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COVID-19 Update - The Emergency Wage Subsidy, CERB and Emergency Business Account

Updated April 16, 2020


On Saturday evening Parliament passed The Canada Emergency Wage Subsidy (“CEWS” i.e. the 75% wage subsidy), finalizing the detailed law as to how the subsidy exactly works. There were some small changes from the initial guidance that was released on CRA’s website that we had previously shared. The final details can be found here:



Our observations and comments include the following:

  • Eligible employers include individuals, taxable corporations, some partnerships, non-profit organizations and charities (excluding schools) who have seen a 15% drop in their March 2020 revenues and a 30% drop in their April and May revenues when compared to a benchmark.

  • The benchmark when comparing revenue for March 2020 will be March 2019 (for April 2020 it will be April 2019 and for May 2020 it will be May 2019).

  • All employers will be able to use an alternative benchmark using the average of their revenue earned in January and February 2020 (this will likely be applicable to high growth employers or newly established employers). Employers can also choose to use a cash basis or accrual basis of accounting, but are required to use the same method throughout the program.

  • Government funded employers will be able to have the option to calculate their revenues either including or excluding government funding.

  • When calculating revenues, the employer is required to exclude all non-arm’s length source revenue (e.g. revenue from related companies).

  • Special rules for the calculation of revenue are provided where companies are affiliated with each other (options of calculating on a consolidated or non-consolidated basis), or where all or substantially all of a company’s revenue comes a non-arm’s length entity (calculating the revenue loss using the non-arm’s length arm’s length sources of revenue).

  • Once an employer qualifies based on revenue for one period, they automatically qualify for the next period (e.g. if you qualify for period 1 because your revenue has decreased at least 15%, you don’t have to analyze revenue for period 2 because you automatically qualify, however, you would have to show a reduction of more than 30% in revenue to qualify for period 3).

  • The 75% subsidy is the greater of:

    1. 75% of the weekly remuneration paid in the qualifying period to a max weekly amount of $847.

    2. The lesser of:

      • 75% of the employees pre-crisis remuneration (average weekly remuneration paid between January 1, 2020 and March 15, 2020), and

      • The actual amount paid, to a maximum of $847 per week.

  • The 75% wage subsidy is based on renumeration that is earned by the employee in the eligible period.

  • Eligible employees are other than those who have been without remuneration for 14 or more consecutive days in the eligibility period.

  • Special rules exist for non-arm’s length employees (i.e. owners). Owners who were previously compensated in dividends will not have their dividends count towards remuneration. Remuneration will only consist of regular payroll. Owners who were compensated in dividends should consider applying for the Canada Emergency Response Benefit (“CERB”).

  • The CEWS has been expanded to include a 100% refund of employer paid CPP and EI contributions for eligible employees for each week throughout which those employees are on leave with pay (not working, but being paid) and for which the employer is eligible to claim for the CEWS for those employees.

  • The 10% wage subsidy is still a program that can be used by employers who do not qualify for the CEWS. If you have made a claim under the 10% wage subsidy it does not disqualify you from the CEWS, but it will reduce your 75% subsidy accordingly.

How to apply: Eligible employers will be able to apply for the CEWS through the Canada Revenue Agency's My Business Account portal in the coming weeks (not available yet). If you do not have a my business account, please create your account here: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html. If you require assistance with creating your My Business Account, please contact your partner's assistant (Amber, Kayla, Lauren or Lynn) for further assistance.


Example of wage subsidy calculation:


Susan worked for your company since 2016 and was laid off on March 20th. Her weekly average earnings were $800 per week from January 1, 2020 until March 15, 2020. Joe applied at your company on April 4th and had not previously been employed by your company. Your company’s revenue decreased by only 10% in March when comparing to last year as well as the average of January and February 2020 using both a cash and accrual basis of accounting. For April, you have done your projections and you are 100% certain that your revenue will be down by 50% when compared to last year by using a cash basis of accounting. Your company therefore qualifies for period 2 and period 3 (period 3 by virtue of qualifying for period 2 because of a revenue decrease). You decide to hire Susan back starting April 13th, and also hire Joe starting April 13th. Both will work a reduced workload of 3 days per week, but you decide to remunerate each of them $600 per week. The wage subsidy received for Susan will be $600 per week [(a) = $450; (b)(i) = $600; (b)(ii) = $600] while the wage subsidy for Joe will be $450 per week [(a) = $450; (b)(i) = $nil; (b)(ii) = $600].


Canada Emergency Commercial Rent Assistance Program:


Today the government announced that they are working on a program to assist small and medium sized businesses affected by COVID-19 with their commercial rent payments. The government did not provide any details on this program. We expect further details in the coming days.


Canada Emergency Business Account ($40,000 loan):


Today the government announced that they are amending the 2019 gross payroll required to qualify to between $20,000 and $1,500,000 (previously $50,000 and $1,000,000).



As always, please contact your advisor if you have any questions, or if you want to discuss your situation in greater detail.

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