To  help employers keep and return workers to their payroll through the challenges  posed by the COVID-19 pandemic, the Prime Minister, Justin Trudeau, announced the  new Canada Emergency Wage Subsidy on March 27, 2020. This would provide a 75% wage subsidy to eligible employers for up to 12 weeks, retroactive  to March 15, 2020.  

This wage subsidy aims to prevent  further job losses, encourage employers to re-hire workers previously laid off  as a result of COVID-19, and help better position Canadian companies and other employers  to more easily resume normal operations following the crisis. While the  Government has designed the proposed wage subsidy to provide generous and  timely financial support to employers, it has done so with the expectation that  employers will do their part by using the subsidy in a manner that supports the  health and well-being of their employees.

Eligible Employers
Eligible employers would include individuals, taxable corporations, partnerships  consisting of eligible employers, non-profit organizations and registered charities. Public  bodies would not be eligible for this subsidy. 

This  subsidy would be available to eligible employers that see a drop of at least 15% of their revenue in March 2020 and 30%  for the following months. In applying for the subsidy, employers would be required to  attest to the decline in revenue. For this purpose, an  employer’s revenue would be its revenue in Canada earned from  arm’s-length sources. Revenue would be calculated using the employer’s normal accounting  method, and would exclude revenues from extraordinary items and amounts on  account of capital. 

Amount of Subsidy
The subsidy amount for a given employee on  eligible remuneration paid for the period between March 15 and June 6, 2020 would  be the greater of: 

  • 75% 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% of the employee’s  pre-crisis weekly remuneration, whichever is less.

In  effect, employers may be eligible for a subsidy of up to 100% of the first 75% of pre-crisis wages or salaries of existing employees. These  employers would be expected where possible to maintain existing employees’  pre-crisis employment earnings.  

Refund for Certain Payroll Contributions
The Government is proposing to expand the CEWS by introducing a new 100 per cent refund for certain employer-paid  contributions to Employment Insurance, the Canada Pension Plan, the Quebec  Pension Plan, and the Quebec Parental Insurance Plan. 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.  

Eligible Periods
Eligibility would  generally be determined by the change in an eligible employer’s monthly  revenues, year-over-year, for the calendar month in which the period began. 

Claiming period Required reduction in revenue Reference period for eligibility
Period 1 March 15 – April 11 15% March 2020 over:

March 2019 

or

Average of January and February 2020

Period 2 April 12 – May 9 30% April 2020 over:

April 2019 

or

Average of January and February 2020

Period 3 May 10 – June 6 30% May 2020 over:

May 2019 

or

Average of January and February 2020

 

Eligible employees
An eligible employee is an individual  who is employed in Canada. Eligibility for the CEWS of 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.  

How to  Apply
Eligible employers would be able to apply for the CEWS through the Canada Revenue Agency’s My Business Account portal as  well as a web-based application. Employers would have to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to  employees. More details about the application process will be made available shortly. 

For full details of the program, please visit the Govenment of Canada Website.

Source: Government of Canada