Initially introduced in March 2020, the Canada Emergency Wage Subsidy (CEWS) is a federal economic support program for businesses impacted by the COVID-19 pandemic. As announced in the 2021 Federal Budget, the CEWS has been extended in order to bridge businesses and workers through to a strong recovery.
Extending the CEWS
With the Wage Subsidy set to expire in June 2021, the 2021 Federal Budget proposes to extend the program for an additional four periods, beginning June 6, 2021 and ending October 23, 2021.
While there are no significant changes to the overall calculation of the program during this extended period, it should be noted that the subsidy rate used in calculations will gradually decline, reducing the amount of government support disbursed during these five periods.
For the period beginning July 4 (Period 18), a business would have to show a decline in revenues of more than 10% to be eligible for the CEWS. This is a change from previous periods where any percentage decrease in monthly revenues meant a business was eligible to claim the CEWS.
For the extended period, the maximum remuneration on which a business may receive the CEWS remains the same as previous periods at $1,129 per employee per week. The subsidy amount that a business can receive per employee per a week is scheduled to decrease over the extended period.
See Table 1 below for details.
Table 1: CEWS Calculations for Periods 17 to 21
Relevant Periods for Calculating Revenues
- Period 17 - July 6 to July 3
- Period 18 - July 4 to July 31
- Period 19 - August 1 to August 29
- Period 20 - August 29 to September 25
- Period 21 - September 26 - October 23
|
Period 17 |
Period 18 | Period 19 | Period 20 | Period 21 | |
| Maximum weekly benefit per employee | $847 | $677 | $451 | $452 | $226 |
| Revenue decline: | |||||
| 70% and over | 75% (i.e., Base: 40% + Top-up: 35%) | 60% (i.e., Base: 35% + Top-up: 25%) | 40% (i.e., Base: 25% + Top-up: 15%) | 40% (i.e., Base: 25% + Top-up: 15%) | 20% (i.e., Base: 10% + Top-up: 10%) |
| 50-69% | Base: 40% + Top-up (revenue decline - 50%) x 1.75 (e.g., 40% + (60% revenue decline - 50%) x 1.75 = 57.5% subsidy rate) | Base: 35% + Top-up (revenue decline - 50%) x 1.25 (e.g., 35% + (60% revenue decline - 50%) x 1.25 = 47.5% subsidy rate) | Base: 25% + Top-up (revenue decline - 50%) x 0.75 (e.g., 25% + (60% revenue decline - 50%) x 0.75 = 32.5% subsidy rate) | Base: 25% + Top-up (revenue decline - 50%) x 0.75 (e.g., 25% + (60% revenue decline - 50%) x 0.75 = 32.5% subsidy rate) | Base: 10% + Top-up (revenue decline - 50%) x 0.5 (e.g., 10% + (60% revenue decline - 50%) x 0.5 = 15% subsidy rate) |
| >10-50% | Base: revenue decline x 0.8 (e.g., 30% revenue decline x 0.8 = 24% subsidy rate) | Base: (revenue decline - 10%) x 0.875 (e.g., (30% revenue decline x 10%) x 0.875 = 17.5% subsidy rate) | Base: (revenue decline – 10%) x 0.625 (e.g., (30% revenue decline – 10%) x 0.625 = 12.5% subsidy rate) | Base: (revenue decline – 10%) x 0.625 (e.g., (30% revenue decline – 10%) x 0.625 = 12.5% subsidy rate) | Base: (revenue decline – 10%) x 0.25 (e.g., (30% revenue decline – 10%) x 0. 25 = 5% subsidy rate) |
| 0-10% | Base: revenue decline x 0.8 (e.g., 5% revenue decline x 0.8 = 4% subsidy rate) | 0% | 0% | 0% | 0% |
CEWS and the Canada Recovery Hiring Program
Employers eligible for the CEWS would generally be able to apply for the Canada Recovery Hiring Program (CRHP). Employers can only apply for one of the subsidy programs. It is recommended that an eligible business explores both the CEWS and CRHP before determining which one to apply for as differing revenue decline-thresholds will impact the subsidy amount a business receives.
Clawback of the CEWS for Executive Compensation
The 2021 Federal Budget introduced a clawback of the CEWS for any publicly listed corporation that has or is currently receiving the subsidy and is paying certain executives more in 2021 than in 2019. If such a corporation is found to be doing this it will be required to repay the equivalent of the CEWS amounts received for any qualifying period starting after June 5, 2021, and until the end of the subsidy program.
This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual tax needs. This publication is not a substitute for obtaining personalized advice.
