Canada Emergency Wage Subsidy (CEWS) – Update

As many of you are aware, the CEWS was modified for the July 5th claim onward. The rules have become increasingly complex as the bulletin was issued here.

Below is a quick summation of the important changes made to the program

• The CEWS resets for period 5. This means that if you had previously qualified for Period 4, you no longer qualify for period 5 and your situation needs to be re-evaluated.
• The CEWS is now split into two parts, a Base Subsidy and a Top-up subsidy. The latter adds an additional 25% to the claim.
• For period 5 and 6, the minimum floor of the CEWS Claim is to ensure that the reimbursement is going to be equally as generous as the first 4 periods at a minimum.
• The Base subsidy maxes out at a revenue drop of 50% or more.
• A chart below has been provided to explain the gradual reduction of the CEWS. The chart below is for the base subsidy.



• Following this the Top-up portion kicks in if your decline is greater than 50% of revenue. Depends on your 3 month average monthly revenue decline. Similar to previous, there are two comparative Periods allowed to establish a baseline of comparison. They are:
  • January and February 2020
  • 3 month average of the prior year
• Based on the decline, there would be a top up of 1.25x the portion above 50% of a drop.
• Therefore, a large % drop of revenue could potentially trigger an 85% reimbursement versus a max 75% as per the previous claims.
• Finally, once this has all been determined, the Safe Harbor rule kicks in where if your decline is above 30%, but you receive less than the 75% claim, the 75% claim is allowed but this is only for Period 5 and Period 6. Periods 7-9 will no longer have the safe harbor rule apply.
• Additionally, there is now a CEWS portion for furloughed employees. A furloughed employee is one that is asked to take a leave of absence to save the company. This rule is only applicable to arm’s length employees (E.G. Family members and yourself as an owner of the company if you own 20% or more, are not eligible). We will not be going into details here but a furloughed employee is entitled to 75% up to a maximum of $847 a week. Annualized this maximum cap is equivalent to an employee who is earning $58,725.33
• Note that revenue is calculated based on Arm’s length sources only. Hence if you voluntarily do not bill a mutually owned company, this would not make the company eligible for this program.
• Similarly to before, you are allowed to look at you revenue based on Accrual or Cash basis. As mentioned, everything resets as of Period 5 and thus If you had used Accrual basis in the beginning, you are allowed to switch to cash basis to period 5 onward.

If you are eligible or believe you are eligible and have not yet claimed for the CEWS we encourage you to talk to us to discuss further on how we can help you.

Note that there will be a fee charged as the claim process is significantly onerous, time consuming and overly complex.