More details on the new Canada Emergency Wage Subsidy

More details on the planned federal wage support program – now called the Canada Emergency Wage Subsidy (CEWS) – have come to light.

The CEWS is designed to discourage companies from laying off workers, particularly at this time of economic distress resulting from the COVID-19 pandemic. The program also encourages employers who have laid off workers to put those workers back on the payroll.

Read more: Planned wage subsidy to support businesses with 30% or more revenue loss

As previously reported, CEWS will offer a 75% wage subsidy to all businesses that have lost 30% of their revenue due to the outbreak. To qualify, companies will have to show proof that their revenue in March 2020 was 30% less than it was in March 2019. All companies, regardless of size, can qualify – even sole proprietorships and partnerships can apply.

The subsidy will cover annual earnings up to $58,700, or $1,129 a week in pre-crisis earnings. This means the maximum subsidy for each employee would be $847 weekly.

CEWS will be in effect for three months, which means companies will have to reapply each month by providing proof that their earnings for that particular month were lower than for the same month last year.

The program is retroactive to March 15, 2020.

CBC News has listed a number of other new details about the CEWS that the public should know:

• The federal government last week passed Bill C-13, a $107 billion aid package, to enact the CEWS.
• The Canada Revenue Agency will administer the CEWS, through the My Business Account portal on the agency’s website.
• The subsidies will be distributed within the next three to six weeks.
• There may be several exceptions to the CEWS for start-ups and new firms.
• Small businesses can apply for both the CEWS and the 10% wage subsidy previously announced earlier this month. However, the CEWS benefit will be adjusted downward to account for any payments made through the previous program. Unlike the CEWS, small businesses can claim the 10% subsidy even if they do not report a drop in revenue.
• The CEWS and the Canada Emergency Relief Benefit (CERB) are two different things. CERB is only available to workers (including the self-employed) who are collecting no income due to COVID-19. Workers still being paid by an employer or who are part-time workers are not eligible for CERB, but will count for CEWS. Workers who quit or voluntarily leave their jobs are also ineligible for CERB.
• Finance minister Bill Morneau has encouraged employers to “do the right things” and pay the remaining 25% of employees’ pre-crisis wages. But if they are unable (due to economic challenges), they must pay the promised 75% amount received through CEWS without any deduction.
• Non-taxable corporations and public sector entities such as cities, public schools and hospitals, cannot apply.
• Canadian subsidiaries of international companies are eligible for CEWS.
• Non-profits and charities are eligible; the government will work with this sector to find criteria consistent with for-profit companies, allowing non-profits to properly gauge whether their revenues declined 30% for the month. Charities may have to show that their donations declined for the month.
• Additional support is being considered for non-profits and charities at the front lines of responding to COVID-19.
• Penalties are being worked on to prevent employers from pocketing the subsidies; new criminal offenses are being considered by the federal government to apply to individuals, employers or business administrators who provide misleading information to obtain access to the benefit, or who misuse the funds.
• It is expected that the CEWS will cost about $71 billion over the next three months.