Last Updated: May 19, 2020
Starting April 27, 2020, Canadian businesses can apply to the CEWS, or Canada Emergency Subsidy program.
Also referred to as ‘the 75% program’, the CEWS is designed to help businesses of all sizes who’ve been negatively impacted by the COVID-19 pandemic. How? By covering 75 percent of employee wages, retroactive from March 15, 2020 to August 29, 2019.
If you are a Canadian employer whose business has been negatively impacted by the current pandemic, we explain who is eligible and what you need to do before you apply.
Disclaimer: This content is for informational purposes only and should not be considered legal, accounting, or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Consult with your legal or financial advisor to make the right choice for your business.
What is the CEWS?
The Canada Emergency Wage Subsidy is a government relief program with three goals:
- Help businesses re-hire workers laid off as a result of COVID-19
- Help prevent further job losses
- Help businesses resume normal operations as soon as possible following the crisis
Eligible employers will receive a 75 percent wage subsidy to rehire and pay their employees.
This money can only be used to pay employee salary, wages, and taxable benefits. It cannot be used to cover severance pay, stock option benefits, the personal use of a corporate vehicle, or operational expenses, such as rent, utilities, or equipment.
The maximum benefit is $847 per employee per week for 24 weeks.
Under CEWS, there is no limit to the total subsidy amount or number of employees an employer can claim, and the subsidy amount received will be considered part of your taxable income.
The program is retroactive from March 15, 2020 through to August 29, 2020. (Originally, the program period was from March 15 to June 6, however it has been extended by an additional 12 weeks). That means that if you re-hire employees who were laid off between March 15 and now, the government will retroactively pay 75 percent of their wages.
The CEWS is the latest Canadian program introduced in response to the COVID-19 pandemic. See our full list of government relief funds for small businesses here.
Who is eligible for the CEWS?
The CEWS is available to Canadian businesses of all sizes, including individuals, taxable corporations, and non-profit organizations, that can prove a reduction in revenue due to the COVID-19 pandemic.
Specifically, you must be able to prove a reduction in revenue for one or more of the following time periods:
- First period: March 15, 2020 to April 11, 2020
- Second period: April 12, 2020 to May 9, 2 020
- Third period: May 1, 2020 to June 6, 2020
More information about the CEWS extension to August 29 will be coming soon.
To be eligible, you must be able to prove that you lost at least 15 percent of your revenue during the first period, and/or at least 30 percent of your revenue during the next two periods.
How do I prove a reduction in revenue?
To calculate a reduction in revenue, you must take your revenue from the period you want to claim CEWS for, then compare it to your baseline revenue.
Your baseline revenue is either:
- The revenue you earned in the corresponding month in 2019,
- The average of the revenue you earned in January and February, 2020
Whichever baseline you initially choose must remain the same for each of the following periods.
If you qualify for the CEWS for one claim period, you will automatically qualify for the following claim period.
Use the table below to see which revenue periods you must compare and the required reduction amounts to be eligible.
|Claim Period||Required reduction||How to calculate eligibility|
March 15, 2020 to April 11, 2020
|15%||March 2020 revenue compared to either:
- March 2019 revenue
OR. average revenue for Jan + Feb 2020
April 12, 2020 to May 9, 2020
|30%||Eligible for period one
April 2020 revenue compared to either:
- April 2019 revenue OR average revenue for Jan + Feb 2020
May 10, 2020 to June 6, 2020
|30%||Eligible for period two
May 2020 revenue compared to either:
- May 2019 revenue OR average revenue for Jan + Feb 2020
Here’s an example of how this would work for a small business who would like to apply for the first period using the corresponding month in 2019 as their baseline revenue:
|Claim period||Baseline Revenue||Revenue in March 2020||Reduction (15% required)||Eligible for the CEWS?|
|Period one: March 15, 2020 to April 11, 2020||$30,000 (total revenue for March 2019)||$12,000||40%||YES|
How is the CEWS subsidy amount calculated?
Now that you know if you’re eligible, how do you know how much you’ll receive?
The CEWS amount is based on:
- The number and type of eligible employees you have
- The amount and type of pay they received before and during the eligibility period
To simplify the calculation, the government of Canada has created an Emergency Wage Subsidy Calculator for Employers. You must use the CEWS calculator to determine your estimated subsidy before you apply.
