75% Emergency Wage Subsidy

The Federal Government will provide a 75% wage subsidy for Canadian businesses experiencing a 15-30% decrease in sales due to COVID-19.

Update: The 75% Canada Emergency Wage Subsidy has been extended by 12 weeks to include a period of March 15, 2020 to August 29, 2020.

What is the 75% emergency wage subsidy for employers?

The Federal Government has announced that it will provide a 75% wage subsidy for qualifying businesses experiencing at least a 15% decrease in sales in March 2020 and a 30% decrease in sales for April and May 2020 due to COVID-19. The program was recently expanded to include June, July and August 2020.

The program is intended to incentivize companies to keep their employees working or rehire workers who had previously been laid off.

The subsidy will cover up to 75% of wages on the first $58,700 that an employee earns, up to a maximum of $847 per week, effective March 15, 2020. The subsidy will last for three months.

There will be no cap per employer and the program will be capped at 75% on the first $58,700 that an employee earns (a maximum subsidy of $44,025 per employee or $847 per week).

Employers will have the option to pay only the 75% subsidy to employees, but are encouraged to "top up" employee compensation with an additional 25% to match pre-crisis earnings.

Employers making an application for the 75% temporary wage subsidy can expect to receive a reimbursement via direct deposit a few days after making the application.

As part of the applications employers will have to attest to the decline in revenue. Applications may be subject to verification before money is disbursed.

Are you eligible for the 75% emergency wage subsidy?

Who is an eligible employer?

To be eligible to receive the wage subsidy, you must:

1. be an eligible employer
2. have experienced an eligible reduction in revenue, and
3. have had a CRA payroll account on March 15, 2020

Types of eligible employers

Eligible employers include virtually every entity with employees, including corporations, sole proprietorships, partnerships, registered charities and non-profit organizations.

What is an eligible revenue reduction?

You must determine if your reduced revenue makes you eligible to apply for the wage subsidy in a particular period.

If you determine that you qualify for the CEWS for one claim period, you will automatically qualify for the following claim period.

Calculate your reduction by comparing your eligible revenue for the starting month of the claim period with your baseline revenue. Your baseline revenue is either:

1. the revenue you earned in the corresponding month in 2019, or
2. the average of the revenue you earned in January and February, 2020

You must choose one of these baseline revenue options for your method of comparison and will not be able to change it for your subsequent calculations for the other 2 periods.

Employers will be allowed to calculate their revenues under the accrual method (receivables) or the cash method (actual deposits), but not a combination of both. Employers will select an accounting method when first applying for the wage subsidy and would be required to use that method for the entire duration of the program.

Who are eligible employees?

An eligible employee is an individual employed in Canada by you (the eligible employer) during the claim period, except if there was a period of 14 or more consecutive days in that period where they did not receive any pay (eligible remuneration) by you.

Retroactively hiring and paying employees

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.

What is eligible remuneration?

Eligible remuneration includes amounts you paid an employee as salary, wages and other taxable benefits, fees, and commissions. These are amounts employers would be required to make payroll deductions on to be remitted to the CRA.

Severance pay and items such as stock option benefits or the personal use of a corporate vehicle are not part of eligible remuneration.

Baseline remuneration

When calculating the wage subsidy, you will need to determine an employee's baseline remuneration. Baseline remuneration is considered to be the average weekly eligible remuneration paid to an employee during the period of January 1, 2020, to March 15, 2020. However, you may exclude from your calculation any period of seven or more consecutive days for which the employee was not paid.

Small businesses will have to reapply each month — for example, proving that sales in April 2020 sales are 30% less than they were in April 2019, and onward.

The subsidy announcement indicated that an “honour system” would be used to determine eligibility, with stiff penalties applied to those businesses which abuse the assistance. Employers that engage in artificial transactions to reduce revenue for the purpose of claiming the wage subsidy would be subject to a penalty equal to 25 per cent of the value of the subsidy claimed, in addition to the requirement to repay in full the subsidy that was improperly claimed.

The size of the company or the number of employees will not affect whether it qualifies for the help.

Employers will also be eligible for a subsidy of up to 75% of salaries and wages paid to new employees.

When will the emergency wage subsidy be available?

The 75% temporary wage subsidy will apply to payroll retroactive to March 15, 2020.

Applications will be available on Monday, April 27, 2020.

Payments to employers will be made by direct deposit a few days after making an application. All businesses should register for direct deposit to ensure money can be sent electronically to avoid delays.

How do I apply for the emergency wage subsidy?

Beginning April 27, applications will be open for the Canada Emergency Wage Subsidy.

1. Most businesses may apply using My Business Account
2. If our firm has been authorized to represent your business, we can apply on your behalf using Represent a Client
3. Alternatively, you may apply using a separate online application form (available April 27)

We have provided a 75% Canada Emergency Wage Subsidy tracking spreadsheet which you can download here:

For instructions on how to use the Emergency Wage Subsidy tracking spreadsheet, please watch the following video:

To register for CRA My Business Account go to the following link: CRA My Business Account

Scroll down and select “CRA Register” under “Option 2 – Using CRA User ID and password."

You will have to complete two steps.

Step 1 – Provide personal information

1. Enter your social insurance number.
2. Enter your date of birth.
3. Enter your current postal code or ZIP code.
4. Enter an amount you entered on one of your income tax and benefit returns. Have a copy of your returns handy. (The line amount requested will vary. It could be from the current tax year or the previous one.) To register, a return for one of these two years must have been filed and assessed.
5. Create a CRA user ID and password.
6. Create your security questions and answers. You can also decide if you want a persistent cookie added to your computer, so that you can access CRA Login Services using that same computer later without being asked for more identification.
7. Enter your business number.

Step 2 – Enter the CRA security code

To access your account, return to My Business Account, select "CRA login," and enter your CRA user ID and password. When prompted, enter your CRA security code.

How do I get a CRA security code?

After you have completed the registration process through My Business Account  you will be issued a CRA security code. The CRA security code has an indicated expiry date. Follow the provided instructions before the code expires, or you will have to contact the Individual tax enquiries to have a new CRA security code issued to you.