Canadian Emergency Wage Subsidy 2.0

The purpose of this post is to provide you with some additional details with respect to recent changes to the Canada Emergency Wage Subsidy.  This program has again been extended to include a period 7-9 and may additionally include a period 10 that will end on December 31, 2020.  There have been significant changes to the program for periods 5-9.  Others have dubbed the changes to the program as CEWS 2.0 and I will refer to it as such.

At a high level the changes to the program are simple enough in theory.  The details however are extremely complex. This complexity is a result of the program changes that are intended to open this subsidy up to more employers.   Rather than explain the details in I will provide a link to CPA Canada’s blog post on this topic below.  If you are interested in some of the more complex components of this program I will also include a link to Moodys Tax blog post on this.

Some key points to consider are this

  1. For period 5-9 any decline in revenue (even if not 30%) will entitle the employer to a wage subsidy.
  2. For periods 5 and 6 the employer can use the old method or the new method of calculating the subsidy.  That is to say the 30% revenue decline test and subsidy calculation that we have become familiar with can still apply for these periods if the employer so chooses.  If the new version of the rules results in a larger subsidy the employer can use the new rules.
  3. For periods 7-9 the new rules of CEWS 2.0 apply.
  4. The deadline for application for the subsidy has been extended to January 31, 2021.  I continue to advocate waiting until period 6 is complete before making a claim for periods 1-6.  The reason for this is that there are many different ways to calculate whether the revenue decline test is met.  However once a method is chosen it must be used consistently in periods 1-6.   Waiting until period 6 is complete allows an employer to test which method of calculating revenue decline provides the maximum subsidy and the employer can then select this method.
  5. Similar to my advice to wait until period 6 is complete you should also consider waiting until all periods are complete before applying for benefits under periods 5-9.  This is again because the method of calculating a revenue decline for these periods must be used consistently and only when all periods are complete will the employer have the information to determine which method results in the largest subsidy.

CPA Canada has provide CPA’s and the public this commentary https://www.cpacanada.ca/en/business-and-accounting-resources/taxation/blog/2020/july/cews-program-revised-extended

For additional reading on this topic I recommend this post from our friends at Moodys Tax.  This post also includes a handy flowchart.  https://www.moodystax.com/moodys-tax-explains-canada-emergency-wage-subsidy-cews-v-2-0/

Tax Payment Extension

The CRA is further extending the payment due date for 2019 individual tax returns and 2019 or 2020 corporation, or trust returns, as well as for instalment payments, from September 1, 2020, to September 30, 2020.

More details can be found here https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-filing-payment-dates.html