We are writing to you to share the latest news we received from the government concerning the proposed 75% wage subsidy for employers. Finance Minister Bill Morneau announced Wednesday a plan to backstop much of the Canadian economy through wage subsidies. This new 75% wage subsidy program is called the Canada emergency wage subsidy (CEWS).
Please note that Parliament has yet to vote on this proposed subsidy and will come into effect once it passes through legislation.
The Canada Emergency Wage Subsidy Details:
On Wednesday, Finance Minister Bill Morneau announced a plan to backstop much of the Canadian economy through wage subsidies. The wage support program, called the Canada emergency wage subsidy (CEWS).
- The federal government will offer a 75 per cent wage subsidy to all businesses that have lost 30 percent of their revenue as a result of the COVID-19 pandemic.
- To qualify, companies will have to show that their revenue in March 2020 was 30 percent less than it was in March 2019.
- The wage subsidy will be administered by the CRA through the My Business Account portal on the agency's website.
- The program will be in effect for three months and companies will have to reapply each month and show that revenues in 2020 are also 30 per cent less than they were in the same month the year prior.
- The 75 per cent wage subsidy will cover annual earnings up to $58,700 — or $1,129 a week in pre-crisis earnings. So the maximum subsidy for each employee would be $847 a week.
- This subsidy applies to payments made to employees on/after March 15th, 2020
Which businesses will qualify?
- The benefit will be offered to all companies that have seen that 30 per cent drop in gross revenue.
- The subsidy is available to all types of corporations in Canada, with the exception of non-taxable corporations and public sector entities like municipalities, public schools and hospitals. Bars and restaurants can qualify.
- Sole proprietorships, partnerships, Canadian subsidiaries of foreign-controlled companies, nonprofits and charities are also eligible.
CEWS vs CERB vs the 10% Wage subsidy
Canada Emergency Wage Subsidy (CEWS)
The Canada emergency wage subsidy or CEWS is designed to discourage companies from laying off workers during the COVID-19 pandemic. The CEWS is also designed to encourage employers who have already laid off workers to put these employees back on payroll, now that they can count on direct payments from Ottawa to cover a significant portion of most wages for the next three months. Please visit this page on the CRA’s website for more information on CEWS.
10% Wage Subsidy
On March 18, 2020, the Prime Minister announced a temporary 10 percent wage subsidy. For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 per cent wage subsidy for a period, any benefit from the 10 per cent wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period. Please visit this page on the CRA’s Website for more information on the 10% Wage subsidy.
Canada Emergency Response Benefit (CERB)
The Canadian Emergency Response Benefit (CERB) is only available to workers, including the self-employed, who are collecting no income ($0) as a result of COVID-19. If an employee is still being paid by an employer, or picking up the occasional shift, they are not eligible for the relief benefit. Workers who quit or voluntarily leave their jobs are also ineligible for the CERB. Please visit this page on the CRA’s website for more information on CERB or take a look at our CERB Fact Sheet.
Q: The government announced a 10 per cent wage subsidy earlier this month for small businesses. What happened to that?
A: This program is still in effect; small businesses can continue to claim the 10% benefit. However, if the company also qualifies for the 75% subsidy (CEWS) the amount of funds received from the 10% benefits will be deducted from the company’s CEWS payment. Unlike the CEWS, small businesses can claim the 10% subsidy even if they haven't seen a drop in revenue in recent weeks.
Q: Are there penalties for misusing this subsidy?
A: The government is considering new criminal offences that will apply to individuals, employers or business administrators who provide false or misleading information to obtain access to this benefit, misuse funds obtained under the program or fail to distribute these funds to your employees. The penalties may include fines or even imprisonment.
Q: Can I receive the Canada emergency relief benefit (CERB) and still collect a subsidized paycheque from my employer?
No. The CERB is available only to workers, including the self-employed, who are collecting no income ($0) as a result of COVID-19.
If you are still being paid by an employer, or picking up the occasional shift, you are not eligible for the relief benefit. Workers who quit or voluntarily leave their jobs are also ineligible for the CERB.
Q: Are any changes being made to other EI benefits?
Other EI benefits, like maternity and parental leave, will be unchanged.
Q: Do I have to make any changes to my company's Knit profile to apply for this subsidy?
A: No, this program is administered by the CRA.