Since the enactment of the original CEWS legislation contained in Bill C-14 which received Royal Assent on April 11, 2020, the government has put forth numerous proposals meant to expand and enhance the Canada Emergency Wage Subsidy. However, the proposals are yet to be passed into law. The latest proposals were announced on July 17, 2020, which if enacted will among other things, serve to extend the wage subsidy entitlement to December 19, 2020. At the time of writing this article, the Bill is still in its first reading in the House of Commons. However, employers have been able to make their CEWS subsidy claims for period 4 even though technically the law allowing this has yet to be enacted.
Here are some highlights of the proposed changes
- Effective July 5, 2020, the CEWS will be divided into two parts – a base subsidy and a top-up subsidy.
- Employers who qualify for the base subsidy will be eligible for a benefit of up to 60% of the maximum weekly remuneration of $1,129 which is a reduction of the current CEWS rate of 75%
- A new « top up » subsidy has been introduced to help those employers who have been particularly hard hit by the COVID-19 crisis
- Employers who qualify for the top-up subsidy will be eligible for a benefit of up to 85% of the maximum weekly remuneration of $1,129 which is an increase over the current CEWS rate of 75%
- The criteria to qualify for the maximum base subsidy will require a revenue decline of 50% whereas under the current program only a 30% decline in revenue was required to receive the maximum subsidy
- Under the new CEWS even employers with less than a 30% decline in revenue could now qualify for the subsidy albeit at a lesser amount
- A change in the reference period rules will allow for a change of the reference periods to be used for purposes of determining the percentage of revenue decline for periods 5 (July) and subsequent periods.
- A change which will allow entities who usually use the cash method as their regular accounting method to elect to use the accrual method for the purpose of calculating their percentage of revenue decline.
- An extension to the deadline for applying for the CEWS from September 30, 2020 to January 31, 2021
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Author: Mona Tessier
Principal, Indirect Tax Specialist