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More time, more complexity, more benefits.

(Updated 09.24.2020)

The CEWS was put in place for an initial 12-week period from March 15 to June 6, 2020, providing a 75% wage subsidy, and later a 10% subsidy, to eligible employers. On May 15, 2020, it was announced that the Government of Canada would extend the CEWS by an additional 12 weeks to August 29, 2020. On the initial four periods (to July 4, 2020) visit our blog post here.

On September 23, 2020, the government proposed amendments to the CEWS legislation that includes an extension of the Canada Emergency Wage Subsidy to the summer of 2021, with no further details provided.

All eligible employers with a decrease in revenue, regardless of the percentage, are entitled to the CEWS.

Effective July 5, 2020, the CEWS consists of two parts:

  • base subsidy available to all eligible employers that are experiencing a decline in revenues, with the subsidy amount varying depending on the scale of revenue decline; and
  • top-up subsidy of up to an additional 25% for those employers that have been most adversely affected by the COVID-19 crisis.

The two-part CEWS would apply concerning the wages of active employees. A separate CEWS rate structure would apply to furloughed employees. In addition, a safe harbour would be available to ensure that, through August 29 (periods 5 and 6), employers would have access to a CEWS rate that is at least as generous as they would have had under the initial CEWS structure.

Base Subsidy for Periods 5 (July 5-August 1) and 6 (August 2-August 29) 

  • Revenue decrease required to access subsidy: Any % decline
  • Revenue Comparison: Same as periods 1 – 4; either current year calendar month vs the same month in 2019 (general approach) or an average of Jan/Feb 2020 (alternative approach).

Note: The employer is eligible to change the basis of the calculation (current year vs prior year or current month vs average of Jan/Feb 2020) for Period 5.  The chosen method will apply for Period 5 onward.

  • New Deeming Rule: If revenue decrease percentage for the current month is lower than the prior month, the decrease is deemed to be the higher prior month, thereby providing a larger subsidy amount.

 

Subsidy Calculation:

1.2 x % revenue decrease x $1,129  per employee/week.

i.e.) If an eligible employer had a 25% revenue decline in July the subsidy per employee per week would be as follows:

1.2 x 25% x $1,129 = $338.70

Under the previous program rules, an employer with a 25% revenue decline would have not qualified for any subsidy at all.

If revenue decline greater than 50%:

60% x $1,129 per employee/week + Top Up (see below)

  • Safe Harbour Rule: For periods 5 and 6 only, if the eligible employer had a revenue decline of more than 30% for periods 5 and 6 (similar to the requirements for period 1 – 4), the subsidy cannot be lower than what would be available under the rules for periods 1-4 regardless of the calculated amounts in periods 5 and 6.

 

Top Up Subsidy:

In addition to the base CEWS subsidy, eligible employers may qualify for a top-up.

  • Revenue decrease required to access subsidy: More than 50% decline (using revenue comparison below).
  • Revenue Comparison: Average revenue for the preceding three calendar months vs average revenue for the same 3 months in 2019 OR average of Jan/Feb 2020.

Subsidy Calculation:

(3-month average decline more than 50%)

1.25 X (revenue decline – 50%) X 1,129.

i.e) If an eligible employer had a 65% average revenue decline for April, May and June, for the July application, the top-up subsidy per employee per week would be as follows:

1.25 x (65% – 50%) x $1,129 = $211.69

This amount would be added to the base subsidy calculation of $677.40 (60% x $1,129) for a total subsidy of $889.09.  This amount is higher than the previous maximum of $847/employee per week.

 

 

Base Subsidy for Periods 7 (August 30-September 26), 8 (September 27-October 24) and 9 (October 25-November 21)

  • Revenue decrease required to access subsidy: Any % decline.
  • Revenue Comparison: Same as periods 1 – 4; either current year calendar month vs the same month in 2019 (general approach) or the average of Jan/Feb 2020 (alternative approach).

Note: the chosen method in Period 5 will apply to periods 7-9.

Subsidy Calculation:

Factor x % revenue decrease x $1,129 per employee/week.

The factor is as follows:

  • Period 7 – 1.0
  • Period 8 – 0.8
  • Period 9 – 0.4

If revenue decline greater than 50%:

  • 50% based on the period) x $1,129 per employee/week + Top Up (see below)
  • 40% based on the period) x $1,129 per employee/week + Top Up (see below)
  • 20% (based on the period) x $1,129 per employee/week + Top Up (see below)

 

The declining factor in periods 7-9 is to account for an expected return to “normal” revenues and to reduce the overall subsidy amounts on a sliding scale rather than to cease all at once.

