Canada Emergency Wage Subsidy - Your questions answered |
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Updated October 25, 2021
Please note: The CEWS expired on October 23, 2021. The program has been replaced with the Hardest-Hit Business Recovery Program (HHBRP) and Tourism and Hospitality Recovery Program. For more information please see the following announcement and Backgrounder. We will provide more information as the government releases details on the programs mentioned above. |
Q: Where can I find more information about the proposed wage subsidy program? A: We recommend you visit the following federal government pages:
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Q: Does the requirement to demonstrate a 30% drop in revenue apply to charities and nonprofits? A: For the month of March 2020, organizations must demonstrate a 15% drop in revenue. For the months of April, May, and June 2020 the eligibility threshold is a 30% drop in revenue. For the months of July 2020 to June 2021, the 30% revenue decline threshold is removed and all eligible employers that are experiencing revenue declines, no matter the scale, are eligible for the program. The subsidy amount will be adjusted to the scale of revenue decline. |
Q: My organization receives significant government funding, but my fundraising and other revenue streams have dropped by more than 30%. Would we still be eligible? A: Charities and non-profit organizations have the option of including revenue from government sources in their revenue calculations or excluding it, and can choose the method that best captures their losses. The ability to include or exclude revenue from government sources continues to be an option available. Once chosen, the same method of calculating revenues must apply to all claim periods. Organizations should note that revenue from non-arm’s length sources is excluded from consideration. Please note that for the months of July 2020 - June 2021, the 30% revenue decline threshold is removed and all eligible employers that are experiencing revenue declines, no matter the scale, are eligible for the program. |
Q: What benchmark would we compare revenues against to calculate our drop in revenue? A: For periods 1 - 4 (March 15 - July 4), there were two options to calculate the drop in revenues (once chosen, the same method of calculating revenues must apply to each eligibility period). For instance, for March, an employer could either compare March revenues to the revenue from March 2019 (called the “general approach”) or compare March revenues to an average of revenue earned in January and February 2020 (called the “alternative approach”). When calculating revenue decline for claim periods 5 – 13 (i.e., July 5, 2020 to March 13, 2021), eligible employers have the option to use the month in which the claim period began or the prior month and then compare it against the same month the previous year (“general approach”) or against the average of January and February 2020 revenues (“alternative approach”). Please note that eligible employers not carrying on a business or otherwise carrying on its ordinary activities on March 1, 2020 must use alternative approach. For periods 5 - 13 (July 5, 2020 - March 13, 2021), employers that have elected to use the alternative approach for the first 4 periods would be able to either maintain that election for Period 5 and onward or revert to the general approach, and vice versa. For periods 14 - 16 (March 14, 2021 - June 5, 2021), to ensure that the general approach continues to calculate an organization's decline in revenues relative to a pre-pandemic month, the prior reference periods would be based on calendar months from 2019. |
Q: If my organization were to apply in March, for how long would we receive the wage subsidy? A: Organizations must apply on a month-to-month basis. The program is slated to stretch from March 15, 2020 to June 2021 (with wage support retroactive to March 15th). There are currently 16 distinct subsidy periods: March 15 - April 11, April 12 - May 9, May 10 - June 6, June 7 - July 4, July 5 - August 1, August 2 - August 29, August 30 - September 26, September 27 - October 24, October 25 - November 21, November 22 - December 19, December 20, 2020 – January 16, 2021, January 17 – February 13, February 14 – March 13, 2021, March 14 - April 10, 2021, April 11, 2021 - May 8, 2021, and May 9 - June 5, 2021. Additional subsidy periods will be added for the September 2021 extension. Please note that the deadline to make an application for any claim period(s) from March 15 to August 29, 2020 is January 31, 2021. For the following claim periods, the deadline is 180 days after the end of the claim period for which the eligible employer is applying. |
Q: Could I apply for the wage subsidy to support staff hired on contract? A: Employees must be on payroll to be an eligible staff expense. The salaries of new employees, and employees that may have been laid off but are subsequently re-hired, are eligible for the subsidy. |
Q: How should we account for prorated revenue received earlier in the year? (ie. project grant funding that is partially allocated to March) A: Organizations would be allowed to measure revenues either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received). Each organization can choose the method that best captures their losses, but will need to apply it consistently across revenue streams, and must use the same method when establishing eligibility each period. If an employer decides to change the accounting method that they use, they must amend any previously submitted applications to reflect this change. |