In order to use the CEWS calculator, you’ll need the following information:
- The time period you are claiming for
- Total number of eligible employees
- Gross payroll for eligible employees
- Total eligible remuneration paid to these employees during the claim period
- Total EI and QPIP premiums you paid on salary to eligible employees for the claim period
- Total CPP and QPP contributions you made on salary to eligible employees for the claim period
- The amount you are eligible to claim under the 10% Temporary Wage Subsidy for Employers for the claim period
- Total amount that your eligible employees have received under ESDC’s Work-Sharing benefit program for the claim period (if applicable)
How do I apply for the CEWS?
The CRA will begin accepting applications on April 27, 2020. You can apply online using your My Business Account or through an application form (available on April 27). Your accountant or financial advisor may also be able to apply on your behalf.
If you plan to apply yourself, the government strongly suggests registering for a CRA My Business Account. You must also use the CEWS calculator to determine your estimated subsidy before you apply.
If you’ve already used the calculator (linked to in the question above), the actual application process should only take a few minutes.
Applications will be processed starting May 5, 2020. Subsidies will be sent directly to employers via direct deposit or cheque.
According to news reports, businesses whose applications were approved during the automatic verification process may receive their subsidies as early as May 6 or 7.
All CEWS claims are subject to verification by the CRA. Incorrect or fraudulent claims can result in fines or imprisonment. The government has also warned that employers who fail to pay their employees accordingly will be required to repay amounts received under the CEWS, and that other penalties may apply.
How is the CEWS different from the 10% Temporary Wage Subsidy (TWS)?
The Temporary Wage Subsidy for Employers (TWS), or ‘10% program’ is a separate government relief program for Canadian businesses.
Under the TWS, eligible employers can receive ten percent of the remuneration they pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee, to a maximum of $25,000 total per employer.
Like the CEWS, the subsidy is considered taxable income.
Unlike the CEWS, you do not need to apply for the Temporary Wage Subsidy. You can receive it by calculating the subsidy yourself and reducing your payroll remittance by that amount.
See the government of Canada’s FAQs about the Temporary Wage Subsidy here.
Can I claim both the CEWS and the TWS?
Employers may be eligible for both the 75 percent Emergency Wage Subsidy and the ten percent TWS.
However, the total amount you are eligible to receive under CEWS may be reduced if you claim TWS for the same period.
Do I have to pay my employees the remaining 25 percent of their wages?
No. As of now, there is no requirement that employers ‘top up’ the remaining 25 percent of wages. However, the Canadian government is encouraging you to do so if you can.
Can my employees receive both the CEWS and the CERB at the same time?
No. The CERB, or Canada Emergency Response Benefit, is a separate government relief program for individuals who have stopped working because of reasons related to COVID-19.
This means that if they have been rehired to receive the 75 percent wage subsidy, they are not eligible to receive the CERB at the same time.
Who is an eligible employee?
An eligible employee is an individual employed in Canada by an eligible employer during the claim period.
According to the government of Canada website:
“Employees who have been laid off or furloughed can become eligible retroactively, as long as you rehire them and their retroactive pay and status meet the eligibility criteria for the claim period. You must rehire and pay such employees before you include them in your calculation for the subsidy.”
You may be required to provide a full list of your employees and their Social Insurance Numbers (SIN) for verification after you apply.
What is considered eligible payroll?
Eligible remuneration includes amounts paid to an employee as salary, wages and taxable benefits, fees, and commissions. Any amount you would normally make payroll deductions on for the CRA are considered eligible remuneration.
We will continue to update this guide as more information becomes available.
If you are interested in applying to the CEWS, speak with your accountant or financial advisor to get advice specific to your business.
Community is Everything
At Jobber, we are committed to helping home service business owners stay informed throughout the crisis. We will continue to provide resources and information to help your communities, customers, and employees.
For additional resources and support, we invite you to join the Jobber Entrepreneurship Group, where service business owners are sharing how they’re communicating with customers and adjusting their processes. For those industries not directly affected, there is advice around planning ahead and keeping customers informed.