New Details Released for Canada Emergency Wage Subsidy

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OTTAWA — Finance Minister Bill Morneau provided further details on the eligibility criteria for businesses to access the Canada Emergency Wage Subsidy (CEWS) yesterday.

“The government will continue to do whatever it takes to support Canadians and the economy during this very difficult time,” says Morneau. “The CEWS is one of the tools we’ve proposed to help businesses and workers. We’re listening to the feedback Canadians and the business community have provided and will make sure this subsidy serves the needs of Canadians.”

The proposed CEWS would provide a strong incentive for employers to pay employees who have been sent home for health-and-safety reasons or due to lack of work. It would also enable employers to retain employees who are still on the payroll and rehire workers who have been previously laid off.

The subsidy would apply at a rate of 75 per cent of the first $58,700 normally earned by employees — representing up to $847 per week, per employee. The program would be in place for a 12-week period, from March 15 to June 6, 2020. Employers of all sizes and across all sectors of the economy would be eligible, with certain exceptions, including public-sector entities. An eligible employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees. All employers would be expected to make best efforts to bring employees’ wages to their pre-crisis levels.

The government is also proposing that employers eligible for the CEWS be entitled to receive a 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 apply to the entire amount of employer-paid contributions in respect of remuneration paid to furloughed employees in a period where the employer is eligible for the CEWS.

In order to address the realities faced by the not-for-profit sector, high-growth companies and new businesses, the government proposes the following additional flexibility:

  • To measure their revenue loss, it’s proposed that all employers have the flexibility to compare their revenue of March, April and May 2020 to that of the same month of 2019 or to an average of their revenue earned in January and February 2020.
  • For March, the government proposes to make the CEWS more accessible than originally announced by reducing the 30-per-cent benchmark to 15 per cent, in recognition of the fact that many businesses did not begin to be affected by the crisis until partway through the month.
  • In recognition that the time between when revenue is earned and when it is paid could be highly variable in certain sectors of the economy, it is proposed that employers be allowed to measure revenues either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received). Special rules would also be provided to address issues for corporate groups, non-arm’s-length entities and joint ventures.
  • Registered charities and non-profit organizations would also be able to benefit from the additional flexibilities with respect to the revenue loss calculation. In addition, to recognize that different types of organizations are experiencing different types of funding pressures, it’s proposed that charities and non-profit organizations be allowed to choose to include or exclude government funding in their revenues for the purpose of applying the revenue-reduction test.

“We’ve heard the voices of small-business owners and employers from across the country. These enhancements to the Canada Emergency Wage Subsidy will mean more flexibility and support for start-ups, high-growth companies and non-profit organisations,” says Mary Ng, Minister of Small Business, Export Promotion and International Trade. “We continue to listen, and we’ll be there for Canadian businesses every step of the way through this unprecedented challenge.”

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