April 24, 2020
Author: Alex Norris
Updates to the Canada Emergency Wage Subsidy Program: New Online Calculator
The federal government recently launched a new Canada Emergency Wage Subsidy (“CEWS”) calculator on the Canada Revenue Agency website. This calculator is intended to help eligible employers estimate the amount of their subsidy claim in advance of applying for the CEWS.
What is the Canada Emergency Wage Subsidy?
We previously addressed the CEWS in a blog post that can be found here. Briefly, the CEWS is intended to assist eligible Canadian businesses financially impacted by the ongoing COVID-19 pandemic. Eligible employers can apply to receive a subsidy of up to 75% of employee wages, up to $847 per employee per week, for a 12 week period spanning from March 15, 2020 to June 6, 2020.
How Much Can I Actually Get Through the CEWS Program?
It depends! There is detailed information about the math behind the subsidy calculation on the federal government’s CEWS website. The amount of the subsidy will be based entirely on the salary or wages actually paid to employees.
The CEWS online calculator allows employers to preview their subsidy claim in advance of submitting an application. There is a downloadable spreadsheet to assist in the necessary calculations. It will help employers determine specific line amounts that they will need to submit as part of the CEWS application.
The government hopes the CEWS online calculator will equip employers with important information they can use now to make informed decisions about retaining and possibly even re-hiring workers.
How do I Apply for the CEWS Subsidy?
Applications for the CEWS will open next Monday, on April 27, 2020, through the CRA’s My Business Account. Before applying, employers will need to determine the amount of the estimated subsidy—so be sure to consult the online calculator. Note that the CEWS will be processed at the payroll program (RP) account level, so employers will have to file a separate application for each RP account.
CEWS claims will be subject to verification by the CRA, with funds expected to be released starting on May 5, 2020. Employers must keep all records demonstrating their reduction in revenues and remuneration paid to employees.
COVID-19 and CEWS
It is important to consider the CEWS eligibility requirements carefully. Employers will be required to repay amounts paid under the CEWS if they do not meet eligibility requirements. Further, employers who engage in artificial transactions to reduce revenue for the purpose of claiming the CEWS will be subject to a penalty equal to 25% of the value of the subsidy claimed, in addition to repayment of the full value of the subsidy.
Although the online calculator will be a useful tool for estimating the CEWS, we recommend employers also consult with their accountants to confirm eligibility (including payroll details) in respect of the CEWS given the potential significant penalties.
If you would like more information about the Canada Emergency Wage Subsidy or other available government programs, or if you would like to discuss employment matters relating to the ongoing COVID-19 pandemic generally, please contact a member of the Carbert Waite Employment Law Group.