COVID-19: Canadian federal economic support for businesses

DESCRIPTION

The CEWS will provide eligible employers with a 75% wage subsidy up to $58,700 per employee ($847 per week).

The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6 will be the greater of:

  • 75% of the amount of remuneration paid, up to a maximum benefit of $847/week
  • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less

This program will be applied retroactively as of March 15, 2020. The program will be in place for a 12- week period, from March 15, 2020 to June 6, 2020. On May 15, 2020 the Government of Canada announced that it will extend the CEWS by an additional 12 weeks to August 29, 2020.

Amounts received by employees through EI pursuant to a Work Sharing Program and amounts received by employers pursuant to the 10% Temporary Wage Subsidy for Employers (see next row) will reduce CEWS amounts.

Additionally, the government has proposed to expand the CEWS by providing a 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. The refund will fully cover these 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, and there would be no overall limit on the refund amount that an eligible employer may claim.

The subsidy is extended until next summer.

As of October 8, 2020, an additional $6 billion was added to the CEWS program expenditure because the maximum base subsidy rate remains at 65% rather than gradually declining to 20% in period 9, which ends on December 19, 2020.

As of October 23, 2020, the airline industry received over $1 billion under CEWS. Discussions of a bailout are still in the works.

ACCESS AND ELIGIBILITY

On July 27, Bill C-20, An Act Respecting Further COVID measures, received Royal Assent. The legislation and provides changes to the CEWS Program. Read below for further details.
Eligible employers include:

  • individuals
  • taxable corporations
  • partnerships consisting of eligible employers, non‑profit organizations and registered charities.

The employer must also:

  • File an application with Minister of National Revenue in respect of a qualifying period before October 2020;
  • Have an individual who has principal responsibility for the financial activities of the employer attest that the application is complete and accurate in all material respects (e.g., a CFO);
  • Have had the requisite reduction in revenue, from arm’s length sources, in each qualifying period; and
  • Have a business number on March 15, 2020 that is registered with the Minister to remit source withholdings.

On May 15, 2020, the Minister of Finance announced the approval of regulations that to extend eligibility for the CEWS to the following groups:

  • Partnerships that are up to 50-per-cent owned by non-eligible members;
  • Indigenous government-owned corporations that are carrying on a business, as well as partnerships where the partners are Indigenous governments and eligible employers;
  • Registered Canadian Amateur Athletic Associations;
  • Registered Journalism Organizations; and
  • Non-public colleges and schools, including institutions that offer specialized services, such as arts schools, driving schools, language schools or flight schools.

The changes to eligibility are retroactive to April 11, 2020, meaning that they apply to the first qualifying period starting March 15, 2020.

Qualifying Periods and Requisite Revenue Reduction for each period are as follows:
Period One

  • March 15 – April 11 (15% required reduction in revenue)

Period Two

  • April 12 – May 9 (30% required reduction in revenue)

Period Three

  • May 10 – June 6 (30% required reduction in revenue)

Period Four

  • June 7 – July 4 2020 (30% required reduction in revenue)

Bill C-20 introduced the following key changes to the program to ensure a safe restart to the economy.

  • Allow the extension of the CEWS until December 19, 2020, including the addition of qualifying periods and redesigned program details until November 21, 2020.
  • Eliminate the 30 per cent revenue decline threshold to promote economic growth and hire back of employees.
  • Introduce a top-up subsidy of up to an additional 25 per cent for employers that have been most adversely affected by the pandemic.
  • CEWS Eligibility criteria expanded
    • Sliding revenue/support options: support for businesses who list 50%+ in revenue to 30% and under, on a sliding scale based on need.
  • Gradual decrease in support from CEWS
    • To prevent businesses from falling off an eligibility cliff and to acknowledge that businesses need planning security and this program has become an important tool for employee retention.

The reference period for eligibility is the same month of the prior year, or an average of revenues for the two months preceding the period in the previous year (for example, the reference time for period one eligibility is March 2019 or an average of January and February 2019). Once a metric is chosen, it must be used consistently.

Eligible employees must be:

  • Working in Canada;
  • Not receiving CERB for the period claimed by the employer;
  • On payroll, but can either be working or laid off.

Non arm’s-length employees (e.g. owners/ shareholders) will be eligible if they were previously on payroll.
As of April 27, 2020, eligible employers can apply for the CEWS through the CRA’s My Business Account portal. See the CEWS How to Apply page here.[1][2]

Beginning April 27, 2020, certain financial institutions will offer CRA direct deposit online enrolment for business payroll accounts through their websites, helping businesses get their payments quickly and securely. Employers can sign up for direct deposit with their financial institutions even after applying for the CEWS. Employers are directed to visit the Canada Direct Deposit[3] website or their financial institutions directly for more information.

The Government of Canada has launched the Canada Emergency Wage Subsidy Calculator[4] to help employers as they prepare to apply for the CEWS. Employers who have used the calculator will be able to use the printable statement feature to enter required information into their application.

According to the June 16, 2020 update, any changes to eligibility criteria, which are to be determined, will commence for periods 5 and/or 6.

The extension of the Canada Emergency Wage Subsidy until June 2021 was announced on October 8, 2020.The subsidy would remain at the current subsidy rate of up to a maximum of 65 per cent of eligible wages until December 19, 2020. This measure is part of the government’s commitment to create over 1 million jobs and restore employment to the level it was before the pandemic.

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