On April 8, 2020, Prime Minister Justin Trudeau provided updates on the Canada Emergency Wage Subsidy (the “Subsidy”). This follows Finance Minister Bill Morneau’s previously announced details on the $71B program. In particular, the Federal government announced a relaxation of the threshold to obtain the wage subsidy for the month of March.
The Subsidy applies to non-publicly funded employers, including partnerships, individuals, and corporations, non-profit organizations, and charities. Number of employees is not a factor in determining eligibility. In order to be eligible, an employer must have experienced a decrease in revenue due to COVID-19 in the month of March, April or May. Each month is a separate measurement period for which subsidies are available. The Prime Minister announced on April 8, 2020 that businesses must show a revenue decline of 15% or more for the month of March to qualify for the subsidy. For the months of April and May, it appears that employers must continue to show the previously announced decrease in revenue of 30% or more. The decline will be determined by comparing March, April, or May, 2020 business revenues to the same month in 2019, or alternatively, to an average of the revenue earned in January and February, 2020. In recognition of the time between when revenue is earned and when it is paid, revenue may be measured either on the basis of accrual accounting (as it is earned) or cash accounting (as it is received). Special rules will also be provided to address issues for corporate groups, non-arm’s length entities, and joint ventures. Charities and non-profit organizations can choose to include or exclude government funding when calculating their loss of revenue.
Employers who do not qualify for the Subsidy can immediately take advantage of the previously announced Temporary Wage Subsidy for Employers which covers 10% of wages paid from March 18, 2020 to June 19, 2020, up to a maximum of $1,375 per eligible employee and $25,000 per employer.
The Subsidy amount available to an eligible employer is not subject to an overall limit, nor is there a limit on how many employees may participate in the program. The Subsidy will be the greater of the following amounts:
- 75% of the amount of eligible remuneration paid, up to a maximum benefit of $847 per week; and
- the lesser of (i) the amount of eligible remuneration paid, (ii) 75% of the employee’s average weekly pre-crisis remuneration (i.e. remuneration paid between January 1 and March 15, 2020), and (iii) a maximum benefit of $847 per week.
“Eligible remuneration” generally includes salary, wages, and other remuneration like taxable benefits. It does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle. “Pre-crisis remuneration” for a given employee is the average weekly remuneration paid for the period of January 1 to March 15, 2020, excluding any seven-day periods in respect of which the employee did not receive remuneration.
The Prime Minister announced on April 8, 2020 that eligible employers will also be entitled to receive a 100% refund for certain employer-paid contributions to Employer Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. The Subsidy will apply retroactively to March 15, 2020 and extends to June 6, 2020. Organizations are encouraged to use the Subsidy to re-hire employees who were previously laid off due to COVID-19 and, if possible, cover the remaining 25% of the employee’s wage. Both the Prime Minister and Finance Minister have emphasized that Subsidy funds are to be used solely for the payment of employee wages and that improper use of the program will result in severe penalties.
Eligible Periods and Employees
The program is available for 12 weeks and the eligible periods are:
- March 15 to April 11;
- April 12 to May 9; and
- May 10 to June 6.
Eligibility for the Subsidy is available to employees other than those who have been without remuneration for 14 or more consecutive days in the eligibility period, ie. from March 15 to April 11, from April 12 to May 9, or from May 10 to June 6.
The government is continuing to finalize details for the Subsidy but has advised that businesses will be able to apply through a Canada Revenue Agency portal, which will be available soon. The federal government intends to launch a new calculator on the Canada Revenue Agency website so that businesses can determine the amount they can expect to claim through the wage subsidy program.
Businesses will be able to apply as of Monday, April 27, 2020.
More information on the subsidy can be found in this COVID 19 Update: Government Enacts Legislation and Provides Details Concerning Application for Canada Emergency Wage Subsidy
More information will be available in the coming days. Check our COVID-19 page for updates as new details emerge.
April 21, 2020 Update
Additional Information on Government Measures
EKB’s team remains committed to helping you and your business through these challenging times. More information about government measures to support individuals and businesses during the pandemic is available in our regularly updated article.
This article was updated on April 20, 2020.