Canada Emergency Wage Subsidy (CEWS) – Everything You Need to Know
Posted onCanada Emergency Wage Subsidy (CEWS) – Everything You Need to Know
CEWS is the official name for the 75% Canada Emergency Wage Subsidy.
Registration for the 75% Canada Emergency Wage Subsidy will commence on April 27, 2020 and processed in bulk on May 4 so that payment can begin on May 5. The Canada Revenue Agency has assigned 3,000 auditors to manually review certain claims. Should your claim not be immediately funded, you should have a response from your manual review within 72 hours. 100% of claims made by large employers are expected to be reviewed. We assume “large employer” means those that are required to remit more frequently than monthly.
To be eligible for CEWS, you must:
- Be an eligible employer
- Have experienced an eligible reduction in revenue, and
- Have had a CRA payroll account on March 15, 2020
Eligible employer include:
- Individuals (including trusts)
- Taxable corporations
- Partnerships consisting of eligible employers
- Non-profit organizations
- Registered charities
Eligible revenue reduction
The reduction is calculated by comparing your eligible revenue for the starting month of the claim period with your baseline revenue.
The baseline revenue can be one of the following:
1. The revenue you earned in the corresponding month in 2019, or
2. The average of the revenue you earned in January and February 2020
NOTE: You cannot change the baseline revenue method for subsequent calculations for the other 2 periods. For example, if you use baseline revenue as revenue you earned in March 2019 in period 1, then period 2 baseline revenue must be revenue you earned in April 2019.
The table list below outlines each claim period and the month for which a decline in revenue would be required:
Period 1
Claiming period: March 15 to April 11
Reference period for eligibility - March 2020 over:
· March 2019 or
· Average of January and February 2020
Period 2
Claiming period: April 12 to May 9
Reference period for eligibility - April 2020 over:
· April 2019 or
· Average of January and February 2020
Period 3
Claiming period: May 10 to June 6
Reference period for eligibility - May 2020 over:
· May 2019 or
· Average of January and February 2020
Once you qualify for CEWS for one claim period, you will automatically qualify for the following claim period. Therefore, if you qualify for period 1, you will automatically qualify for period 2 and 3. If you didn’t qualify for period 1, then you will have to calculate the reduction again using the same baseline revenue in period 1. If you qualify in period 2, then you automatically qualify for period 3.
Eligible employees
They must be employed by you during the claim period and not be without pay for 14 or more consecutive days in that period.
For employee who were laid off, they can be eligible retroactively if you rehire them and their retroactive pay and status meet the eligible criteria for the claim period.
If the rehired employees received Canada Emergency Response Benefit, they may be required to repay some or all the amounts they received.
Eligible remuneration
Eligible remuneration includes amounts you paid an employee as salary, wage, and other taxable benefits, fees and commissions. Basically, this is the gross pay.
Subsidy calculation
For each qualifying period, the maximum weekly subsidy is the least of the following except non-arm’s length employees:
1. 100% gross pay for the week
2. 75% of average weekly gross pay from the period of January 1, 2020 to March 15, 2020
3. $847
For non-arm’s length employees such as business owners and their family, it is the least of the following:
1. 100% gross pay for the week
2. 75% of average weekly gross pay from the period of January 1, 2020 to March 15, 2020.
3. $847
Here is a link to where you can find the CRA calculator for this subsidy and download the excel calculation spreadsheet.
If any of the following applies, they will be deducted from the subsidy:
1. 10% temporary wage subsidy for employees’ amount
2. Amounts received through ESDC’s work sharing program
If the employer has eligible employees on leave with pay, the total amount of employers EI and CPP contributions paid to those employees are added to the subsidy.
How to apply
Applications open April 27th and you can apply in the following forms:
1. You may apply using My Business Account
2. We can apply on your behalf using the represent a client portal
3. There will be an online application form that will be available beginning April 27th
For more information on getting ready to apply please click the link below.
Important things to note
As this is a very lucrative program with very specific qualifications, we expect that claims will be audited very frequently. In order to mitigate this, we recommend that you do the following:
1. Keep diligent records of your calculations as well as any backup documents you have used to prepare those calculations.
2. Keep all your payroll records for 7 years. This would be our recommendation all the time but is exceedingly important if you are accessing this subsidy.
3. Remember that you can engage us to assist with any CRA audit. We also offer a product called audit shield that may minimize the cost to you of us providing this assistance with any CRA audit you may encounter. Please reach out to info@colbysteckly.ca for more information and/or a quote.