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The 75% Canada Emergency Wage Subsidy and 10% Temporary Wage Subsidy

The Government of Canada has announced the Canada Emergency Wage Subsidy (CEWS) that will provide a subsidy of up to 75% of wages paid to a maximum benefit of $847 per week per employee.

Qualifying for the CEWS

To qualify for the CEWS, the business must be an eligible business with eligible employees a 30% or more drop in sales in March, April or May.

Eligible Employer – An eligible employer is a taxable corporation (i.e. pays taxes in Canada), individual, partnerships whose partners are eligible employers, not-for profits, and registered charities.

30 % Decrease in revenue – There are three reference periods to measure the 30% drop in revenue and covers payroll paid as follows:

  1. Payroll Paid from March 15, 2020 to April 11, 2020 – Compare sales of March 2020 to March 2019,
  2. Payroll Paid from April 12, 2020 to May 9, 2020 – Compare sales of April 2020 to April 2019, and
  3. Payroll Paid from May 10, 2020 to June 6, 2020 – Compare sales of May 2020 to May 2019.

Eligible remuneration – Includes salary, wages and other pay but does not include severance, stock options and allowances.

Claiming owner-manager salary under this benefit should be done so with caution. It would be prudent to have already been on payroll with regular source deduction remittances prior to March 11, 2020.

Taxable – The subsidy received will be taxable income to the business.

Compliance and penalties – Businesses that have used the subsidy but that do not qualify may be required to repay any amounts and fraudulent claims may be subject to files, penalties or potentially imprisonment.

How to Apply

Applications may be made though CRA’s My Account for Business or via a web application through the CRA’s website.

CEWS Information

Temporary Wage Subsidy (TWS)

The Government previously announced the Temporary Wage Subsidy (TWS) which was designed to help small and medium sized businesses with payroll. The TWS is a 10% subsidy whereby the business can reduce is payroll source deductions by 10% of payroll paid to a maximum of $1375 per employee and $25,000 per employer.

To qualify for the TWS, your business must be and individual, partnership, non-profit, registered charity or Canadian-controlled private corporation (CCPC), with an existing business number and payroll account on March 18, 2020 and have pay salary, wages, or bonuses to employees.

Eligible employees are an individuals who are employed in Canada. There does not appear to be any limit on owner-managers and if an owner-manager was already on payroll, there would be no reason to suggest the subsidy would not have been available.

The payroll paid must have occurred between March 18 and June 19 and the subsidy is self-claimed by reducing remittances of source deductions.

If you use a payroll service, please check with them directly to determine their procedures for taking advantage of this program.

Note, access to this program is not dependent on the CEWS and thus it is possible to qualify under both programs.

TWS More information:

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Dean Paley

A graduate of Simon Fraser University, Dean started and operated an independent painting company while perusing a degree at SFU. After graduating from Simon Fraser, Dean entered the Certified General Accountants Program of Professional studies where he obtained the professional CGA designation. After a number of successful years as the head of finance for the Canadian operations in a global financial services firm, Dean moved into a marketing role and established and launched a tax, estate and financial planning support department and service to advisors and clients. During this time Dean successfully obtained the Certified Financial Planner (CFP) designation. Dean has been a member of the Canadian Forces Reserve spanning three decades serving in the Royal Westminster Regiment (B.C.), the Military Police and later as a commissioned officer in the Cadet Instructors Cadre in Hamilton Ontario. Dean Paley CGA CFP has been interviewed and quoted in major media such as the National Post, Financial Post, Toronto Star, Canadian Business, Money Sense and Investment Executive. Dean is married to his lovely wife Deborah and has four lovely children.