Home » Covid Impact Update: Canada Emergency Wage Subsidy (CEWS) Apr 21 2020

Covid Impact Update: Canada Emergency Wage Subsidy (CEWS) Apr 21 2020


By Leanne Standryk and Alexandra Del Vecchio

We previously provided a report of the Canada Emergency Wage Subsidy Program (CEWS) announced April 1, 2020.  On April 11, 2020, the Federal Government passed Bill C-14, Covid Emergency Response Act, No. 2.  Bill C-14 amends the Income Tax Act to introduce the CEWS.

Since that time, the Federal Government has provided further information and updates including the latest announced Tuesday, April 21, 2020 confirming:

a) The availability of a new on-line calculator found at https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html; and

b) Eligible Employers may apply for the CEWS on April 27, 2020.

Eligible Employers

Eligible employers include individuals (including trusts), taxable corporations, persons exempt from corporate tax other than public institutions (non-profit organizations, agricultural organizations, boards of trade, chambers of commerce, non-profit corporations for scientific research and experimental development, labour organizations or societies, benevolent or fraternal benefit societies or orders), registered charities and partnerships consisting of eligible employers. Public bodies such as municipalities, local governments, crown corporations, public universities, colleges, schools and hospitals are NOT eligible for the subsidy.  

Public institutions are NOT eligible for the subsidy, which include municipalities, local governments, Crown corporations, public universities, colleges, schools and hospitals.

Eligible Employees

Eligible employees are individuals employed in Canada by an eligible employer during the claim period, except if there was a period of 14 or more consecutive days where they did not receive any pay from the employer. Note that employees who have been laid off can become eligible retroactively provided that the eligible employer rehires them and their retroactive pay and status meet the eligibility criteria for the employer’s claim period. These employees must be rehired and paid before the employer can include them in their calculation for the subsidy.

Revenue Reduction

Originally, the CEWS was available to those eligible employers who had seen a drop of at least 30% of their revenue in a proscribed period. The initial requirement has now been revised so that Eligible Employers who have seen and can demonstrate a drop in revenue of at least 15% of their revenue in March 2020 and 30% in April 2020 and May 2020 may be eligible for the subsidy.  Employers must attest to the change in revenue in the application process.

  • To demonstrate the reduced revenue, employers may compare eligible revenues over one of the following periods of time
  • Year over year March 2020 to 2019, April 2020 to 2019 and May 2020 to 2019.

Average of revenue earned in January and February 2020.  

When applying for the CEWS you must chose either the year over year approach or the alternative average approach and must use that same approach throughout the program period.

An employer’s revenue for this purpose would be its revenue from business carried on in Canada earned from arm’s length sources.  Revenue is to be calculated using the employer’s normal accounting method and would exclude revenues from extraordinary items and amounts on account of capital.  For non-profits and registered charities, the government has confirmed its commitment to work with the sector to determine the appropriate method of calculating ‘revenue’ taking into consideration their specific circumstances.

Value of the Subsidy  

The CEWS amount is based on the number and type of eligible employees the employer has and the amount and type of pay they received before and during the crisis.

The Amount of Subsidy for an individual employee will be based on eligible remuneration for a twelve-week period, March 15 to June 6, 2020 and will be the greater of:

  • 75% of the amount of remuneration paid, up to a maximum benefit of $847.00 per week; and
  • The amount of remuneration paid, up to a maximum benefit of $847.00 per week of 75% of the employee’s pre-crisis weekly remuneration, whichever is less.

The CEWS will be retroactive to March 15, 2020

In addition to the base subsidy, the CEWS will also cover 100% of employer-paid contributions (E.I., CPP) for eligible employees on leave with pay and who are not performing any work for the employer and for whom the employer is eligible to receive the base CEWS.

Eligible Remuneration

Eligible remuneration used to calculate individual employee subsidy amounts may include salary, wages and other taxable benefits, fees and commissions. This is remuneration of which would be generally subject to withholdings or deductions for tax purposes, required by law and remitted to the Receiver General. However, it does not include severance pay or items such as stock option benefits or the personal use of a corporate vehicle.

There is no known overall limit on the total subsidy that an eligible employer may claim under the CEWS program other than the individual limits noted above.

Claim Periods

To date, there are three eligibility claim periods:

Period One: March 15 – April 11, 2020. 

The employer must show a 15% decline in revenue for March 2020 as compared to March 2019 or the average of their January and February 2020 revenue.

Period Two: April 12 – May 9, 2020. 

An Employer will be required to show a 30% decline in revenue for April 2020 as compared to April 2019 or the average of their January and February 2020 revenue.

Period Three: May 10 – June 6, 2020. 

An Employer will required to show a 30% decline in revenue for May 2020 as compared to May 2019 or the average of their January and February 2020 revenue.

For example, if revenues in March 2020 were down more than 15% compared to either March 2019 or the average of their January and February 2020 revenue, the employer would be eligible to claim the CEWS on remuneration paid to employees between March 15 and April 11, 2020.

Application Process

Eligible employers may apply for the CEWS online through the CRA’s “My Business Account” portal on April 27, 2020. 

Once eligibility for the subsidy is approved for a specific period, the Employer will automatically qualify for the next period of the program.

If an employer or organization does not qualify for the CEWS, they may still be eligible for a previously announced 10% wage subsidy for small businesses, non-profits and/or charities regarding remuneration paid between March 18, 2020 and June 20, 2020.

Where an organization or Employer is eligible for both the CEWS and the temporary 10% wage subsidy previously announced, the 10% wage subsidy paid in an overlapping period will generally reduce the amount available under the CEWS.

Eligible employers may not claim the CEWS for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the Canada Emergency Response Benefit (“CERB”), unless such employees are rehired and retroactively paid before the employer calculates their CEWS.

Amounts received by eligible employers under the CEWS will be deemed government assistance and will be included in the eligible employer’s taxable income. Assistance received under either wage subsidy would reduce the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration.

Objective of the Program

The objective of the program is to provide a subsidy that allows employers to retain their employees on payroll and to avoid lay-offs and/or terminations.  Under Bill C-14, employers are expected to make their best efforts to pay the remaining 25% of wages, however, the Federal Government recognized that for some employers, this may not be possible. Employers are also required to make their best efforts to recall or re-hire employees, however, Bill C-14 does not make this a mandatory condition of eligibility for the program.  If employers currently have employees on lay-off but there is no work available, Bill C-14 requires the Employer to put the employees back onto payroll where the employee status may change from lay-off to paid leave of absence supported by the CEWS.


We remain committed to supporting our clients with timely communication of details as they become known.  The various programs offered by the Federal Government and by Bill C-14 add complexities to the workplace. We are available to answer your questions and provide assistance specific to your workplace please contact us at 905-641-1551.



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