Apr 5, 2020  By John Hyde

The Canada Emergency Wage Subsidy - Important Update

The federal government has released important information regarding the wage subsidy program designed to help Canadian businesses keep their employees on payroll. Here is a summary of what we know so far and, what details remain to be determined.

  1. The Federal Government will provide a 75 per cent wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020, for companies that can demonstrate a decline in revenue of 30 per cent or more.
  1. The subsidy amount for a given employee will be 75 percent of the remuneration paid, up to a maximum benefit of $847 per week. Eligible remuneration may include salary, wages, and other remuneration that would be subject to statutory withholdings. However, it does not include severance pay, items such as stock option benefits, or car allowances.
  1. Eligible employers include businesses of all sizes, across all sectors of the economy, with the exception of public sector entities.
  1. The 30 percent eligibility requirement will be determined by comparing year-over-year revenue from one period (see chart below) to the corresponding month in the previous year. Eligible employers who suffer a drop in gross revenues of at least 30 per cent in March, April or May, when compared to the same month in 2019, will be able to access the subsidy.
  1. An employer’s revenue is defined by the Department of Finance as gross revenue from business carried on in Canada earned from arm’s-length sources, excluding revenues from extraordinary items and amounts on account of capital. Based on the current definition, it appears that gross revenue is not divided by a company’s individual departments but, rather, the sum of all revenue sources. The federal government will work with charities and non-profits to ensure that the definition of revenue is appropriate. The Minister of Finance also acknowledged that the system is not perfect and the government is considering making exceptions for some companies, such as start-ups, by basing the loss in revenue to the previous month in 2020, rather than the corresponding month in 2019. No further details have been released at this time.
  1. The subsidy will run from March 15 until June 6, 2020, and will be divided into the following eligibility periods:


Claiming period

Reference period for eligibility

Period 1

March 15 – April 11

March 2020 over March 2019

Period 2

April 12 – May 9

April 2020 over April 2019

Period 3

May 10 – June 6

May 2020 over May 2019

  1. Companies must reapply for the subsidy at the end of each period, through the CRA’s My Business Account portal. Businesses are encouraged to register for direct deposit through the portal, in order to avoid delays in receiving payment. Employers will be required to keep records demonstrating their reduction in revenue and remuneration paid to employees.
  1. Anti-abuse rules will be introduced and there will be severe penalties for fraudulent claims. Every dollar of the wage subsidy is expected to be paid to employees.
  1. The 75 percent subsidy does not replace the 10 percent wage subsidy that was introduced on March 18. Small businesses that do not meet the criteria for the 75 percent financial aid, can still apply for the 10 percent subsidy on remuneration paid from March 18 to June 19, 2020. Companies that are eligible for both subsidies may apply for both, however, any funds collected on the 10 percent program, will reduce what a business can receive on the 75 percent program.
  1. At this time, there is no information on whether the 75 percent subsidy is a taxable benefit. However, the 10 percent subsidy is and must be reported as income for that taxable year.
  1. Employers are eligible for the 10 percent subsidy if they are a(n):
  • individual (excluding trusts),
  • partnership,
  • non-profit organization,
  • registered charity, or
  • Canadian-controlled private corporation (including a cooperative corporation) eligible for the small business deduction;
  • have an existing business number and payroll program account with the CRA on March 18, 2020; and
  • pay salary, wages, bonuses, or other remuneration to an eligible employee.
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