 

Top Up Subsidy:

In addition to the base CEWS subsidy, eligible employers may qualify for a top-up.

  • Revenue decrease required to access subsidy: More than 50% decline (using revenue comparison below)
  • Revenue Comparison: Average revenue for the preceding three calendar months vs average revenue for the same 3 months in 2019 OR average of Jan/Feb 2020.

Subsidy Calculation:

(3-month average decline more than 50%)

1.25 X (revenue decline – 50%) X 1,129.

i.e) If an eligible employer had a 65% revenue decline in June, July and August, for the September application, the top-up subsidy per employee per week would be as follows:

1.25 x (65% – 50%) x $1,129 = $211.69

 

The elimination of the 30% revenue threshold allows for eligible employers with a decline in revenues, regardless of the size of the decline, to qualify for subsidy payment.  The idea is to encourage hiring and eliminate any potential hesitancy to grow revenues for fear of lost subsidy funding.

 

 

Furloughed Employees

Periods 5 & 6

The benefit for these periods will be the same as periods 1-4 being the greater of 75% of the remuneration paid to a maximum of $847/week and 75% of the pre-crisis weekly remuneration to a maximum of $847 or the amount paid, whichever is less.

Periods 7 to 9

Adjustments to the program will be made to align it with CERB/EI.  CEWS for furloughed employees will be available to eligible employers that qualify for the base rate and/or the top-up for active employees in the relevant period.

The employer portion of contributions (CPP &EI) will continue to be part of the CEWS program.

Additional information will be added once it becomes available. 

Eligible Remuneration:

No changes are proposed from the original definitions.  Details can be found in our previous CEWS blog post here.

Baseline Remuneration Changes:

Default period remains at Jan 1, 2020 – March 15, 2020

An employer can elect to use:

  • Periods 1 – 4 – Mar 1 – May 31, 2019
  • Period 5 – Mar 1 – Jun 30, 2019
  • Period 6 – 9 – Jul 1 – Dec 31, 2019
    • Average weekly remuneration excludes any period of 7 or more consecutive days without remuneration.
    • The election can be made on an employee by employee basis.
    • Baseline remuneration is only relevant for non-arms length employees.

CEWS for arms-length employees continues to be based on actual amounts paid.

 

New Qualifying Periods, Existing Reference Periods and Previous Reference Periods

The extension of CEWS necessitates the creation of the following additional qualifying periods and reference periods:

Period Number New Qualifying Period Existing Reference Period Previous Reference Period
Period 4 June 7-July 4, 2020 June 2020 June 2019
Period 5 July 5-August 1, 2020 July 2020 July 2019
Period 6 August 2-August 29, 2020 August 2020 August 2019
Period 7 August 30-September 26, 2020 September 2020 September 2019
Period 8 September 27-October 24, 2020 October 2020 October 2019
Period 9 October 25-November 21, 2020 November 2020 November 2019

There may also be, prescribed by regulation, one additional qualifying period ending no later than December 31, 2020. If there is an additional qualifying period, the current reference period and prior reference period in respect of that qualifying period will also be prescribed.

For the qualifying periods beginning after July 4, 2020, an employee need not have been without remuneration for 14 or more consecutive days in the qualifying period in order to be an eligible employee.

Eligible Employers and Employees

Eligible employers include:

  • Individuals,
  • Taxable corporations and trusts,
  • Partnerships consisting of eligible employers,
  • Non‑profit organizations and registered charities.
  • Public institutions are generally not eligible for the subsidy.

As announced on May 15, 2020, eligible employers also include the following groups:

  • Partnerships that are up to 50-per-cent owned by non-eligible members;
  • Indigenous government-owned corporations that are carrying on a business, as well as partnerships where the partners are Indigenous governments and eligible employers;
  • Registered Canadian Amateur Athletic Associations;
  • Registered Journalism Organizations; and
  • Non-public colleges and schools, including institutions that offer specialized services, such as art schools, driving schools, language schools or flight schools.

An eligible employee is an individual who is employed in Canada. Effective July 5, 2020, the eligibility criteria would no longer exclude employees that are without remuneration in respect of 14 or more consecutive days in an eligibility period.

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