The Canada Emergency Wage Subsidy (CEWS) program has been expanded, extended and changed in several ways that should make the emergency relief more available to your business. Even if you could not access the earlier versions of the wage subsidy, we recommend you check again as more businesses with any degree of revenue reductions will now qualify.
As of July 5th (Period 5), the revenue reduction requirement and wage subsidy will move to a sliding scale allowing businesses to receive a subsidy as long as they show some revenue loss. This will allow those who need help the most to receive a substantial wage subsidy (as high as 85%), and those whose revenues are improving to get a smaller subsidy to help their business get back to more normal levels.
6 important CEWS changes you should know about
1. More businesses are now eligible
As of July 5th (Period 5), any amount of revenue loss can make you eligible for some wage subsidy. The new CEWS consists of a base calculation and a top-up calculation. The base calculation is on a sliding scale and is for anyone with any amount of revenue drop (even 1-2%). We estimate that 75% of small business owners (or more) will now qualify. With CRA, we are putting together materials to help small businesses calculate the new CEWS.
Also, more types of businesses are now eligible for the CEWS (i.e. seasonal businesses, private schools, newly aquired businesses, etc.).
2. Hardest hit businesses will get a 25% top-up
Businesses that have had a 50% or greater reduction in their revenue will qualify for up to a 25% top-up in addition to the base subsidy. This means a business could get as much as an 85% wage subsidy in July and August.
3. More employees are eligible
From March 15th to July 4th (Period 1-4), employees had to be paid at least once every 14 days within a CEWS period. This rule, called the “14-Day Rule,” resulted in the wages for many employee becoming ineligible for the subsidy especially when they were casuals, temps, laid-off employees or returning employees not being paid in a biweekly schedule that followed the CEWS periods.
Under the new rules, as of July 5th (Period 5) the 14-Day Rule will no longer exist, allowing you to subsidize more employee wages on a schedule that fits your business’ needs.
4. You may be able to subsidize some of your own salary
The previous rules require that non-arms’ length employees (owners and family members) must have been paid from January 1st to March 15th (Baseline Period) to be eligible for the CEWS.
Under the new rules, new Baseline Periods have been added to all periods to include more non-arms’ length employees. The below chart shows what the Baseline Remuneration Periods will look like.
|Periods||Periods 1-3||Period 4||Periods 5-6|
|Baseline Remuneration Periods|
As of July 5th (Period 5) non-arms length employees with a baseline remuneration will be able to use the least of: their claim CEWS period’s pay, their average wage from during their baseline period, and $1,129
5. You may qualify for a bigger subsidy in two ways
From Periods 1-4, using the deeming rule allows you to apply for the CEWS without needing to meet the revenue drop test of 30% when you have already qualified for a previous period. As of period 5, this deeming rule has been integrated into the revenue drop calculation to allow more businesses to be eligible for the subsidy. When calculating their revenue drop, businesses will be able to use their current or prior month’s revenues to compare with a pre-COVID-19 period (prior referencing period).
Under the new Safe Harbour Rule, you can choose between the old and new revenue calculations for periods 5 (July) and 6 (August). This allows you to choose the approach that is most advantageous for your firm.
6. The subsidy will now be available until the end of the year
CEWS has been extended until December 19th, 2020, for a total of 10 periods, each lasting four weeks. The subsidy will be gradually phased out from September to December. If you have not received the subsidy for previous time frames and are eligible, make sure to apply for them retroactively by January 31, 2020.
The new CEWS will help many more businesses access some much needed relief. If you have not qualified for the program in the past, we strongly urge you to check if you qualify now. The CEWS can help you bring employees back to work, plan for the rest of the year and progress toward normal business operations.
However, we also know the new rules are incredibly complicated. With CRA, we are putting together materials to help small businesses calculate the new CEWS. If you need help understanding them or determining if your businesses is eligible for the subsidy, give us a call at 1-888-234-2232.