Canada Emergency Wage Subsidy (CEWS)

UPDATE June 8, 2020 - Instructions to access CEWS at KCCU and more links

To support businesses that are facing revenue losses and to help prevent layoffs, the government is providing eligible employers a temporary wage subsidy. The subsidy will cover 75 percent of each employee’s wages, but only for the first $58,700. That means the maximum amount of subsidy would translate to $847 per week unless an employer tops up any salary exceeding $58,700 from the business’s own funds. The wage subsidy is available for corporations, non-profits and charities whose gross revenues have decreased by at least 15 percent in March and 30 percent in April and May compared to the same month last year or an average of their revenue earned in January and February 2020.

An employer’s revenue for this purpose is its revenue in Canada earned from arm’s-length sources. Revenue is calculated using the employer’s normal accounting method, and exclude revenues from extraordinary items and amounts on account of capital. Employers are allowed to calculate their revenues under the accrual method or the cash method, but not a combination of both. Employers select an accounting method when first applying for the CEWS and are required to use that method for the entire duration of the program.

There will be three claiming periods and once an organization has applied, they automatically qualify for the other periods. Applications will be available through a CRA My Business Account as of June 5, 2020.

More information can be found here.

10% Temporary Wage Subsidy

The 10% wage subsidy is still available for organizations that cannot receive the Canada Emergency Wage Subsidy. Originally, the government announced a wage subsidy of 10% for Canadian Controlled Private Corporations (CCPCs), including cooperative corporations, non-profit organizations, and charities. The subsidy is only available to a CCPC if its taxable capital employed in Canada for the preceding tax year, calculated on an individual or associated group basis, is less than $15 million.

This subsidy applies from March 18 to June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.

The subsidy must be calculated manually, either by you or whoever is responsible for making your payroll remittances. The CRA will not automatically calculate the allowable subsidy. The calculation is the following: Planed income Tax remittance – 10% subsidy = New Income Tax remittance. You cannot however reduce your remittance of Canada Pension Plan contributions (CPP) or Employment Insurance (EI) premiums.

You do not need to apply for the subsidy. You will continue deducting income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from salary, wages, bonuses, or other remuneration paid to your employees, as you currently do.

The subsidy is calculated when you remit these amounts to the CRA. Once you have calculated your subsidy, you can reduce your current payroll remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy.

More information can be found here.