In response to the difficulties Canadian businesses are facing the Canadian Government announced the Canada Emergency Wage Subsidy Program. We have highlighted some of the key elements below.

The Government is constantly changing the program as they work through the different scenarios and implications of the program.

Eligibility

• The purpose of the subsidy is to prevent further job losses, encourage employers to re-hire workers previously laid off as a result of COVID-19.
• This program provides a 75-per-cent wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020.
• This subsidy would be available to eligible employers (defined as individuals, taxable corporations, and partnerships consisting of eligible employers as well as nonprofit organizations and registered charities) that see a drop of at least 30 per cent of their monthly revenue, year over year.
  • Revenue for this purpose is any revenue from an arm’s length source and would exclude revenues from extraordinary items and amounts on account of capital.
  • The table below outlines each claiming period and the period in which it has a decline inrevenue of 30 per cent or more.

• For new businesses established after February 2019, eligibility would be determined by
  comparing monthly revenues to a reasonable benchmark. Details of what constitutes a
  reasonable benchmark have not been provided at this time.
  • At this point there has also been no discussion about high growth companies with
    increase in revenue since prior year.  Such businesses may have invested towards future
    growth by hiring additional staff and are now facing mass layoffs. As of now Ottawa has
    not announced any eligibility exceptions for such businesses. We hope this will be
    addressed soon.

Amount of Subsidy

• The subsidy amount for a given employee (including new employees) 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; 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 (further details coming on what
    this means), whichever is less.
• This means 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. There is no overall limit
  on the subsidy available to each employer.
• There are special rules for employees who do not deal at arm’s length with the employer. The
  subsidy amount will be:
  • maximum of $847 per week; or
  • 75 per cent of the employee’s pre-crisis weekly remuneration. Although, not clearly specified yet, it will likely be the lessor of the two.

Applying

More details about the application process are forthcoming. However, the following is known as of now:

• Application will occur through CRA My Business Account Portal or a web-based application
• Records have to be maintained of both the reduction in revenues and the amounts paid to
  employees

Other notes

• For companies that are not eligible for this enhanced wage subsidy, the original subsidy of 10%
  remains available.
• 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.

As previously noted, the program is ever evolving as the Government works through the nuances and
details of the program. Please continue to re-visit this post for further updates.

If you have any questions or would like to discuss further, please feel free to contact us.