On July 17, 2020, Canada’s Minister of Finance, Bill Morneau, announced the most anticipated proposed changes to the Canada Emergency Wage Subsidy (CEWS) program. These are proposed changes that have yet to receive approval by the House of Commons and Royal Sanction from the Senate. Notwithstanding the foregoing, here is what you should know about the proposed changes:
| Combined CEWS | ||||||||||
| Application and Amount | ||||||||||
| Proposed changes starting Period 5 | ||||||||||
| Claiming period | Period 5 | Period 6 | Period 7 | Period 8 | Period 9 | |||||
| Remuneration earned |
|
Jul. 5, 2020
to Aug. 1, 2020 |
|
Aug. 2
to Aug. 29, 2020 |
|
Aug. 30
to Sep. 26, 2020 |
|
Sep. 27
to Oct. 24, 2020 |
|
Oct. 25
to Nov. 21, 2020 |
| Base CEWS subsidy rate | ||||||||||
| Revenue decline ≥ 50% | 60% | 60% | 50% | 40% | 20% | |||||
| Revenue decline < 50% | 1.2X revenue drop | 1.2X revenue drop | 1.0X revenue drop | 0.8X revenue drop | 0.4X revenue drop | |||||
| Top-up subsidy rate | ||||||||||
| Revenue decline ≥ 70% | 25% | 25% | 25% | 25% | 25% | |||||
| Revenue decline between 50% and 70% | 1.25X (X – 50%) | 1.25X (X% – 50%) | 1.25X (X% – 50%) | 1.25X (X% – 50%) | 1.25X (X% – 50%) | |||||
| Revenue decline ≤ 50% | 0% | 0% | 0% | 0% | 0% | |||||
| Max subsidy (per employee) – Base CEWS | $677 | $677 | $565 | $452 | $226 | |||||
| Max subsidy (per employee) – Top-up | $282 | $282 | $282 | $282 | $282 | |||||
| Max subsidy (per employee) – Combined | $960 | $960 | $847 | $734 | $508 | |||||
| Safe Harbour rule * | Yes | Yes | No | No | No | |||||
| Reference period for revenue decline – Base CEWS
|
||||||||||
| a. General approach
|
|
Jul. 20 vs. Jul. 19
or Jun. 20 vs. Jun. 19 |
|
Aug. 20 vs Aug. 19
or Jul. 20 vs. Jul. 19 |
|
Sep. 20 vs. Sep. 19
or Aug. 20 vs Aug. 19 |
|
Oct. 20 to Oct. 19
or Sep. 20 vs. Sep. 19 |
|
Nov. 20 to Nov. 19
or Oct. 20 to Oct. 19 |
| b. Alternative approach
|
|
Jul. 20 or Jun. 20
over average of Jan. 20 and Feb. 20 |
|
Aug. 20 or Jul. 20
over average of Jan. 20 and Feb. 20 |
|
Sep. 20 or Aug. 20
over average of Jan. 20 and Feb. 20 |
|
Oct. 20 or Sep. 20
over average of Jan. 20 and Feb. 20 |
|
Nov. 20 or Oct. 20
over average of Jan. 20 and Feb. 20 |
| Reference period for revenue decline – Top-up CEWS | ||||||||||
| a. General approach
|
|
Apr. 20 to Jun. 20
vs. Apr. 19 to Jun. 19 |
|
May. 20 to Jul. 20
vs. May. 19 to Jul. 19 |
|
Jun. 20 to Aug. 20
vs. Jun. 19 to Aug. 19 |
|
Jul. 20 to Sep. 20
vs. Jul. 19 to Sep. 19 |
|
Aug. 20 to Oct. 20
vs. Aug. 19 to Oct. 19 |
| b. Alternative approach
|
|
Apr. 20 to Jun. 20
average vs. Jan. 20 and Feb. 20 average |
|
May. 20 to Jul. 20
average vs. Jan. 20 and Feb. 20 average |
|
Jun. 20 to Aug. 20
average vs. Jan. 20 and Feb. 20 average |
|
Jul. 20 to Sep. 20
average vs. Jan. 20 and Feb. 20 average |
|
Aug. 20 to Oct. 20
average vs. Jan. 20 and Feb. 20 average |
|
* An eligible employer with a revenue decline of at least 30% in the relevant reference period would receive a CEWS rate of at least 75%. |
||||||||||
Furthermore, the following changes are of interest:
- Eligible Employers and Employees
Eligible employee would no longer exclude employees that are without remuneration in respect of 14 or more consecutive days in an eligibility period.
- Qualifying revenues
Eligible employers that have elected to use the alternative approach for the first 4 claiming periods would be able to either maintain that election for Period 5 and onward or revert to the general approach for Period 5 and onward. Conversely, eligible employers that have used the general approach for the first 4 claiming periods would be able to either continue with the general approach for Period 5 and onward or elect to use the alternative approach for Period 5 and onward.
- Eligible Remuneration
- Active arm’s length employees: the calculation for the subsidy would no longer take into consideration pre-crisis remuneration (baseline remuneration)
- Actives employees not dealing at arm’s length: the calculation for the subsidy would be now as follows, the lesser of:
- Current remuneration
- Pre-crisis remuneration
- 1,129 $
- The pre-crisis remuneration would now be the average weekly remuneration paid between January 1 to March 15, 2020 or July 1, 2019 to December 31, 2019
- Furloughed employees
- CEWS available to eligible employers that qualify for either the CEWS base rate or the top-up for active employees in the relevant period
- CEWS calculation to remain the same for periods 5 and 6 than for Period 1 to 4. Starting in period 7, the calculation is based on the lesser of remuneration paid and the amount set in regulation.
We Are Here to Help
We offer a Crisis Relief Program to support you throughout the process. Whether you are wondering about your company’s eligibility or would like an estimate of the amount of subsidy to which you may be entitled, do not hesitate to contact a member of our team.
