Understanding the Canada Emergency Wage Subsidy

New details were provided this week regarding the Canada Emergency Wage Subsidy (CEWS) for employers.  The stated purpose of the subsidy is to help employers keep and return workers to their payroll.  The stated aim of the subsidy is to prevent further job losses, encourage employers to re-hire workers previously laid off as a result of COVID-19 and to assist employers to more easily resume normal operations when the crisis has passed.

Eligible Employers

Eligibility for the subsidy is broad and includes individuals, corporations, partnerships of eligible employers, non-profit organizations and registered charities.  Public bodies such as municipalities, local government, Crown Corporations, public schools and hospitals are not eligible for the subsidy.

To be eligible for the subsidy the employer must have a drop of at least 15% of their revenue in March 2020 and 30 percent for the following months.  Revenue is calculated using the employer’s normal accounting method and excludes revenues from extraordinary items.  Revenues can be calculated under the accrual method or the cash method and must use the same method throughout the duration of the program.  Charities can choose whether or not to include revenue from government sources as part of their calculation but again must take a consistent approach throughout the program.

The calculation of change in revenue can be done by comparing year over year, or if not appropriate for the specific employer’s circumstances could be done by comparing revenue earned in January and February.

When employers apply for the subsidy they will be required to attest to the decline in their revenue.

Amount of Subsidy

The subsidy is payable retroactive to March 15.  The amount of the subsidy is equivalent to 75% of the employee’s remuneration up to a maximum of $847 per week.  The eligible remuneration for the purposes of this calculation are the amounts for which the employer generally would be required to withhold or deduct amounts to remit to the Receiver General, or in other words, includes salary, wages and taxable benefits.  Eligible remuneration does not include severance pay, stock option benefits or the attributed value of the personal use of a corporate vehicle.

There is no overall maximum subsidy amount that an employer may claim.  Employers are expected to make best efforts to top up employees’ salaries to pre March 15 levels.  All amounts paid under CEWS are considered taxable income for the employer.

Refund for Payroll Contributions

The CEWS plan also includes a 100% refund for employer paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan and the Quebec Parental Insurance Plan for employees who are being paid but not performing any work.  The eligibility criteria is considered on a weekly basis and is in the form of a refund.  The refund has no impact on the weekly maximum wage subsidy.

To qualify for the refund of employer paid contributions, the employee must be being paid for work and during the week that they are being paid they must not have performed any work for the employer (on leave without pay).  Employers are required to continue to collect and remit employer and employee contributions to each program.  The employer will apply for the refund at the same time that they apply for the CEWS.

Interaction between CEWS and other Programs

The CEWS program is only one of the programs available to assist employers.  The other available programs are the 10% Wage Subsidy and the Work-Sharing program.  The interaction between CEWS and these programs is as follows:

  1. 10% Wage Subsidy – any benefit from the 10% Wage Subsidy will reduce the amount of CEWS claimable in the same time period;
  2. Work-Sharing program – EI benefits received by employees through the program will reduce the benefit that the employer is entitled to receive under the CEWS.

Application Process

Employers apply for the CEWS through the CRA’s My Business Account portal.  Employers are required to maintain records documenting revenues and remuneration paid.  More details about the application process will be released in the near future.


To put funds into the hands of employers as quickly and seamlessly as possible, the government is relying on an attestation process only to determine eligibility.  However, there will be significant fines and penalties if amounts are paid under the CEWS when employers are not eligible.  Penalties could range from fines to imprisonment.


This post was authored by Rose Keith, QC. Please don’t hesitate to contact her at rkeith@harpergrey.com or anyone else from our Authors page if you have any questions.

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