Canada Emergency Wage Subsidy “2.0”

The rules for the Canada Emergency Wage Subsidy (CEWS) have undergone a major overhaul. This came into effect for Period 5 on July 5, 2020.

The “CEWS 2.0” as it’s referred to by some, has been extended and has had several major changes implemented. This increases the complexity of the calculations, but also makes it so more employers can qualify for the subsidy.

Here are the main changes to the CEWS:
The subsidy has been extended to November 21 with a possibility that a December period will be added. Workers with over 14 days of no pay are no longer disqualified from CEWS and the subsidy will apply to any and all wages they do have over a four-week Period.

The 30% revenue drop is no longer a requirement to apply for CEWS.  This means a company with as little as a 1% revenue drop qualifies. However, the amount of your subsidy is now a direct factor of your revenue drop so a 1% revenue drop will only qualify you for a subsidy between 0.04% – 0.12% depending on the Period for which you are applying.

The subsidy is no longer 75%.  The subsidy is a varying factor each Period with the factor and the maximum subsidy being reduced gradually each period.The maximum subsidy is dropping to 60% in Period 5 and then down to 20% in Period 9. There is a Top-up Percentage for companies whose revenues have dropped more than 50%.  This Top-up is also on a sliding scale based on your revenue drop to a maximum of 25%.

Base Remuneration (pre-crisis average weekly earnings) is no
longer required for Arm’s Length Employees as the subsidy is only allowed on actual remuneration. This means that the ability to receive a subsidy of 100% of your employee’s wage if you paid them up to 75% of their base remuneration is no longer available. The Base Remuneration (pre-crisis average weekly earnings) for Non-Arm’s Length employees is still required however you can now elect the Base Remuneration Period to be July 2019 – December 2019 rather than the January 1 – March 15, 2020 period.  This means that if you have Non-Arm’s Length employees who were only paid a bonus at the end of the year in 2019 this bonus can now be used as Base Remuneration.

With the new changes in place some companies who were unable to apply for CEWS because they had less than a 30% drop in revenue will now qualify.  There is also the possibility that Owner’s who didn’t have qualifying wages for the first four periods may now qualify under CEWS 2.0.

This information was provided by the Catalyst Group.

To access the subsidy calculator and more, you can navigate to the government website by clicking here.

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