Q: What is the total amount organizations would be able to receive per employee? A: For periods 1 - 4 (March 15 - July 4), the subsidy would amount to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less. Employers will be expected to make their best effort to top-up employees' salaries to bring them to pre-crisis levels. The top-up is not mandatory, though. There is no cap on the total amount each organization can receive. For periods 5 - 16 (July 5, 2020 - June 5, 2021), the base subsidy amount will be calculated according to the scale of revenue loss and a new top-up subsidy will be available to those hardest hit. The base rate and the top-up rate apply to remuneration of up to $1,129 per week for active employees. The maximum weekly benefit per employee with the combined base and top-up rate is $960 for claim periods 5 and 6 (July 5 to August 29, 2020), after which the maximum weekly benefit per employee declines to $847 for claim period 7 (August 30 to September 26, 2020) and $734 for claim periods 8 - 10 (September 27 to December 19, 2020). |
Q: Could I use the subsidy to rehire employees who were already laid off as a result of COVID-19? A: Yes, the subsidy was designed to prevent further job losses, and encourage employers to re-hire workers previously laid off due to the effects of COVID-19. |
Q: Would I be able to apply these calculations to revenue from individual divisions, departments, or product lines, and claim 75% of salaries for that division, department or product line? A: No. Associated companies and legal subsidiaries can calculate separately, but there is no mechanism for a single legal entity to separate business lines for this purpose. |
Q: How do I apply? A: Employers will be able to apply on their CRA My Business Account or through the Web Forms application. |
Q: What documentation would I need to apply? A: The Government is currently recommending that organizations keep records demonstrating their revenues and remuneration paid to their employees. Applications will require an attestation of eligibility by a senior individual with authority over the organization’s finances. |
Q: What about the 10% temporary wage subsidy that was previously announced? A: Organizations that cannot demonstrate a sufficient drop in revenue to meet eligibility requirements for the 75% wage subsidy can still apply for the originally announced 10% wage subsidy (for the entire duration of the program or for any of the eligibility periods in which they do not meet the higher criteria threshold). Please note that the temporary wage subsidy program ended on June 19, 2020. |
Q: In what claim periods is the top-up subsidy applicable, and how is it calculated? A: A top-up subsidy of up to 25% is now available for eligible employers with a revenue drop of 50% or greater. The top-up subsidy is available for claim periods 5 to 10 (i.e., July 5 to December 19, 2020). The top-up subsidy rate is 35% for periods 11-13 (i.e., December 20, 2020 to June 5, 2021). For claim periods 5 – 7 (i.e., July 5 to September 26, 2020), the top-up subsidy amount is calculated by comparing average revenues in the preceding three months to the same months in the prior year (the “general approach”), or comparing average monthly revenue in the preceding three months to the average monthly revenue in January and February 2020 (the “alternative approach”). For claim periods 8 - 13 (i.e., September 27, 2020 to March 13, 2021), the revenue-decline test for the top-up will be determined by the change in monthly revenues, year-over-year, for the current or previous calendar month, or by the change in monthly revenues relative to the average of January and February 2020 revenues. The three-month revenue-decline test will not be used for these periods. For periods 14 - 16 (March 14, 2021 - June 5, 2021), to ensure that the general approach continues to calculate an organization's decline in revenues relative to a pre-pandemic month, the prior reference periods would be based on calendar months from 2019. The top-up subsidy rate is added to the base subsidy rate to determine the overall subsidy rate that you would be eligible for. As of March 3, 2021, the maximum subsidy rate (i.e., base +_top-up) has been increased to 75% from December 20, 2020 to June 5, 2021 (an increase of 10% from maximum rate for periods September 27 to December 19, 2020). The maximum base rate remains at 40%, while the top-up subsidy rate increased to 35% (as noted above). |
Q: How does the safe harbour rule work? A: For claim periods 5 and 6 (i.e., July 5 to August 29, 2020), an eligible employer with a revenue decline of 30% or greater is entitled to a subsidy rate of at least 75%, which is the subsidy rate that is available to eligible employers in claim periods 1 through 4 (i.e., March 15 to July 4, 2020). The safe harbour rule applies to both active employees and furloughed employees (i.e., employees on paid leave). For example, if you had a revenue drop for claim period 5 (i.e., July 5 to August 1, 2020) of 31%, you would be entitled to a subsidy rate of at least 75%. You could be entitled to a subsidy rate greater than 75% if you are eligible for the top-up subsidy. For claim periods 8 – 13 (i.e., September 27, 2020 to March 13, 2021), a safe harbour rule has been added as a result of changes to the revenue-decline test for the top-up subsidy. This rule entitles an eligible employer to a top-up subsidy rate that is no less than it would have received under the three-month revenue-decline test. |
