Canada Emergency Wage Subsidy (CEWS) Extension and Other Updates

CEWSupdate
Canada’s Finance Minister recently announced proposed changes to the Canada Emergency Wage Subsidy (CEWS) including the extension of the program until December 2020. Please note that there are significant changes to this program because of these announced proposals, effective July 5, 2020. The following are the legislative proposals for the CEWS:
  • Extension of the CEWS until December 19, 2020 including redesigned program details until November 21, 2020.
  • Make subsidy available to employers with a revenue decline of less than 30% and provide a gradually decreasing base subsidy to all qualifying employers.
  • Introduce a top-up subsidy of up to an additional 25% for employers that have been adversely affected by the pandemic.
  • Provide assurance to employers that have already made business decisions for July and August that they will not receive a subsidy lower than they would have under the previous rules.
  • Address certain technical issues identified by stakeholders.
As mentioned above, the Federal Government has made significant changes to the program. One of the major changes is the introduction of the top-up subsidy. Starting July 5, 2020, the CEWS will consist of 2 parts:
  • Base subsidy - available to eligible employers experiencing a decline in revenues with the subsidy amount varying depending on the scale of revenue decline. This base CEWS would be a specified rate, applied to the amount of remuneration paid to the employee for the eligibility period, on remuneration of up to $1,129 per week. This would also apply to employers with a revenue decline of less than 30%.
  • Top-up subsidy – up to an additional 25% for employers adversely affected by the pandemic. Employers that have experienced a 3- month average revenue drop of more than 50% would receive this top-up CEWS rate equal to 1.25 times the average revenue drop that exceeds 50%, up to a maximum top-up CEWS rate of 25%, which is attained at a 70% revenue decline. The top-up CEWS rate would also apply to remuneration of up to $1,125 per (same with the base CEWS rate).
As we are introduced to a new structure of this program, the Federal Government has set a safe harbour that would ensure that employers would have access to the CEWS rate that is at least as generous as they would have had under the initial CEWS structure through August 29 for period 5 (July 5-August 1) and period 6 (August 2 - August 29). In short, during periods 5 and 6, employers will have the option to do the old program if it is more beneficial for them.

Note: The Canada Emergency Wage Subsidy is different from the 10% Wage Subsidy. The 10% Wage Subsidy ended last June 2020 (eligible period was from March 18, 2020 to June 19, 2020).

Source: https://www.canada.ca/en/department-finance.html, https://www.canada.ca/en/department-finance/news/2020/07/adapting-the-canada-emergency-wage-subsidy-to-protect-jobs-and-promote-growth.html
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