Canada Emergency Wage Subsidy – CEWS
By now most of you will have heard of the Canada Emergency Wage Subsidy program. Often referred to as CEWS the program is designed to subsidize employers paying wages in cases were revenues have declined when compared to pre-covid revenues. While the spirit and intent of the program is simple the administration and details of it are complex.
For the first 1-6 period an employer would qualify for CEWS if it the employer had experienced a 30% decline in revenue compared to pre-covid levels. If that criteria is met a subsidy of 75% of its employees’ wages (up to a max) is paid back to the employer in the form of a subsidy. This program was rolled out in the early days of the pandemic.
In August 2020 the government extended the program into November 2020 and modified the rules for qualification and the amount of the subsidy. The new rules became known to many as CEWS 2.0.
At a high level the changes to the program are simple enough in theory. The details however are again 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 this article 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, we will also include a link to Moodys Tax blog post on this. If you have specific questions PDC is happy to discuss this with you. We have assisted many of our clients with the calculations for the subsidy and worked through some of the more complex aspects of this program.
More recently the government has announced their intention to continue the program into June 2021. No details have been made available as to whether the program will continue under the current set of rules or if further modification will be made.
This program provides significant subsides to employers and we encourage our clients to make a claim if they otherwise qualify.
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/
Canada Emergency Bank Account
Originally launched on April 9, 2020, CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.
Initially the program allowed for a $40,000 loan. If repaid on or before December 31, 2022 25% or up to $10,000 will be forgiven and does not have to be repaid.