Prime Minister Justin Trudeau, on March 27 announced that the Government is proposing to introduce a wage subsidy of 75 per cent for qualifying businesses, for up to 3 months, retroactive to March 15, 2020 as part of the Government of Canada’s COVID-19 Economic Response Plan.
Today, the Government of Canada announced the details of the proposed Canada Emergency Wage Subsidy. Justin Trudeau said that the Parliament will be recalled to pass this proposed legislation.
- The Canada Emergency Wage Subsidy would apply at a rate of 75 per cent of the first $58,700 normally earned by employees – representing a benefit of up to $847 per week. The program would be in place for a 12-week period, from March 15 to June 6, 2020.
- Eligible employers who suffer a drop in gross revenues of at least 30 per cent in March, April or May, when compared to the same month in 2019, would be able to access the subsidy.
- Eligible employers would include employers of all sizes and across all sectors of the economy, with the exception of public sector entities.
- For non-profit organizations and registered charities similarly affected by a loss of revenue, the government will continue to work with the sector to ensure the definition of revenue is appropriate to their circumstances. The government is also considering additional support for non-profits and charities, particularly those involved in the front line response to COVID-19. Further details will be announced in the near term.
- 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 at least make best efforts to top up salaries to 100% of the maximum wages covered.
WHO ARE THE ELIGIBLE EMPLOYERS FOR THE 75% WAGE SUBSIDY
- Eligible employers would include individuals, taxable corporations, and partnerships consisting of eligible employers as well as non‑profit organizations and registered charities.
- Public bodies would not be eligible for this subsidy. Public bodies include municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals.
- This subsidy would be available to eligible employers that see a drop of at least 30 per cent of their revenue In applying for the subsidy, employers would be required to attest to the decline in revenue.
- An employer would not be eligible to claim the Canada Emergency Wage Subsidy for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the Canadian Emergency Response Benefit.
- Employers who are not eligible for the Canada Emergency Wage Subsidy would still be able to furlough employees who will receive up to $2,000 a month.
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. The amount of wage subsidy provided under theCOVID-19 Economic Response Plan received by the employer in a given month would be ignored for the purpose of measuring year-over-year changes in monthly revenues.
- For example, if revenues in March 2020 were down 50 per cent compared to March 2019, the employer would be allowed to claim the Canadian Emergency Wage Subsidy (as calculated above) on remuneration paid between March 15 and April 11, 2020.
- For eligible employers established after February 2019, eligibility would be determined by comparing monthly revenues to a reasonable benchmark.
- The table below outlines each claiming period and the period in which it has a decline in revenue of 30 per cent or more.
Eligible Period Claiming period Reference period for eligibility Period 1 March 15 – April 11 March 2020 over March 2019 Period 2 April 12 – May 9 April 2020 over April 2019 Period 3 May 10 – June 6 May 2020 over May 2019
What is the amount of subsidy
The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:
- 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week. That is employers may be eligible for a subsidy of up to 100 per cent of the first 75 per cent of pre-crisis wages or salaries of existing employees. These employers would be expected where possible to maintain existing employees’ pre-crisis employment earnings.
- and 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. The government said that detailed with respect to how to define pre-crisis weekly remuneration for a given employee will be provided in the coming days.
- Eligible remuneration may include salary, wages, and other remuneration. These are amounts for which employers would generally be required to withhold or deduct amounts to remit to the Receiver General on account of the employee’s income tax obligation. It does not include severance pay or items such as stock option benefits or the personal use of a corporate vehicle.
- A special rule will apply to employees that do not deal at arm’s length with the employer. The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration.
- There would be no overall limit on the subsidy amount that an eligible employer may claim.
How to Apply For Canada Emergency Wage Subsidy
Eligible employers can apply through the Canada Revenue Agency’s My Business Accountportal 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.
The Department of Finance said that more details about the application process will be made available shortly.
More Information is available on the Department of Finance website.