The federal government has announced that applications for 75 per cent wage subsidy for qualifying businesses will open on April 27th. Officials expect to have processed 90 per cent of claims by May 4 with payments landing later that week, MPs on the House of Commons finance committee were told Thursday, April 16.
What is the Canada Emergency Wage Subsidy (CEWS)?
The CEWS provides a wage subsidy of 75% (that’s up to $847 per employee per week), to eligible employers, for up to 12 weeks, retroactive to March 15, 2020.
Are you eligible for the Canada Emergency Wage Subsidy?
Many types of Canadian employers are eligible
- individuals (including trusts)
- taxable corporations
- persons that are exempt from corporate tax (Part I of the Income Tax Act), other than public institutions:
- non-profit organizations
- agricultural organizations
- boards of trade
- chambers of commerce
- non-profit corporations for scientific research and experimental development
- labour organizations or societies
- benevolent or fraternal benefit societies or orders
- registered charities
- partnerships consisting of eligible employers
Who is not eligible: Public bodies would not be eligible for this subsidy. Public bodies include municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals.
Before you apply, make sure you know:
1. What is your eligible revenue reduction?
Determine if your revenue reduction makes you eligible for the CEWS in a particular period:
- For March 15-April 11 – 15% drop in revenue
- For April 12-May 9 – 30% drop in revenue
- For May 10-June 6 – 30% drop in revenue
To calculate your reduction, compare your eligible revenue for the starting month of the claim period with your baseline revenue. Your baseline revenue is the amount you earned in the corresponding month in 2019 OR the average of January and February 2020.
2. Who are eligible employees?
An eligible employee is an individual who:
- Is employed by you in Canada, and
- Has received eligible remuneration for 14 or more consecutive days in the eligibility period.
3. What is eligible remuneration?
Eligible remuneration includes amounts you paid an employee as salary, wages and other taxable benefits, fees, and commissions.
Severance pay and items such as stock option benefits or the personal use of a corporate vehicle are not part of eligible remuneration.
10% Wage Subsidy
The 10% Temporary Wage Subsidy for Employers reduces the amount of income tax source deductions that employers have to remit to CRA on behalf of their employees by up to 10% of their remuneration (to a maximum of $1,375 per employee up to $25,000 per employer).
Many employers that qualify for the CEWS also qualify for the 10% Temporary Wage Subsidy for Employers.
CEWS and the 10% Temporary Wage Subsidy for Employers are intended to provide total support of up to 75% for payroll, not 75% + 10%. If you did not reduce the source deductions you remitted to the CRA, but you were entitled to the 10% Temporary Wage Subsidy for Employers, the CRA will treat you as having over-remitted your employee source deductions (so that normally you will be entitled to a refund).
If an employer does not qualify for the CEWS, they may still be eligible for the 10% wage subsidy.
How is the Canada Emergency Wage Subsidy calculated?
Use CRA calculator to estimate the amount of your wage subsidy.
1. Select your claim period
- March 15 to April 11, 2020
- April 12 to May 9, 2020
- May 10 to June 6, 2020
2. Determine your gross payroll for eligible employees
The CEWS provides a wage subsidy of 75% (that’s up to $847 per employee per week). The amount that you can claim for eligible employees depends on whether they:
- Earned $1,129.33 or more per week
- Earned $1,129.32 or less per week and have NOT had their pay reduced since the crisis
- Earned $1,129.32 or less per week and HAVE had their pay reduced since the crisis
Are arm’s length or non-arm’s length
3. Claim a refund for certain premiums and contributions
You can claim a 100% refund for the employer-paid part of contributions made on behalf of eligible furloughed employees (on leave with partial or full pay) for any full week in the claim period. This includes:
- Employment Insurance (EI)
- the Canada Pension Plan (CPP)
- the Quebec Pension Plan (QPP), and
- the Quebec Parental Insurance Plan (QPIP)
4. Enter deductions
The amount you can claim for the CEWS will be reduced by:
- Amount that you are eligible to claim under the 10% Temporary Wage Subsidy for Employers (for the claim period)
- Total amount that your eligible employees have received under ESDC’s Work Sharing Benefit program
5. Get results
Fill out the CEWS online calculator to determine the subsidy you can expect to claim and print your results using the printable statement feature.
How to apply for CEWS?
Before you apply:
- Register now for CRA’s My Business Account if you are not already signed up.
- If you are unable to register for My Business Account, make sure you have an online web access code so you are prepared to use the alternative application.
- Before you apply, you will also need to calculate the estimated subsidy (as per the above method) for your business.
- If you’re expending a payment of over $25 million, Register for the large value transfer system.
When applications open on April 27:
- Apply through My Business Account
- Businesses representatives can apply through Represent a Client
- A separate online application form will be available April 27