Last week the government of Canada announced that it will offer a wage subsidy of up to 75% for qualifying businesses, backdated to March 15, 2020. You can read CCPartners' blog on that announcement here. At first we thought this was a substantial increase from the 10% federal wage subsidy for small businesses introduced previously, and a welcome expansion to the previously announced subsidy only for small and medium businesses (undefined). However, it now appears that the Canada Emergency Wage Subsidy is an additional subsidy accessible for employers. Some details remain unannounced, but now we have somewhat of a clearer picture – pending legislation actually being passed.
Here is what we know as of April 1, 2020:
- Eligible employers can receive the subsidy for up to 12 weeks, retroactive to March 15, 2020, expiring on June 6, 2020.
- Eligible employers include individuals, taxable corporations, and partnerships consisting of eligible employers, as well as non-profit organizations and registered charities.
- Public bodies including municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals are not eligible for the subsidy.It appears that most employers will not be disqualified just for receiving some public funding, and it may be that non-profit organizations and registered charities are specifically eligible.
- The subsidy is available only to businesses who have seen a 30% revenue decrease due to COVID-19.Revenue means revenue from business carried on in Canada earned from arm's-length sources, calculated using the employer's normal accounting method, and excluding extraordinary items.
- A 30% decrease refers to a decrease from the same month in 2019.For example, a business whose revenue in April 2020 is at least 30% less than their revenue in April 2019 would be eligible for the subsidy.
- A different and as of yet undefined calculation for revenue will apply to non-profits and charities.
- The subsidy amount for a given employee on eligible
remuneration paid between March 15 and June 6, 2020 would be the
- 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee's pre-crisis weekly remuneration, whichever is less.
- Employers who are eligible for the Canada Emergency Wage Subsidy are expected where possible to maintain existing employees' pre-crisis employment earnings, although there are as of yet no details on what is actually required in this respect.
- Remuneration eligible to be subsidized includes salary, wages, and other remuneration for which employers would generally be required to withhold or deduct amounts to remit to the Receiver General.Severance pay, or items such as stock option benefits or the personal use of a corporate vehicle are not eligible to be subsidized.
- There will be no limit on the subsidy amount that an eligible employer may claim.
- The periods for eligibility for employers established no later
than February 2019 are as follows:
Claiming Period Reference Period for Eligibility Period 1 March 15 - April 11 March 2020 over March 2019 Period 2 April 12 – May 9 April 2020 over April 2019 Period 3 May 10 – June 6 May 2020 over May 2019
- Eligible employers will be able to apply online for the Canada Emergency Wage Subsidy through their My Business Account portal with the Canada Revenue Agency.
- Employers who do not meet eligibility requirements will be required to repay amounts received under the Canada Emergency Wage Subsidy.Penalties may apply in cases of fraudulent claims.
- For any employer who is eligible for the Canada Emergency Wage Subsidy and the 10 per cent wage subsidy previously announced, any benefit claimed from the 10 per cent wage subsidy in a claiming period would correlatively reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in the same period.
- Employers will not be able to claim the Canada Emergency Wage Subsidy for remuneration paid to an employee in a 4-week period for which the employee receives money from the Canada Emergency Response Benefit ("CERB").
- Wage subsidy received by an employer will be considered government assistance and be included in the employer's taxable income.
Certainly questions remain for employers. Do I have any productive work for my employees? How many of my employees can I have working? What can I do if my business is eligible for the Canada Emergency Wage Subsidy, but my employees would benefit more from collecting CERB?
More details with respect to the specifics of the federal wage subsidy will have to be released when parliament is recalled to pass the corresponding legislation. The details of this article were retrieved from the Government's website here. As always, the team at CCPartners will continue to monitor the situation and update our readers through our COVID-19 blog series.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.