Created in response to COVID-19, the Canada Emergency Wage Subsidy (CEWS or subsidy) provides savings to employers through a subsidy equal to 75% of employee wages on the first $58,700 per employee, up to a maximum of $847 per week, with no overall maximum for the employer.
Who is eligible for the CEWS?
The CEWS will be available to employers that meet the definition of an “eligible entity”:
- An individual (i.e., sole proprietorships)
- A taxable corporation
- A registered charity, other than a public institution
- A non-profit organization, other than a public institution
- A partnership, all of the members of which are described in 1-4, or
- A prescribed organization.
The term “Public institution” is also defined and would include municipalities, local governments, Crown corporations (both federal and provincial), public universities or colleges, schools, school boards, hospitals and health authorities, among others.
Due to the wording in the CEWS legislation, many Indigenous-owned businesses were not originally considered eligible entities. However, Indigenous Services Canada has announced that the following would now also be considered eligible entities:
- corporations carrying on a business that are at least 90-percent-owned by one or more Indigenous governments, and
- partnerships carrying on a business the members of which are Indigenous governments, eligible Indigenous government-owned corporations and other eligible employers.
How does an eligible entity qualify for the CEWS?
When the CEWS was first introduced, it required a decrease in monthly revenues of 30% as compared to the same month in the previous year for March, April and May. Since then, the government has made key changes to this requirement. Depending on the choices made by the employer with respect to revenues, it could impact their ability to qualify for the subsidy. Considerations need to be made in the following areas:
- Compare revenues to prior year or Jan and Feb, 2020
- Entity-by-entity basis or consolidated;
- Cash method vs Accrual;
- The effect of revenues from related parties;
- How to determine the amount of revenues earned “in Canada.”
Some of these items are discussed in this section, and the rest
in the section thereafter.
We are here to help
We understand that you want to be agile and responsive as the situation unfolds. Having access to experts, insights and accurate information as quickly as possible is critical—but your resources may be stretched at this time.
We’re here to support you as you navigate through the impacts of coronavirus on your business and your investments.
 It should be noted that legislation including these types of Indigenous businesses has not yet been released by the Department of Finance to confirm this position. Any Indigenous business that may be relying on this announcement should proceed with caution until Finance has provided confirmation.
Grant Thornton LLP wants to caution that these rules are still new and continue to evolve as the government continues to re-evaluate the economic impact caused by the COVID-19 pandemic. We may still see changes to these measures—as well as new measures—as the government attempts to address the issues that have been raised by us and the tax community. Therefore, any analysis included herein, reflects our knowledge as of the date and time of this email and may no longer be applicable if changes do occur and you should proceed with caution before making any decisions.
What the new Canada Emergency Wage Subsidy rules means for your business
On July 17, 2020, the federal government introduced proposed changes to the Canada Emergency Wage Subsidy (CEWS) rules.Read more
Canada Emergency Business Account (CEBA)
The Canada Emergency Business Account (CEBA) was created by the federal government to provide interest-free loans of up to $40,000 for small businesses and not-for-profit organizations.Read more
Canada Emergency Response Benefit (CERB)
In response to COVID-19, a new program called the Canada Emergency Response Benefit (CERB) was established to provide $2,000 per month (i.e., $500 per week) to workers who qualify for the benefit for up to 16 weeks.Read more