Q: Are organizations that use a third party to administer their payroll able to apply? A: Recent changes to the CEWS allow for eligible employers that hire a third party to facilitate the administration of its payroll to qualify for the wage subsidy for any or all of the claim periods. To apply for and receive the wage subsidy, each eligible employer requires their own business number and payroll program account. Eligible employers who did not have their own payroll program account with the Canada Revenue Agency (CRA) on or before March 15, 2020, but on March 15, 2020 employed one or more individuals and allowed a third party with a business number to make payroll remittances on their behalf, through the third party’s account, will need to register for their own payroll program account. Eligible employers may also need to register for their own business number if they did not previously have one. In general, eligible employers will be expected to continue using their new payroll program account for all future payroll remittances. However, in certain situations, future payroll remittances can continue to be made using the existing payroll program account administered by the third party. |
Q: Are employer contributions still recoverable for the recently added claim periods? A: Employer contributions to Employment Insurance, Canada Pension Plan, Quebec Pension Plan, and Quebec Parental Insurance Plan on behalf of employees on paid leave will continue to be recoverable by the employer for claim periods 5 to 13 (i.e., July 5, 2020 to March 13, 2021). |
Q: Are employers still unable to claim the wage subsidy for an employee that has not been paid for 14 or more consecutive days? A: For claim periods 5 to 13 (i.e., July 5, 2020 to March 13, 2021), employers will be able to include employees that were unpaid for 14 or more consecutive days in a given claim period in their calculations. This is different from the rule pertaining to claim periods 1 to 4 (i.e., March 15 to July 4, 2020), where employers are not able to include these employees. |
Q: Is my organization eligible to apply? A: To be eligible to apply, you must have had a CRA payroll account on or before March 15, 2020 (or used a payroll service provider who made remittances on your behalf) and experienced a drop in revenue. You must also be one of the following types of employers:
Public institutions are still not eligible for the subsidy. This includes municipalities and local governments, Crown corporations, public universities, colleges and schools, school boards, hospitals, and health authorities. |
Q: Has there been a change to how the subsidy amount for furloughed employees is calculated? A: For claim periods 5 to 10 (i.e., July 5 to December 19, 2020), furloughed employees (i.e., employees on paid leave) are treated differently than active employees (i.e., employees who worked for any part of a week during the claim period) when calculating the subsidy amount. For claim periods 5 and 6, the support for furloughed employees remains the same as in claim periods 1 through 4 (i.e., March 15 to July 4, 2020). CEWs for furloughed employees will be available to any employer who qualifies for the base rate or the top-up subsidy for active employees (mentioned above). Effective claim period 9 (i.e., October 25, 2020), the wage subsidy for furloughed employees will be aligned with the benefits provided through Employment Insurance (EI). This means the subsidy per week in respect of an arm’s length employee (or a non-arm’s length employee who received pre-crisis remuneration for the relevant period) would be the lesser of: i) the amount of eligible remuneration paid in respect of the week; and ii) the greater of $500 and 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $573. The maximum subsidy amount per week for furloughed employees is $595 for periods 11-16 (i.e., December 20, 2020 to June 5, 2021). |
Q: Is investment revenue, such as interest or dividends from investments in securities, included in the calculation? A: To the extent that investment revenue, such as interest or dividends from investments in securities, arises in the course of an eligible employer’s ordinary activities in Canada in the particular period, is not an extraordinary item or on account of capital, and is included in revenue under its normal accounting practices, it would generally be included in qualifying revenue. |
Q: When is the deadline for applying? A: The deadline to make an application for any claim period(s) from March 15 to August 29, 2020 is January 31, 2021. For the following claim periods, the deadline is 180 days after the end of the claim period for which the eligible employer is applying. |
Q: Does the deeming rule still apply in the newly added claim periods? A: A deeming rule does apply to claim periods 5 to 13 (i.e., July 5, 2020 to March 13, 2021), but it is not the same deeming rule that is applicable to claim periods 1 to 4 (i.e., March 15 to July 4, 2020). For claim periods 1 to 4, eligible employers that have experienced a revenue drop in one of first three claim periods is automatically considered to have experienced the required reduction in revenue for the immediately following claim period. For claim periods 5 to 13, if an eligible employer experienced a greater revenue drop in the immediately preceding claim period than in the current claim period that the employer is applying for, then the employer would be able to use the revenue drop in the preceding claim period for the purposes of determining its base wage subsidy amount for the current period.
