COVID-19 Federal Benefits and Supports
Canada Emergency Wage Subsidy Update
By Nizam Shajani, CPA, CA, MBA
The Canada Emergency Wage Subsidy (CEWS) application is now open.
The CEWS provides a 75% wage subsidy to eligible employers for up to 12 weeks and is retroactive to March 15, 2020. The subsidy will be available at a rate of 75% of weekly remuneration paid to a maximum of $847 per employee. This could amount to a subsidy of up to $10,164 per employee over the twelve-weeks period. Your business must have experienced a drop of at least 15% of revenue in March 2020 and 30% for April 2020 and/or May 2020 to qualify for this subsidy.
This subsidy is available to Canadian businesses, big or small, individuals, partnerships and corporations that are not publicly funded. This will also be available for not for profit organizations and charities.
Those organizations that do not qualify for the Canada Emergency Wage Subsidy may continue to qualify for the previously announced Temporary 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.
What Businesses Qualify?
The subsidy will be available for businesses where revenues have decreased substantially. Revenues will either be compared to the same month last year for March, April or May, to make this determination, or to the average of January and February of the current year. The application will need to be made each month. The decrease should be 15% or more for the month of March and 30% or more for the months of April and May.
Calculation of the revenue can be based on accrual accounting (as the revenues are earned) or cash accounting (as revenues are received), and should be considered with members of a group via joint elections.
In addition, there are seven elections or the attestation that no election that may be filed with the application. These selections need to be considered concurrently with the calculations.
How Much is the Subsidy?
The federal government will cover 75% of wages paid to employees on the first $58,700 of normal salary, up to $847/week per employee. The number of employees does not matter. There is no cap per employer.
The subsidy will be retroactive to March 15, 2020 and available for a twelve-week period to June 6, 2020.
How Do You Get the Subsidy?
You may now apply through the Canada Revenue Agency My Business account portal.
Individuals who have the principal responsibility for the financial activities must attest that the application is complete and accurate. As such, the individual(s) that make the attestation can be held personally responsible for the application that is filed and will also be subject to penalties for incorrect and/or fraudulent claims.
Businesses not found to have met the CEWS eligibility after receiving the subsidy will be subject to fines of up to 25% of the amounts received and face up to five years in prison and/or a 200% penalty for fraudulent claims.
The CRA may publish the name of any employer that makes an application for the CEWS.
We Are Here to Help
This could become a complex application with high risk. Please contact our firm if you need assistance with the analysis of the legislation as it relates to your organization, the application process, qualifications, calculations and analysis.
This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2020 Shajani LLP