04/03/2020
On April 1st, 2020, Canada’s Finance Minister Bill Morneau provided some additional details with regards to the Canada Emergency Wage Subsidy (CEWS) program, at an estimated cost of $71 billion. We expect further details in the days and weeks ahead:
WHAT IS CEWS?
The CEWS is a wage subsidy that will cover 75 per cent of an employee’s salary, up to a maximum of $847 per week. It is available for qualifying employers, for up to 3 months, retroactive to March 15, 2020.
QUALIFYING FOR CEWS?
This subsidy will be available to Canadian (non-publicly funded companies, charities, not for profits, partnerships and individuals) who have a 30% decrease or more in Gross Revenues since this time last year.
To qualify, Employers will have to demonstrate this decrease by comparing this year’s revenues with revenues for the same month last year, for the months of March, April, and May. Qualifying Employers will need to reapply each month and will have to demonstrate the pre-crisis income of their workers and that they have actually continued to pay their workers. Qualifying Employers will be required to swear/attest that they are doing everything they can to pay the remaining 25% of their workers income. Although this will not always be possible, the system will be flexible. There is no maximum number of employees that will affect eligibility.
SITUATIONS OF NO SALES HISTORY?
In some situations, an employer may not be able to show a decrease in revenue compared to the same month last year. In these circumstances, for example start-ups, new businesses, or businesses with significant revenue lags, the subsidy has not yet been clarified. The Government is working on providing further details regarding these types of situations.
EARLIER 10% WAGE SUBSIDY?
The 75% CEWS does NOT replace the previously announced 10% wage subsidy program. The 10% wage subsidy will still be available to employers that don’t qualify for the 75% CEWS.
ADMINISTRATION OF CEWS?
All Employers will be able to apply for CEWS through an online Portal provided by the Canada Revenue Agency (CRA) within the next 3-6 weeks. The CEWS will be made by direct payment(s) to qualifying employers. The CEWS will not be made by a series of reductions of payroll remittances, as is being done for the 10% wage subsidy program. As such, Employers are advised to set up on direct deposit with CRA asap in order to receive their subsidy more quickly.
AVAILABILITY OF CEWS?
The CEWS funds are expected to be available in approximately 6 weeks and is intended to help Employers keep and return their workers on payroll. Please note that there will be severe consequences and penalties for abusers of the program. The CEWS program is aimed at protecting the Economy which includes the Canada Emergency Response Benefit (CERB), aimed at helping Canadians who have lost their jobs, and the Canada Emergency Business Account (CEBA), which is aimed at helping businesses through access to business loans.
We expect more details will follow soon and remind you that this article has been written in general terms to provide broad guidance only. It should not be relied upon to cover specific situations and you should not act upon the information contained herein without obtaining professional advice specific to your circumstances. Please contact our office to consult or discuss this information in the context of your specific circumstances as we accept no responsibility for any loss or damages that may result from reliance on this information in this article.
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Yours Truly,
Charles S. Ghadban, CPA, CMA
Charles Ghadban Accounting
Strategic Tax & Accounting Services
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