• KD Wray

Legislation Has Passed


This program is meant to support employers through COVID-19 crisis

The program is designed to motivate employers to rehire employees on layoff, and ideally put them on leave with pay.  Employees rehired would not be eligible for the Canada Emergency Response Benefit (CERB) so they would cancel their CERBclaim and repay the amount


Eligible employer


Eligible periods

Eligible employee


Eligible employers is very broad and includes individuals, taxable corporations, some partnerships, not for profit organizations (NPO) and registered charities

To be eligible for the CEWS for a period, an employer has to be able to demonstrate a drop of revenue by comparing revenue in the current period to a prior period as described in the chart below

Employers will apply for the CEWS though the CRA My Business Account portal or through a web-based application

The deadline for filing a claim is October 2020

Employer will attest to the accuracy of the application

Employer must have a business number for payroll PRIOR to March 15, 2020

The CEWS can be received by either cheque or direct deposit

Employer needs to keep records to demonstrate their reduction in arm’s length revenues for the applicable period

Employer needs to keep records on remuneration paid to employees to support the claim


Revenue is using arm’s length sources earned in Canada

Revenue is typically calculated using the employer’s normal accounting method and excludes extraordinary items or amount on account of capital

The employer for the purpose of the revenue decline test can elect to using either the accrual method or the cash method to calculate revenue

Affiliated groups can compute revenue on a consolidated or individual basis, the same method would be used for all periods (speak to your tax advisor to determine)

There are some special rules to deal with non-arm's length revenue scenarios

NPOs and charities have special rules

Program is designed to be flexible to maximize applicability to employers


If an employer qualifies for one period than they automatically qualify for the next period, again trying to keep as any employers eligible for the subsidy.

An eligible employee is an individual who is employed in Canada and receives pay for more than 14 consecutive days in the applicable period (this is to tie the CERB into the CEWS).


It is a bit complicated

Greater of:

75% of the amount paid, to a maximum of $847 per week

Lessor of

Amount paid to a maximum of $847 per week

75% of the pre-crisis weekly employee pay

Pre-crisis pay is the average of the pay between January 1 and March 15, excluding any seven day periods with no pay

Employers are expected where possible to maintain existing employees’ pre-crisis employment earnings

New employees are eligible for the CEWS

Pay includes salary, wage and taxable benefits but excludes severance pay, stock option benefits and corporate vehicle benefits

If the employee does not deal at arm’s length with the employer there are special rules limiting the subsidy (speak with your tax advisor as to this calculation)

The non-arm’s length employee had to be employed between January 1, 2020, and March 15, 2020, no new additions

There is no maximum overall limit to the subsidy that the employer can apply to receive

Employers are expected to make their best efforts to top up employee’s pay to bring them to pre-crisis levels


100% refund of the employer portion of CPP \ QPP and EI if

Employee qualifies for the CEWS subsidy AND the employee is on leave with pay

Working from home would disqualify the employee from this payroll contribution refund

The payroll contribution refund are applied for by the employer through the

CRA My Business Account portal

Employers found NOT to be in compliance with the rules will be required to repay the ineligible amount and will be subject to interest, substantial penalties and in some cases incarceration for fraudulent claims.  The government is VERY serious about the potential for abuse so a robust audit regime will likely be put in place.  Records should be retained to support the application.

The CEWS and refund of payroll contributions are considered revenue but are excluded from the revenue calculation as discussed above.

There is a tie in with the temporary 10% wage subsidy, this subsidy will reduce your CEWS.

Work sharing program will reduce the benefit that their employer is entitled to receive under the CEWS.

Maude and Stéphane own a corporation that operates an automobile repair shop. They are working full time, each drawing a salary of $1,300 per week, and have three part-time employees, each earning $800 per week, for a total weekly payroll of $5,000. Maude and Stéphane have reduced their opening hours due to decreased demand for their services. They had initially laid off their employees, but they have now decided to re-hire them following the announcement of the Canada Emergency Wage Subsidy. Their employees are not being asked to report to work during this challenging period.

Maude and Stéphane are now keeping their employees on the payroll, paying them 75 percent of their pre-crisis salary ($600 per week). Maude and Stéphane would be eligible for a weekly wage subsidy of $3,494 ($847 for each of themselves and $600 for each of their employees). Maude and Stéphane would also be eligible for a 100-per-cent refund of their employer-paid contributions to Employment Insurance and the Canada Pension Plan in respect of their employees, providing an additional benefit of up to $124 per week.

At the end of each claiming period, Maude and Stéphane would submit an application through the Canada Revenue Agency portal, attesting that their decline in revenues in each month is sufficient to qualify when compared to the average of January and February. They would also report the total remuneration paid to themselves and their furloughed employees during the month. As Maude and Stéphane have access to direct deposits with the Canada Revenue Agency, they would receive their subsidy shortly after each application.

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