On April 8, 2020, Prime Minister Justin Trudeau provided updates on the Canada Emergency Wage Subsidy (the "Subsidy"). This follows finance Minister Bill Morneau's previously announced details on the $71B program. In particular, the Federal government announced a relaxation of the threshold to obtain the wage subsidy for the month of March.
Eligibility
The Subsidy applies to non-publicly funded employers, including partnerships, individuals, and corporations, non-profit organizations, and charities. Number of employees is not a factor in determining eligibility. In order to be eligible, an employer must have experienced a decrease in revenue due to COVID-19 in the month of March, April or May. Each month is a separate measurement period for which subsidies are available. The Prime Minister announced on April 8, 2020 that businesses must show a revenue decline of 15% or more for the month of March to qualify for the subsidy. For the months of April and May, it appears that employers must continue to show the previously announced decrease in revenue of 30% or more. The decline will be determined by comparing March, April, or May, 2020 business revenues to the same month in 2019, or alternatively, to an average of the revenue earned in January and February, 2020. In recognition of the time between when revenue is earned and when it is paid, revenue may be measured either on the basis of accrual accounting (as it is earned) or cash accounting (as it is received). Special rules will also be provided to address issues for corporate groups, non-arm's length entities, and joint ventures. Charities and non-profit organizations can choose to include or exclude government funding when calculating their loss of revenue.
Employers who do not qualify for the Subsidy can immediately take advantage of the previously announced Temporary Wage Subsidy for Employers which covers 10% of wages paid from March 18, 2020 to June 19, 2020, up to a maximum of $1,375 per eligible employee and $25,000 per employer.
Coverage
The Subsidy will cover up to 75% of an employee's first $58,700 in wages, providing a maximum of $847/week per employee. The Prime Minister announced on April 8, 2020 that eligible employers will also be entitled to receive a 100% refund for certain employer-paid contributions to Employer Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. The Subsidy will apply retroactively to March 15, 2020 and extends to June 6, 2020. Organizations are encouraged to use the Subsidy to re-hire employees who were previously laid off due to COVID-19 and, if possible, cover the remaining 25% of the employee's wage. Both the Prime Minister and Finance Minister have emphasized that Subsidy funds are to be used solely for the payment of employee wages and that improper use of the program will result in severe penalties.
There is no overall limit on the subsidy amount that an eligible employer may claim.
Timing
The government is continuing to finalize details for the Subsidy but has advised that businesses will be able to apply through a Canada Revenue Agency portal, which will be available soon.
Once businesses have applied, it is expected that funds will be made available to the business in 6 weeks.
More information will be available in the coming days. Check our COVID-19 page for updates as new details emerge.
Additional Information on Government Measures
EKB's team remains committed to helping you and your business through these challenging times. More information about government measures to support individuals and businesses during the pandemic is available in our regularly updated article.
This article was updated on April 8, 2020.
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