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75% Canada Emergency Wage Subsidy (CEWS) FAQ

What is the Canada Emergency Wage Subsidy (CEWS)?

How do I calculate my subsidy amount?

Which employers are eligible?

Are there any employers that are not eligible?

I'm an eligible employer, so what else do I need to qualify?

How do I calculate my reduction in revenue?

Which income sources do I have to use to calculate my revenue?

How much of my employee's wage does the subsidy cover?

What if my wife/husband or children are employees?

Can I still keep my employees on payroll even if there is no work?

Is there a limit to how many employees my organization can claim?

What if I've hired a new employee?

Do I have to cover the other 25% of my employee's wage?

Can I also claim the 10% Emergency Wage Subsidy?

I'm already participating in the Work-Sharing program, can I also claim the CEWS?

Do I have to pay taxes on this?

How do I apply?

What are the penalties for false claims?

What is the Canada Emergency Wage Subsidy (CEWS)?

The Canada Emergency Wage Subsidy provides a 75% wage subsidy to eligible employers for up to 12 weeks, and is retroactive to March 15, 2020.

How do I calculate my subsidy amount?

The Government of Canada has created an online CEWS calculator that can be accessed here:

CANADA EMERGENCY WAGE SUBSIDY CALCULATOR

Which employers are eligible?

• individuals
• taxable corporations
• partnerships that consist of eligible employers
• non-profit organizations
• registered charities

Are there any employers that are not eligible?

• municipalities
• local governments
• Crown corporations
• wholly owned municipal corporations
• public universities
• colleges
• schools
• hospitals

I'm an eligible employer, so what else do I need to qualify?

You need to show a specified reduction in revenue, or greater, during one of the eligible periods. 

• 15% reduction in March, 2020, or
• 30% reduction in April, 2020, or
• 30% reduction in May, 2020

Periods Required Reduction Reference Period
PERIOD 1 March 15 - April 11, 2020 15% March, 2019 OR average of January and February, 2020
PERIOD 2 April 12 - May 9, 2020 30% April, 2019 OR average of January and February, 2020
PERIOD 3 May 10 - June 6, 2020 30% May, 2019 OR average of January and February, 2020

PLEASE NOTE If you qualify for any of the eligible periods, you automatically qualify for the following period.

EXAMPLE You qualified for Period 1, therefore you also automatically qualify for Period 2 regardless of revenue increases or reductions.

How do I calculate my reduction in revenue?

1) You can compare your year-over-year revenue for each month.

EXAMPLE Your revenue in March 2019 was $100,000. Your revenue in March, 2020 was $80,000. This is a 20% decline year-over-year, so you would qualify for Period 1 (March 15 - April 11).

2) You can compare your average income for January and February, 2020 against any eligible period.

EXAMPLE Your revenue in January, 2020 was $150,000 and your revenue in February, 2020 was $50,000 for a total of $200,000. Therefore, your average revenue over those two months was $100,000. If your March, 2020 revenue was $70,000, this is a 30% decline, so you would qualify for Period 1 (March 15 - April 11).

PLEASE NOTE Once you select a comparison method, you must continue to use that method for the duration of the program.

You may use either accrual accounting (as they are earned) or cash accounting (as they are received) for your calculations.

PLEASE NOTE Once you select an accounting method, you must continue to use that method for the duration of the program.

Which income sources do I have to use to calculate my revenue?

The calculations will be made using your revenue in Canada earned from arm’s-length sources, excluding revenues from extraordinary items (ex. a one-time gain or loss not expected to recur in the future) and it will be calculated using your normal accounting method.

How much of my employee's wage does the subsidy cover?

The subsidy will cover whichever amount is greater from the following calculations:

Calculation 1Calculation 2
75% of an employee's weekly remuneration paid between March 15 and June 6, 2020 (up to a maximum of $847 per week) the amount of remuneration paid, up to a maximum of $847 per week OR 75% of the employee’s pre-crisis weekly remuneration - whichever is less

The pre-crisis remuneration for an employee is the average weekly remuneration paid between January 1, 2020 and March 15, 2020, excluding any seven-day periods in which the employee did not receive remuneration.

PLEASE NOTE If an employee has been without remuneration for 14 consecutive days, they are not eligible for that period. This is intended to prevent overlap with the Canada Emergency Response Benefit (CERB).

Eligible compensation includes salary, wages and taxable benefits. It does not include severance pay, stock option benefits, or the personal use of a corporate vehicle.

What if my wife/husband or children are employees?

For non-arm's length employees, they must have been employed prior to March 15, 2020, and the subsidy will be:

• limited to remuneration paid in any period between March 15 and June 6, 2020
• capped at the lesser of 75% of the employee’s pre-crisis weekly remuneration OR $847

Can I still keep my employees on payroll even if there is no work?

Yes. When they are on leave with pay, you will still have to pay EI, CPP and tax will be taken off, too. However, you will get a refund on your EI and CPP premiums.

In general, an employee will be considered to be on leave with pay throughout a week if that employee is remunerated for that week but does not perform any work for the employer in that week. The EI and CPP refund would not be available for eligible employees that are on leave with pay for only a portion of a week.

Is there a limit to how many employees my organization can claim?

No. There is no cap on the amount of CEWS an employer can claim.

What if I've hired a new employee?

Their current wages are also eligible for a 75% subsidy, up to a maximum of $847 per week.

Do I have to cover the other 25% of my employee's wage?

No, but it is highly recommended, where possible, that you maintain existing employees’ pre-crisis employment earnings. 

Can I also claim the 10% Emergency Wage Subsidy?

Yes, but any benefit from the 10% wage subsidy will generally reduce the amount available to you under the CEWS in that same period.

I'm already participating in the Work-Sharing program, can I also claim the CEWS?

Yes, but any EI benefits received by employees through the Work-Sharing program reduce the benefit that you are entitled to receive under the CEWS.

Do I have to pay taxes on this?

Yes. The wage subsidy is considered government assistance and is included in your taxable income.

How do I apply?

You will be able to apply through the Canada Revenue Agency's My Business Account portal and must do so before October, 2020. More details about the application process will be made available shortly.

What are the penalties for false claims?

Fraudulent claim penalties will include fines and possible imprisonment. If you artificially reduce revenue for the purpose of claiming the CEWS, you will be required to repay the full subsidy as well as a penalty of 25 percent of the value of the subsidy claimed.

Still have questions? Contact Scott Rowland at

scott.rowland@availcpa.com OR 403-382-6800

For a complete list of our COVID-19 resources for individuals and businesses, please visit availcpa.com/resources

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