The information contained in the below publication was current at the time it was published. The COVID-19 programs evolve continuously, and the relevant information may have changed since publication. Readers are advised to discuss their particular situation with their Crowe BGK advisor.
Date: Last updated on April 21, 2020
From: Crowe BGK Tax Group
Subject: UPDATE: Details on the Canada Emergency Wage Subsidy (75% Subsidy)
Today, the Canada Revenue Agency announced details regarding the application process for the Canada Emergency Wage Subsidy (CEWS). It will be possible to submit applications starting on April 27, 2020. We also added to this publication a planning tip to optimize the CEWS. All important changes from the previous version of this publication are in italics.
Benefits provided under the Canada Emergency Wage Subsidy (CEWS)
The pre-crisis remuneration for a given employee is based on the average weekly remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in respect of which the employee did not receive remuneration.
Conditions to claim the CEWS
The effect of this paragraph is to prevent taxpayers reporting income on the cash method from creating or increasing a loss by the purchase of inventory. Please speak to your Crowe BGK advisor for further details on this inventory adjustment.
As can be seen from this formula, where an employer earns revenues from one than more non-arm’s length persons, the analysis must be done with each of the non-arm’s length persons.
Below is an example of how this formula works:
Required reduction in revenue
Reference period for eligibility
March 2020 over:
Eligible for Period 1
April 2020 over:
Eligible for Period 2
May 2020 over:
May 2019 or
Interaction between the CEWS and the Canada Emergency Response Benefit (CERB)
Interaction with existing 10% wage subsidy
10% Wage Subsidy
$0 (Not eligible)
$0 (maximum already reached)
(CEWS is reduced by the 10% wage subsidy claimed in the same period)
Interaction with the Work-Sharing Program
How to apply for the CEWS
Integrity of the program, and introduction of a strict anti-avoidance rule