Today, the Federal Government provided more details on how Canadians can access the Canada Emergency Wage Subsidy (CEWS) program and the Canada Emergency Response Benefit (CERB). Combined, these two programs are a $95 billion investment, the largest economic program in Canadian history.

Crowe MacKay specialists have summarized these details below.

If you have any questions or concerns, you are encouraged to contact your local Crowe MacKay advisor.

Canada Emergency Wage Subsidy

The following is a review of details pertaining to the CEWS that were previously announced:

  • The Federal Government will cover up to 75% of each employee’s salary on the first $58,700 that they earn this year, or up to $847 per week.
  • The program is effective for a 12-week period, from March 15 to June 6, 2020.
  • To be eligible, a business’ revenue has to have decreased by at least 30%.
  • Eligible employers 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 Federal Government will continue to work with the sector to ensure the definition of revenue is appropriate to their circumstances. The Federal 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 the CEWS will be based entirely on the salary or wages actually paid to employees, and employers will be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered.

Highlights of the information released today on the CEWS are as follows:

Eligible Employers

Eligible employers under the CEWS will include individuals, taxable corporations and partnerships consisting of eligible employers as well as non‑profit organizations and registered charities. Public bodies will not be eligible for this subsidy, and these include municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals. The CEWS will be available to eligible employers that see a drop of at least 30% of their revenue for any of the claiming periods mentioned below, compared to revenues over a similar period in 2019.

The table below outlines each claiming period and the reference period for eligibility:

For example, if revenues in March 2020 were down 50% compared to those in March 2019, the employer would be allowed to claim the CEWS (as calculated below) on remuneration paid between March 15 and April 11, 2020. When applying for the subsidy, employers will be required to attest to the decline in revenue.

Calculating Revenues

An employer’s revenue for this purpose will be its revenue from its business carried on in Canada earned from arm’s-length sources, calculated using the employer’s normal accounting method, excluding revenues from extraordinary items and amounts on account of capital. For non-profits and charities, the government will continue to work with the sector to ensure the definition of revenue is appropriate to their specific circumstances.

For non-profits and charities, the government will continue to work with the sector to ensure the definition of revenue is appropriate to their specific circumstances.

Amount of Subsidy

The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020, will be the greater of:

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

Further guidance with respect to how to define pre-crisis weekly remuneration for a given employee will be provided in the coming days.

As described above, employers may be eligible for a subsidy of up to 100% of the first 75% of pre-crisis wages or salaries of existing employees, and such employers will be expected where possible to maintain their existing employees’ pre-crisis employment earnings. The CEWS will also be available for salaries and wages paid to new employees.

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 as payroll taxes. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.

Furthermore, a special rule will apply to employees who do not deal at arm’s length with the employer, such as owner-managers. 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% of the employee’s pre-crisis weekly remuneration.

There will be no overall limit on the subsidy amount that an eligible employer may claim. Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.

Application Process

Eligible businesses will be able to apply for the CEWS online through a Canada Revenue Agency online portal. The application system is expected to  be live in approximately six weeks.  More details regarding how to apply for the program will follow as soon as they become available.

Businesses’ Responsibilities

In order to maintain the integrity of the CEWS program and to ensure that it helps Canadians keep their jobs, employers will be required to repay amounts received under the CEWS if they do not meet the eligibility requirements and pay their employees accordingly. Penalties may apply in cases of fraudulent claims and anti‑abuse rules will be proposed to ensure that the subsidy is not inappropriately obtained, and to ensure that employees are paid the amounts they are owed.

Those organizations that do not qualify for the CEWS may continue to qualify for the previously announced wage subsidy of 10% of remuneration paid from March 18 to before June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Employers who are not eligible for the CEWS would still be able to furlough employees who may receive up to $2,000 a month under the CERB.

 

Read the Federal COVID-19 Economic Response Plan Summary

 

 

Canada Emergency Response Benefit

The CERB is stated to be a $24 billion economic program. Today, more details pertaining to the application process and payment timelines were announced. Both are summarized below.

Application Process

The CERB will be available beginning April 6. This can be accessed by applying online through your CRA My Account or over the phone.

If you have applied for Employment Insurance already, you do not need to apply for the CERB.

After you submit your application, you will need to confirm your unemployment status on a monthly basis to continue to receive the CERB.

The Federal Government has asked that Canadians abide by the following application schedule, organized by the month you were born in.

If you have a birthday in:

January, February, March                Apply on Mondays (April 6)
April, May, June                               Apply on Tuesdays (April 7)
July, August, September                  Apply on Wednesdays (April 8)
October, November, December       Apply on Thursdays (April 9)
Any month                                       Apply on Fridays, Saturdays, and Sundays

Payment

The benefit will be paid by direct deposit or by cheque. If you select the direct deposit option you can expect your funds in 3-5 days (recommended). If you select the cheque option, you can expect your funds in approximately 10 days.

Canada Emergency Response Benefit Details

The CERB provides $2,000 per a four-week period ($500 per week) to individuals impacted by COVID-19.

You may receive the CERB for a maximum of 16 weeks and you must re-apply for it every four weeks.

You will not qualify for the CERB if you quit your employment voluntarily.

In order to qualify for the CERB:

  • You must be a Canadian resident aged 15 and older.
  • You must have earned at least $5,000 of total income from employment, self-employment, and/or certain employment insurance benefits (generally parental benefits) in 2019 or in the 12-month period leading up to your application.
  • You must have ceased to work for reasons related to COVID-19 for at least 14 consecutive days within the four week period that you are applying for. This may apply if you are still employed but not receiving income because of disruptions to your work situation due to COVID-19.
  • During the period that you ceased working, you must not receive any employment income, self-employment income, unemployment benefits, or benefits under a provincial plan because of pregnancy or in respect of the care of new-born or adopted children.

 

Read how to prepare your CERB application