The federal government has opened applications for the Canada Emergency Wage Subsidy (CEWS), the $73 billion program aimed to prevent job losses and encourage employers to rehire workers laid off as a result of COVID-19.
A report found more than half of small firms with employees said they will apply for the CEWS.
The program offers a subsidy of 75 percent of an eligible employee’s weekly earnings, to a maximum of $847 per employee per week to eligible employers, for up to 12 weeks. The funding is retroactive to March 15. The government said businesses can generally expect to receive their payment within 10 business days if they are registered for direct deposit on their payroll account.
To be eligible to receive the wage subsidy, businesses must:
1. Be a private corporation, non‑profit organization, or registered charity.
2. Have experienced a reduction in revenue related to COVID-19
3. Have had a CRA payroll account on March 15
For the eligible revenue reduction requirement, businesses should choose which periods the reduction took place over.
- The first is the period between March 15 and April 11, where the baseline revenue is March 2019, or the average of January and February 2020.
- The second is the period between April 12 and May 9, where the baseline revenue is April 2019, or the average of January and February 2020.
- The third is the period between May 10 and June 6, where the baseline is May 2019 or the average of January and February 2020.
Registered charities and non-profit organizations can choose whether or not to include revenue from government sources when applying for the subsidy.
Before applying for the CEWS, businesses must confirm their business details and direct deposit information for payroll accounts are up to date. They should then register these payroll accounts for direct deposit, before estimating the subsidy the business will need. The government said businesses expecting a payment of $25 million or more need to receive their payment through the large value transfer system.
There are three ways to apply for the subsidy. Most companies can apply using the Canada Revenue Agency’s (CRA) “My Business Account,” but representatives, such as owners, directors, or bookkeepers, can also apply using “Represent a Client,” or companies can use the Web Forms application with their web access code.
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All claims that are approved through the CRA automated verification process will be sent for payment on May 5, and payments that are being made through direct deposit should begin to reach employers’ accounts as of May 7.
The government said some applications will require a secondary verification, done manually, and in these cases the CRA may contact employers to verify information. It is expected that these secondary verifications will take no more than 72 hours in the vast majority of cases.
CFIB said the complexities of the program remain a significant concern for businesses.
The CRA has partnered with financial institutions to enroll Canadian employers for direct deposit, and employers can now register business payroll accounts for direct deposit with the CRA through their bank portals. Employers can also sign up for direct deposit with their financial institutions after applying for the CEWS.
The CEWS is taxable, and recipients must include the amount of subsidy they receive on their Annual Return of Income when calculating their taxable income.
CEWS recipients will also need to report the amount of the CEWS that was used to pay each of their employees’ salaries by using a special code at the bottom of the employees’ T4 slips. The government said more information on these reporting requirements will be released before the end of the year.
A new report from the Canadian Federation of Independent Business (CFIB) found that more than half of small firms with employees said they will apply for the subsidy, although many still have questions around the specifics of the program.
CFIB said its business helpline is receiving approximately 800 calls per day, adding that the complexities of the program remain a significant concern for businesses.
Some of the outstanding questions that remain regarding the CEWS, according to CFIB, include, whether employer wages be included in the wage subsidy; new employees hired after March 15th can be included; and if employees are paid in periods that are different from those outlined by the government, how does the employer recalculate their pay.
Full details of the CEWS can be found here.
During his daily briefing on Monday, Prime Minister Trudeau noted that since applications opened at 6 am, more than 10,000 businesses have already applied for the wage subsidy. The prime minister stated the subsidy is meant to support all types of companies from larger businesses to “fast-growing startups that employ just 20 people.”
While some from the startup, tech community have criticized the federal program’s revenue criteria, a survey conducted by the Council of Canadian Innovators (CCI) found the expanded criteria passed by Parliament in early April could allow more startups to access the subsidy. The survey found that nearly 40 percent could be ineligible for the wage subsidy, compared to 94 percent of companies that said they would be ineligible prior to the expanded criteria.
The CCI noted that the most frequent business models cited as not be eligible were software-as-a-service (SaaS) and recurring monthly revenue through subscriptions.
CFIB’s latest survey found that three out of 10 businesses owners who had staff prior to COVID-19 say they will not apply for the CEWS; of those, 29 percent say the main reason is because it is too late to bring back laid-off workers, while 23 percent would like to apply but are not eligible.
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