75% Wage Subsidy For Canadian Businesses Affected By COVID-19 (CEWS)

Written by Caitlin Wood

75% Wage Subsidy For Canadian Businesses Affected By COVID-19 (CEWS)

Categories

Business Covid-19 Wage Subsidy

Updated On: April 14, 2020 – The federal government has passed the 75% wage subsidy, also knows as the Canada Emergency Wage Subsidy (CEWS). More information coming soon, however below are some resources to get you started:

Eligible Periods

Visit Canada.ca for more information

The federal government has announced that it will increase the wage subsidy promised in early March from 10% to 75%. Prime minister Justin Trudeau explained, “It’s becoming clear that we need to do more — much more — so we’re bringing that percentage up to 75 percent for qualifying businesses.” Canadian small businesses have been particularly affected by the economic effects of the COVID-19 pandemic. With all non-essential businesses closed in the country’s two largest provinces, Ontario and Quebec, there is simply no revenue to continue to support their employees. 

What We Know About The Government Funded Wage Subsidy

As this is breaking news and as the government’s response to the COVID-19 pandemic changes on a daily basis, the exact details of the wage subsidy are not clear, but this is what we know so far:

• March 18: The Trudeau government announces a 10% wage subsidy to help support Canadian businesses
• March 27: Trudeau announces during his daily update that the government-funded wage subsidy would be increased to 75%
• The wage subsidy will be backdated to March 15th
• The government will cover up to 75% of a salary on the first $58,700, which is about $847/week.
• The CEWS will be available for 12-weeks, from March 15, 2020 to June 06, 2020.
• In addition to the 75% wage subsidy, the government of Canada has included a “Refund for Certain Payroll Contributions”. This would cover 100% of certain employer-paid contributions to EI, CPP, QPP, QPIP. This refund will cover employer contributions to employees who are on leave with pay.

What We Don’t Know Yet About The Wage Subsidy

As more information is provided by Trudeau and his government, we will continue to update the information provided here. But for now, there are still some unanswered questions concerning the newly increased government subsidy for Canadian businesses.

• Will there be other eligibility requirements besides the 30% revenue loss?
• How long before businesses will start to benefit?

Who Can Apply For CEWS?

Private corporations, taxable corporations, and partnerships who see a loss in revenue of at least 15% in March or 30% thereafter can apply for CEWS. Municipalities, crown corporations, hospitals, schools and other public bodies are not eligible for this subsidy.

How Do You Calculate Your Revenue Decline?

There are two ways you can show your decline in revenue. One, you can compare your current month’s revenue to the same month last year. For example, you may compare your revenue in March 2020 in comparison to March 2019. You can also compare your current revenue to your average revenue in January and February 2020. Please check the table above for more details.

How Do You Apply For CEWS?

Eligible businesses can apply through the CRA’s my business account portal. You will have to provide proof of loss in revenue and remuneration paid to employees.

How Will They Receive the Money?

If your business has registered with direct deposit with the CRA, then you can expect to receive your subsidy through direct deposit shortly after your application has been submitted.

What about the 10% Wage Subsidy Program?

The Government of Canada‘s 10% Wage Subsidy program will allow employers to “reduce the amount of payroll reduction required to be remitted to the CRA”. It is a 3-month long program, designed to provide temporary relief. It can be used in combination with the 75% CEWS, however, those that use the 10% wage subsidy benefit for a certain period, will be eligible for less CEWS for the same period.

Main Goals of The Wage Subsidy

As small and medium-sized businesses in Canada continue to deal with the economic effects of the pandemic, the increase in the wage subsidy is meant to help:

• Allow businesses to keep their employees on payroll
• Maintain relationships with employees so help make the process of reopening as smooth as possible
• Help Canadians employed by small and medium-sized businesses deal with the financial strain of the COVID-19 pandemic

Trudeau Government Announces Canada Emergency Business Account (CEBA)

In addition to increasing the wage subsidy, Trudeau also announced that a new Canada Emergency Business Account would be created in order to provide loans to small and medium-sized businesses in Canada. Businesses will be able to qualify for loans up to $40,000, interest-free for the first year. Moreover, up to $10,000 may be forgiven under certain circumstances. Learn how to apply by clicking here. GST, HST and custom duty payments will be deferred till June in an effort to reduce the financial pressure many businesses are facing.

Importance of Supporting Businesses

In order to bounce back from this crisis, Prime minister Justin Trudeau explains that these small businesses need to be able to restart their operation after the crisis as they are the backbone of society. By providing businesses affected by COVID-19 a 75% wage subsidy, these companies will be able to retain their employees and be able to continue business after the crisis ends. As such, $107 billion has been invested in response to the crisis.