On April 8, 2020, the Government of Canada announced enhancements and additional details regarding The Canada Emergency Wage Subsidy (CEWS). This announcement should allow for more employers to benefit from the CEWS and in some cases provide additional benefits. The highlights include:
- Employers can use either the accrual or cash method in determining their revenue decrease, but once chosen, the method must be used for the entire program.
- Charities and non-profit organizations can choose whether or not to include amounts from government sources as revenue, but once chosen, the method must be used for the entire program.
- When determining their revenue decrease, employers have the choice of using either the average of January and February 2020, or the comparative month in 2019. However once an approach is chosen, it needs to be used for the entire program.
- To be eligible for the subsidy for the March 15 to April 11 claiming period, there needs to be a only a 15% drop in revenue in March 2020.
- Clarity has been provided that employers may be eligible for 100% of the first 75% of the employees pre-crisis salaries up to a maximum weekly subsidy of $847. This could be beneficial where there has been a reduction in an employees current salary due to the crisis.
- Eligible remuneration includes taxable benefits but excludes severance and stock option and automobile benefits.
- Reiterated that there is no limit on the total subsidy an eligible employer may claim.
- Where an employee is on leave with pay, a 100% refund of employer portion of CPP and EI contributions where the employer is eligible for the CEWS for those employees. However, the amount must be paid and then the employer applies for the refund.
- Relaxation in rules where employees have applied for the Canadian Emergency Response Benefit. Now, if the employee has had 14 consecutive days with remuneration in the eligibility period, the employer will qualify for a subsidy on the amount paid to the employee.
- Employers that engage in artificial transactions to reduce revenue for the purpose of qualifying for the CEWS will be subject to a penalty of 25% of the value of the subsidy claimed, in addition to the requirement to repay the subsidy.
- The subsidy amount for non-arm’s length employees will be limited to the eligible remuneration paid up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration. In other words, if there was no pre-crisis weekly remuneration, no 75% subsidy would be available for these employees, regardless of whether wages were paid after March 15, 2020.
The full text of the announcement can be found at the following link.
On April 8, 2020, the Prime Minister announced that they are aiming to get the program ready within 3 weeks. The original target was 3-6 weeks from the April 1, 2020 announcement date. Eligible employers will be able to access the CEWS through the CRA online portal. To expedite receiving a reimbursement, we recommend employers register and enroll in direct deposit with the CRA using the “My Business Account” portal.
Canada Emergency Business Account (CEBA)
You can apply for CEBA through your financial institution starting April 9, 2020. This is a $40,000 interest free loan for small business and not-for profits to help cover operating costs while revenues have been temporarily reduced. To qualify, organizations will need to demonstrate they paid between $50,000 and $1 million in total payroll in 2019. 25% of the loan will be forgiven where the loan is repaid by December 31, 2022.
Summary of COVID-19 Assistance for Alberta Small Businesses
KMSS has updated our summary of the support available for Alberta small business and can be found here.
Your KMSS advisory team is here to assist you and your business. Please note that our office is primarily working remotely and we encourage clients to send us their tax and other financial information electronically. Although our office doors are locked, if you are healthy and would prefer to drop off the information or send it to us by courier, we continue to accept deliveries and couriers on business days between the hours of 9:00am and 4:00pm.