75% Canada Emergency Wage Subsidy
- Will be available for non-publicly funded companies, charities and not for profits
- Must have a 30% (15% for March) decline in revenue compared to the same period last year.
- Or a 30% (15% for March) decline in revenue when comparing average sales in January and February 2020 to March, April or May 2020. This position should help high growth businesses or businesses that didn’t have any sales in the comparative month for 2019.
- If you qualify for one month you are automatically qualified for the following month, this way you know you will receive the subsidy prior to paying your employees.
- Beware you can’t flip back and forth between the 2 methods of calculating the decline, once you pick a route you are stuck with it.
- In some situations revenue will have been recorded for a sale but receipt of the funds may now be in question. As a result CRA is allowing employers 2 ways of measuring revenue. Option 1. on the basis of accrual accounting (as they are earned) or 2. cash accounting (as they are received).
- either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received). Again, the selected method would be required to be used for the entire duration of the program.
- NPO’s and Charities have the option of including or excluding government funding in calculating revenue. – Again, no flip flopping, pick a method.
- For the owner or people related to the owner the 75% subsidy is available but the employee must be employed by the Employer before March 15th 2020 and the subsidy is limited to 75% of “pre-crisis remuneration”
- “Pre-crisis remuneration” for a given employee would be based on the average weekly remuneration paid between January 1 and March 15 excluding any seven-day periods of zero remuneration.
- Employers must be able to prove they are doing everything possible to pay the remaining 25% of the wages
- Employers are encouraged to rehire recently laid off employees
- Planning point: If you qualify for both the 10% wage subsidy and the 75% wage subsidies it may be faster for you to get the 10% subsidy and then you will receive the remaining 65% once your application has been approved.
- In cases where there is insufficient work for keep employees busy so they are doing no work whatsoever the employer is entitled to receive 100% of the employer-paid contributions to CPP and EI. This amount is not subject to the $847 weekly limit.
- Caution: If am employee collected CERB the 75% wage subsidy may be unavailable so make sure you pick the most beneficial program.
- Beware! Very stiff and severe penalties for those that take advantage of the system are being proposed perhaps as high at 225%
How do I apply?
- Applications for CEWS will open on Monday 27th April, and will be made through “My Business Account” portal.
If you don’t have your “My Business Account” set up you might want to read this post on how to set one up
Check out this video from Video Tax which discusses the 75% CEWS- http://https://vimeo.com/403110880.
Here is an updated video after the legislation received royal assent.
The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a post such as this, a further review should be done by a qualified professional.
No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.