For example, let’s say an eligible employer is applying for the wage subsidy in claim period 5 (i.e., July 5 to August 1, 2020). Their revenue drop in claim period 5 is 35%, while their revenue drop in claim period 4 (i.e., June 7 to July 4, 2020) is 45%. According to the deeming rule for claim periods 5 to 9, they would be able to use the 45% revenue drop in their subsidy calculations for claim period 5. |
Q: Can we include gift in kind donations in our revenue calculations? Generally speaking, yes. Qualifying revenue of a charity is generally determined in accordance with its normal accounting practices. Qualifying revenue means the inflow of cash, receivables, or other consideration arising in the ordinary activities of the charity in a particular period. For greater certainty, qualifying revenue does not include extraordinary items. Determining what is an extraordinary item is a question of fact. Generally, if your charity has received in kind donations in the past, these should be included in your revenue calculations. |
Q: Our organization is newly established and had no revenues prior to the start of the COVID-19 lockdown. Can we qualify for the CEWS subsidy? In general, if operations began anytime after February 2020, your organization would not be eligible for the wage subsidy. However, if your organization earned revenue in January and February 2020, you may be eligible to apply using the alternative approach to calculating qualifying revenue for periods 1-4. For periods 5 and later, there is no minimum revenue drop required to qualify for the subsidy; the rate revenue drops is only used to calculate how much subsidy can be received for these periods. If your organization had a payroll account prior to March 15, 2020, you may be eligible to apply. Even if your organization did not have a payroll account, if someone else made remittances for your organization, you may still be eligible to apply. |
Q: We are applying for CEWs in claim period 5, and we had a revenue decline of 80% in that period. Under the safe harbour rules, are we able to claim a CEWS rate of 100% (subsidy rate of 75% + top-up rate of 25%)? No, eligible employers are not able to claim a CEWS subsidy rate of 100%. Under the safe harbour rule for claim periods 5 and 6 (i.e., July 5 to August 1, 2020), applicants with a revenue decline of 30% or greater are entitled to a total subsidy rate not lower than that available in claim periods 1 – 4 (i.e., March 15 to July 4, 2020), which is 75%. But the highest total subsidy rate in claim periods 5 and 6 that eligible employers can receive is 85% of eligible remuneration. Therefore, eligible employers that have experienced a drop in revenue of 70% or greater in either or both claim period 5 and 6 could receive an 85% subsidy rate. |
Q: If we made a mistake on our CEWS application, are we able to update the application? Yes, you can make changes to your applications at any point in time. You can do so through My Business Account or through the Represent a Client portal. If you applied using the Web Forms application, you may contact CRA’s business enquires phone number (1-800-959-5525). You will need to have available:
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Q: If we are expecting a revenue shortfall sometime after the end date of the CEWS program, can we include it in our revenue calculations? Currently, the CEWS is structured in such a way that the subsidy pertains to a specific period. Generally speaking, any revenue that is not earned or received in the relevant month(s) for the claim period(s) for which you are applying cannot be factored into your revenue calculations. |
Q: If we receive the subsidy, do we have to use the money to top-up our employees’ wages to their pre-COVID levels, or can we maintain them at their currently reduced levels? The CEWS was brought into effect to enable the re-hiring of workers, help prevent further job losses and ease charities (and other entities) back into normal operations. It is important to note that the CEWS is taxable and while charities are exempt from paying income taxes, the subsidy must still be reported on your T3010 Charity Information Return. In addition, recipients of the CEWS will be expected to report the amount of CEWS that was used for each of your employees’ salaries using a special code in the “other information” area at the bottom of the employee’s T4 slip. Amounts used by a charity in the calculation of their subsidy and levels paid to employees are at the discretion of the charity. However, it should be noted there are substantial anti-abuse provisions within the legislation. |
Q: Are we able to receive the CEWS subsidy for an employee that was recently hired? How does this work, given that they did not have earnings in any of the baseline remuneration options? A charity may be able to claim the CEWS for eligible remuneration even if the employee was hired after March 15, 2020. An eligible employee, in respect of a week in a claim period, means an individual employed by an eligible employer during the claim period. The subsidy is intended to assist charities (and other entities) in paying the wages of employees that are currently working, regardless of whether they were employed by the charity pre-pandemic. The potential difference is the amount of the subsidy. In a simplified example, if an individual was employed by a charity pre-pandemic at a rate of $800 per week and are now paid $600 a week, the eligible remuneration amount for this employee would be $600 per week of a claim period. If that employee was not employed pre-pandemic, their prior salary would be $0 per week in the calculation, but would still have an eligible remuneration amount of $450 per week of a claim period. |
Q: Can we include salary continuance in our CEWS claim? Generally, a salary continuance is received when an individual is no longer employed by an entity. While the employee continues to receive remuneration, their employment has been terminated. Given that the CEWS subsidy requires there be an eligible employee (an individual employed by an eligible employer during the claim period) and eligible remuneration (amounts paid to an employee for services), it is unlikely a salary continuance would qualify to be included in an employer’s CEWS claim. |