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Canada Emergency Wage Subsidy Details

02-Apr-20

By McLennan Ross Labour & Employment Team

The Government has released further details on the Canada Emergency Wage Subsidy announced last week.

The portal for application is not yet open but the Government announced that funds would be available in approximately 6 weeks. This Subsidy is paid as a direct benefit rather than a reduction in the remittance to the Receiver General.

Eligibility

Eligible employers are those that have seen a drop of at least 30% in their revenues of the Eligible Periods. This is calculated using the employer’s normal accounting method, and excludes extraordinary items and amounts on account of capital.

The revenues used for the purpose of assessing eligibility must be arm’s-length revenues.

The drop in revenue will be determined by the change in the employer’s monthly revenues year-over-year, using 2019 months as comparables.

  • Eligible periods
    • Period 1: March 15 to April 11 – March 2020 over March 2019
    • Period 2: April 12 to May 9 – April 2020 over April 2019
    • Period 3: May 10 to June 6 – May 2020 over May 2019

For employers established after February 2019, eligibility would be determined by comparing monthly revenues to a reasonable benchmark.

Public bodies are not eligible. This includes, municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals.

Non-profits and charities are still eligible. Government will work with this sector to ensure the definition of revenue is appropriate to their specific circumstances.

How To Apply

Applications can be submitted using the CRA’s My Business Account portal.  

Amount of the Benefit

The benefit covers employee remuneration between March 15 and June 6, 2020.

Remuneration means the 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.

Remuneration excludes severance pay, stock option benefits, or personal use of corporate vehicle.

The benefit consists of the greater of:

  • 75% of the amount of remuneration paid, up to a maximum 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.

Pre-crisis weekly remuneration details remain to be announced.

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.

The subsidy will also be available for salaries of new employees.

There is no overall limit on the subsidy amount that an eligible employer may claim.

Interaction with the 10% Wage Subsidy

Employers may apply to both, but any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy.

Interaction with the CERB

Employers cannot claim the 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 CERB.

Compliance and Enforcement

The system is predicated on “high trust.” However, the government will develop rules that create new offences for providing false or misleading information to obtain access to the benefit.

The benefit must be paid to employees.

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