Yesterday afternoon Finance Minister Bill Morneau provided more details on the federal government’s previously announced Canada Emergency Wage Subsidy (“CEWS”).
A few days ago, Prime Minister Trudeau announced that the federal government would be providing businesses with a wage subsidy of up to 75% of an employee’s first $58,700 of wages, up to a maximum subsidy of $847 per week per employee for businesses who have experienced a reduction in revenue of least 30%. Minister Morneau has now added some further details on this subsidy.
What will the wage subsidy provide businesses?
As previously announced, the government intends to provide businesses with a wage subsidy of 75% of an employee’s first $58,700 of wages, up to a maximum of $847 per week per employee. This wage subsidy will be in place for three months and will be retroactive back to March 15, 2020. When asked about the possibility of extending the subsidy beyond this initial three-month period, Minister Morneau said the government was always open to looking at new measures should they become necessary.
How will the 30% revenue loss be calculated?
Minister Morneau advised that the 30% gross revenue loss will be calculated based on a comparison of the business’s revenue from the same month of previous year (i.e. March 2020 vs March 2019). It is not yet clear how businesses who have been operating for less than a year or businesses with more complex revenue issues (e.g. businesses whose March revenues reflect business conducted in January/February) will be impacted by this requirement. Minister Morneau advised that more details on these issues will be provided in the coming days and weeks.
Who will be eligible to apply for the wage subsidy?
Any businesses, including individuals, partnerships, corporations that are not publicly funded, charities, and non-profit organizations, experiencing a gross revenue loss of 30% as of March of this year will be able to apply for the subsidy. Businesses will need to re-apply each month for the subsidy.
Will employers have to pay the remaining 25% of wages?
Employers will have to show that they are paying employees 75% of their wages to get the subsidy. When asked about the remaining 25% and whether it was mandatory for employers to pay that portion of an employee’s wages, Minister Morneau advised that employers will have to attest that they are doing everything they can to pay the remaining 25% but that they will be flexible as they recognize that some businesses will not be able to do so.
How will businesses apply for the subsidy?
Businesses will apply through a CRA portal to be launched within the next 3-6 weeks. Minister Morneau advised that they expect funds to start flowing to businesses in approximately 6 weeks. However, he encouraged businesses to begin re-hiring people now if they can, knowing that the money will be coming back to them in a few weeks’ time. Minister Morneau also encouraged businesses to ensure they are set up with CRA direct deposit, as this will ensure they received the wage subsidy as quickly as possible.
The above information is based on what the government has announced in press conferences on the CEWS as of today’s date. We are expecting more details on the subsidy to be released in the coming days. It is likely that Parliament will be recalled sometime next week to pass the legislation necessary to implement this program. We are actively monitoring developments on this program and will provide further updates once more information becomes available.