CEWS (75% subsidy) Update

You may be aware that the Canadian government announced changes to the Canada Emergency Wage Subsidy (CEWS) last week. Since there is a lot of information to keep track of, we wanted to identify the main areas that have changed and share these with you: revenue qualifier and reference period, calculating revenues, charities and non-profits can choose to include other sources of revenue, specifications about pre-crisis remuneration, refund for certain payroll contributions, interaction with other support programs, and specifications about penalties. Please see the changes highlighted below.

The table below outlines the Temporary Wage Subsidy (TWS) for you again, alongside the CEWS programs. Some key things to consider are:

• we have already started implementing the TWS on customers payroll
• the TWS may impact the potential amount of money received from the CEWS
• customers will need to initiate the application for the CEWS and apply for applicable refunds, we cannot do this on customers behalf

Refund for Certain Payroll Contributions
The Government is proposing to expand the CEWS by introducing a new 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan, the details are below.

• This refund would cover 100% of employer-paid contributions for eligible employees for each week while those employees are on leave with pay and for which the employer is eligible to claim for the CEWS for those employees.
• An employee will be considered to be on leave with pay throughout a week if that employee is remunerated by the employer for that week but does not perform any work for the employer in that week.
• This refund would not be available for eligible employees that are on leave with pay for only a portion of a week.
• This refund would not be subject to the weekly maximum benefit per employee of $847 that an eligible employer may claim in respect of the CEWS. There would be no overall limit on the refund amount that an eligible employer may claim.
• Employers would be required to continue to collect and remit employer and employee contributions to each program as usual.
• Eligible employers would apply for a refund, as described above, at the same time that they apply for the CEWS.

Some important notes about how the subsidies interact with each other and with other government benefits are as follows:

• If you claim the TWS and also receive the CEWS, any benefit from the TWS for remuneration paid in a specific period would generally reduce the amount available to be claimed under the CEWS in that same period.
• For the Canadian Emergency Response Benefit (CERB):
  • Eligibility for the CEWS of an employee’s remuneration is limited to employees that have not been without remuneration for more than 14 consecutive days in the eligibility period, i.e., from March 15 to April 11, from April 12 to May 9, and from May 10 to June 6.
  • This rule replaces the previously announced restriction that an employer would not be eligible to 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 Canadian Emergency Response Benefit.
  • Please click on this link for more information about the CERB.
• For employers and employees that are participating in a Work-Sharing program, EI benefits received by employees through the Work-Sharing program will reduce the benefit that their employer is entitled to receive under the CEWS.
• Please visit this link for more information about the TWS.
• Please click this link or more information about the CEWS.
• Please visit this link for more information about the Work Sharing program.

Penalties
A final note regarding the CEWS, employers would be required to repay amounts paid under the CEWS if the government discovers they do not meet the eligibility requirements and pay their employees accordingly. Employers that abuse the program with offences such as fraud may be subject to penalties that may include fines or even imprisonment.
Employers that engage in artificial transactions to reduce revenue for the purpose of claiming the CEWS would be subject to a penalty equal to 25% of the value of the subsidy claimed, in addition to the requirement to repay in full the subsidy that was improperly claimed.

Stay well,

The Includables