COVID-19 – Canadian Tax and Business News, release #21
Our COVID-19 Canadian Tax and Business News updates are our way of informing our clients, friends and business associates with recent information that may help businesses and individuals while coping with the outcomes from the COVID-19 pandemic.
Our goal is to monitor the news and release relevant information as it becomes available.
The summary below is based on our understanding and interpretation of the announcements made by the government. The information below is in summary form and subject to change until the proposals are passed as legislation. Contact one of our professionals to discuss these matters in the context of your situation before acting upon such information.
CEWS Expansion until 2021
On October 9, 2020, the Department of Finance announced the Canada Emergency Wage Subsidy (“CEWS”) would be expanded until June 2021. Ongoing details will be provided as the program progresses into the new year.
CEWS Periods 8, 9 and 10
On October 14, 2020, the Department of Finance released details regarding periods 8, 9 and 10 (collectively referred to as the “subject periods”) of the CEWS. The subject periods run from October 24, 2020 to December 19, 2020. The expansion of the CEWS to period 9 was previously announced in July of 2020 where the Department of Finance divided the program into two parts consisting of a “base subsidy” and a “top-up subsidy”. Although specific eligibility details for the subject periods have not been provided, below is a quick summary of the government announcements on changes related to the base and top-up subsidies. This is a brief summary, and the government is expected to release a detailed technical backgrounder on the extended CEWS including details on eligibility in the near future. Also, legislation will need to be introduced in order to implement the changes summarized in this update.
Base and Top-Up Subsidy-Active Employees
The base subsidy during the subject periods will be fixed at 40% and the maximum top-up subsidy rate will remain at 25% for qualifying wages paid to active employees. Wages paid to furloughed employees are not subject to these changes (the rules for furloughed employees is discussed later in this news update).
In previous periods, eligible employers qualified for the top-up subsidy if they experienced a 3-month average revenue drop of more than 50%. For the subject periods, the revenue-decline test for the base subsidy and the top-up subsidy will be harmonized. As a result, both subsidies will be determined by the change in monthly revenues year over year for either the current or previous calendar month under the general approach or by the change in monthly revenues relative to the average of its January and February 2020 revenues under the alternative approach. The full top-up of 25% and overall maximum subsidy rate of 65% is achieved with a revenue decline of 70% in a period.
Safe Harbour Provision
The proposed changes to the CEWs for the subject periods include a safe harbour provision with respects to the top-up subsidy which provides eligible employers with a top-up subsidy rate no less than it would have received under the previous three-month-revenue decline test applicable to periods 5 through 7.
Furloughed Employees
Wages paid to furloughed employees will still be eligible for the CEWS, but the subsidy amount will be better aligned with benefits provided through Employment Insurance. As a result, the subsidy per week is equal to the amount of eligible remuneration paid in respect of the week; or, if the employee receives remuneration of $500 or more in respect of the week, the greater of $500 and 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $573.
Stay tuned for additional details on the program specifics once the government has released the technical backgrounder.
Resources
Finance Backgrounder on CEWS Periods 8, 9 and 10
Government announces new, targeted support to help businesses through pandemic
As we all try to stay safe, we need to remind ourselves business will get back to normal but in the meantime let’s all do our part to get to normal as soon as we can. If you have any questions or require further information, don’t hesitate to reach out to us.
Get in touch by email: info@fazzaripartners.com or phone: 905.738.5758
