’ normal accounting methods (with some exclusions).
There is no overall limit on the subsidy amount an eligible employer may claim. The subsidy is based on eligible remuneration paid between March 15, 2020 and June 6, 2020, and is equal to the greater of A and B, where:
- A equals 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per employee per week; and
- B is the lesser of C and D:
- C is the amount of remuneration paid, up to a maximum of $847 per employee, per week: and
- D is 75 per cent of the employee’s “pre-crisis” weekly remuneration.
Eligible wages will include the amounts employers would normally use to calculate payroll remittances, but will not include things like severance pay, stock option benefits or automobile benefits. Further guidance on “pre-crisis” weekly remuneration used in the above formula will be provided in the coming days by the Department of Finance. A special rule will apply to employers that do not deal at arm’s length with an employee to restrict the amount of the subsidy and prevent sudden, arbitrary increases in remuneration during the twelve-week period.
Currently, employers are encouraged – not required – to make the 25 per cent top-up for employees to bring their salaries to 100 per cent of normal salaries. Employers may be required to repay all or a portion of the subsidy if they do not meet eligibility requirements. Penalties, fines or even imprisonment may also apply in cases of fraudulent claims.
Application will be through CRA’s online My Business Account portal with a web-based application process being developed over the next three to six weeks.
It is important to note organizations who do not meet the eligibility criteria for the CEWS may still qualify for the previously announced 10 per cent wage subsidy (on wages paid March 18, 2020 to June 20, 2020, to a maximum of $1,375 per employee and $25,000 per employer).
Note that the CEWS will not be available to employers for amounts paid to an employee during a week from one of the four-week periods for which the employee is also eligible for the Canadian Emergency Response Benefit (CERB). Where employers are not eligible for the CEWS and have laid off employees, the employee will still qualify for the CERB of up to $2,000 a month (provided they meet all eligibility criteria).
As expected, the information contained in today’s announcement will require legislative approval and is therefore subject to change.