COVID-19: More details on the Canada Emergency Wage Subsidy

Gordon Jessup • April 02, 2020

The Department of Finance has provided additional information to assist employers to determine whether they are eligible for the new Canada Emergency Wage Subsidy.  The program provides a 75 per cent wage subsidy to eligible employers for up to 12 weeks.

Eligible Employers

Eligible employers include individuals, taxable corporations and partnerships consisting of eligible employers as well as not-for-profit organizations and registered charities.  Public bodies, such as municipalities, local governments, Crown corporations, public universities, colleges, schools and hospitals are not eligible for the subsidy.

Eligible employers that see a drop of at least 30 per cent of their revenue in an eligible period would be able to claim the subsidy.  Employers are required to attest to their revenue decline when applying for the subsidy.

For eligible employers established after February 2019, eligibility would be determined by comparing monthly revenues to a reasonable benchmark.

Calculating Revenues

An employer’s revenue is defined as revenues from business conducted in Canada and from arm’s length sources.  Revenue must be calculated using the employer’s normal accounting method and excludes revenues from extraordinary items and amounts on account of capital.

The government is working with the non-profit and charity sector to ensure the definition of revenue is appropriate.

Amount of the Subsidy

The subsidy is calculated for each employee on eligible remuneration paid between March 15 and June 6, 2020.  It is the greater of:

  • 75 per cent of the amount of remuneration paid, up to a maximum of $847 per week; and
  • The amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.

This means that employers may be eligible for a subsidy of up to 100 per cent of the first 75 per cent of pre-crisis wages and salaries of existing employees.  Further guidance on how to define pre-crisis weekly remuneration will be released in the coming days.

Employers will also be eligible for a subsidy of up to 75% of salaries and wages paid to new employees.

Eligible remuneration includes salary, wages and other amounts for which employers would be required to deduct and remit income taxes.  It does not include severance pay, stock option benefits or taxable benefits related to the personal use of a corporate vehicle.

The subsidy does apply to employees that do not deal at arm’s length with the employer, but the subsidy will be limited to eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration.

It is expected that employers will make their best efforts to top-up employees’ salaries to bring them to their pre-crisis remuneration.

Eligible Periods

Eligibility is determined by the change in the employer’s monthly revenues, year-over-year, for the calendar month in which the period begins.  This table outlines each claiming period and the month in which a decline in revenue of 30 per cent or more would be required to qualify for the subsidy.

2020 Claiming periodReference period for eligibility
Period 1 March 15 – April 11March 2020 over March 2019
Period 2April 12 – May 9April 2020 over April 2019
Period 3May 10 – June 6May 2020 over May 2019


Applying for the Subsidy

Eligible employers can apply for the subsidy through the Canada Revenue Agency’s My Business Account portal.  There will also be a web-based application to allow for those employers that do not currently have My Business Account access to apply for the subsidy.

Employers will be required to keep records demonstrating their entitlement to the subsidy.

Employers will be required to repay amounts received under the subsidy program if they do not meet the eligibility criteria and pay their employees accordingly.  Penalties may apply in cases of fraudulent claims.  The government will build in anti-abuse rules to ensure that employers do not inappropriately obtain amounts under the program.  They are also considering criminal offences that will apply to individuals, employers or business administrators who provide false or misleading information in order to access benefits or who misuse any funds obtained.

Interaction with the Temporary Wage Subsidy for Employers

This temporary wage subsidy allows eligible employers to a 10 per cent wage subsidy.  Employers may be eligible for both the 10 per cent and 75 per cent subsidies.  Any benefit from the 10 per cent wage subsidy for remuneration paid in a period would generally reduce the amount of remuneration available to be claimed under the 75 per subsidy in that same period.

Interaction with the Canadian Emergency Response Benefit

An employer would not be eligible to claim the 75 per cent subsidy for remuneration paid to an employee in a week that the falls within a 4-week period during which the employee is eligible for the Canada Emergency Response Benefit.

Taxation of the Subsidy

The subsidy is considered government assistance, and like other forms of assistance, is to be included in the employer’s taxable income when received.  It will not be revenue for the purposes of determining whether an eligible employer suffered a 30 per cent decline in the monthly revenues.

Please contact your Fuller Landau engagement partner or manager for any questions.



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