On April 11, 2020, the Federal Government enacted legislation for its new Canada Emergency Wage Subsidy ("CEWS"). The CEWS is a $73 billion subsidy intended to support the well-being of workers, maintain employment relationships, and reduce claims on the employment insurance regime. In particular, the CEWS is a cash subsidy paid by the Federal Government to eligible employers based on the amount of wages paid to employees.
When the CEWS program was first announced, the Federal Government excluded from eligibility all government-owned corporations that are tax exempt under s. 149(1)(d.5) of the Income Tax Act. The apparent purpose for rendering this broad category of corporations ineligible was to exclude public bodies such as hospitals, universities, and municipalities from accessing the CEWS program. However, this broad exclusion also appeared to potentially have the effect of excluding, whether intentionally or not, tax-exempt First Nation economic development entities owned by Indigenous Governments.
Fortunately, on May 15, 2020, as part of its ongoing response to the economic impacts of the COVID-19 pandemic, the Federal Government announced that it has formally extended the application of the CEWS program to include tax-exempt Indigenous Government-owned corporations. In particular, the Federal Government has extended eligibility to Indigenous Government-owned corporations that are carrying on business and are tax-exempt under s. 149(1)(d.5) of the Income Tax Act, as well as their wholly-owned subsidiaries that are carrying on business and are tax-exempt under s. 149(1)(d.6) of the Income Tax Act.
In addition, the Federal Government has announced that partnerships where each partner is either an Indigenous Government or an "eligible employer" will be deemed eligible entities for the purposes of the CEWS. In these contexts, Indigenous Governments would include First Nation Bands, self-governing Indigenous Governments, and other comparable Indigenous governing bodies.
The above noted changes are retroactive to April 11, 2020, which means that they apply to the first qualifying period for the CEWS starting March 15, 2020 and subsequent qualifying periods. In addition, the original 12-week period for accessing the CEWS has been extended by the Federal Government for an additional 12-weeks, to August 29, 2020 for all eligible employers.
In order to assist employers that want to access the CEWS, our colleagues have prepared a series of helpful articles about this program:
- For more general information on the CEWS, please see "Canadian Tax—The New 75% Wage Subsidy".
- For information on accessing a CEWS calculator, please see "Canada Emergency Wage Subsidy Calculator Now Available".
In addition to the CEWS, Gowling WLG LLP's Indigenous Law practice group has synthesized the various federal funding programs available to assist Indigenous communities, individuals, and businesses during the COVID-19 pandemic:
- For more information on these funding programs, please see "Canada's COVID-19 Economic Response Plan: Federal Funding for Indigenous Communities and Businesses".
Gowling WLG LLP's Indigenous Law practice group has also been keeping up to date on recent governance issues affecting Indigenous Nations:
- For information on Indigenous communities' authority to restrict access to reserve lands during the COVID-19 pandemic, please see "COVID-19 and Indigenous Communities: Authority to Restrict Access".
- For information on the authority to postpone First Nation elections during the COVID-19 pandemic, please see "COVID-19 and First Nation Elections: Options for Dealing with the 'Governance Gap'".
- For information on exercising Band Council powers during the COVID-19 pandemic, please see "COVID-19 and Band Council Decisions: Exercising your Powers During the Pandemic".
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