Canada Emergency Wage Subsidy to Extend into December

LAST UPDATED JULY 14, 2020

On Saturday, April 11, Parliament approved Bill C-14, the Canada Emergency Wage Subsidy (CEWS) legislation. The CEWS program aims to stabilize the economy and help employers deal with the current economic crisis. It provides financial support to employers – including nonprofit organizations and charities – to mitigate the need for future layoffs, as well as support employers in bringing back employees who are currently on temporary layoffs, or to rehire employees who were dismissed.

Extension of relief period: On July 14, the federal government extended the CEWS program until December 2020. Initially, the CEWS provided a 75% wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020 with three separate qualifying periods. Since then, the federal government has extended the program, first, to August 29, 2020, and now to December 2020.

DETAILS AND ELIGIBILITY

Employers must show that their organization has been negatively impacted by COVID-19. The CEWS program will cover wages for March to December 2020. However, the government intends to revisit the duration of the program given the implications of COVID-19. The details of the CEWS include the following:

  • Eligible employers include nonprofit organizations, registered charities, and nonprofit corporations for scientific research and experimental development.

  • The CEWS will cover up to 75% of employees’ salaries and wages, amounting to a maximum of $847 per week per employee. There is no limit on how much an organization can receive.

  • The subsidy is for eligible employers who have a drop of at least 15% of their revenues in March and at least a 30% drop in April and May.

  • Eligible employers will receive a 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, and other contributions for employees on paid leave.

  • The CEWS is retroactive to March 15, 2020.

  • An eligible employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees.

  • Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.

  • New employees including existing staff are eligible for the CEWS.

  • To ensure compliance and maintain the integrity of the program, the employer is required to repay the full amount paid under the CEWS if they do not meet the eligibility requirements.

Additionally, those employers who artificially reduce their revenue in order to apply for the subsidy will face an added penalty equal to 25% of the amount received under the CEWS program. Penalties may apply in cases of fraudulent claims.

Click here to see if you are eligible for the CEWS program.

CALCULATING REVENUES

The Government now has a clear definition of "revenue” that is appropriate for nonprofit organizations’ and charities’ specific circumstances. The details on how to calculate revenue include:

  • The calculation includes most forms of revenue, excluding revenues from non-arm’s length persons.

  • Nonprofit organizations and charities can choose whether or not to include revenue from government sources (e.g. grants) as part of their calculation.

  • To calculate whether an employer has experienced a decrease in revenue, the reference period can be the same month in the prior year (for example, March 2019 compared to March 2020) or the average of January and February 2020. Those employers who choose to elect January and February 2020 as their reference period, will automatically apply for purposes of determining an employer’s entitlement for all three qualifying periods. For nonprofit organizations and charities that did not exist as of March 2019, January and February reference periods will automatically apply.

  • Employers can either select the general year-over-year approach or the alternative approach when first applying for the CEWS and are required to use the same approach for the entire duration of the program.

  • Revenues can be calculated using the accrual method or the cash method – whichever best captures an organization’s loss – but not a combination of both. The chosen method to calculate revenue must be used for the entire duration of the program.

The CRA has also launched the Canada Emergency Wage Subsidy calculator to support employers as they prepare to apply for the CEWS. The CEWS calculator prepares employers with important information they can use to make more informed decisions about retaining and re-hiring workers. The CRA plans on holding information sessions in the coming days for eligible employers. CCVO will update this page when the dates for the information sessions are released.

Click here for an infographic to estimate the amount of your wage subsidy and here to calculate your subsidy amount.

HOW TO APPLY

Applications for the wage subsidy program are now open. To receive the CEWS, employers must file an application through the organization’s existing account on the Canada Revenue Agency’s (CRA) My Business Account portal.

For more information on the CEWS, click here.

policy news, community recoveryGuest UserCEWS, Bill C-14, Canada Emergency Wage Subsidy, COVID-19Comment