In this blog series, AF Accounting describes the COVID-19 relief programs offered the Government of Canada and its partner organizations. Parts 1-7 covered the: CERB, CEBA, extended tax deadlines, taxation of the CERB, CECRA, BCAP and LEEFF. Part 8 discusses the Canada Emergency Wage Subsidy (CEWS).
What is the CEWS?
The CEWS is available for Canadian businesses that are experiencing negative affects due to COVID-19. The program provides a subsidy of 75 per cent of employee wages for up to 24 weeks. The aim is to have employers re-hire workers they laid off due to the pandemic, reduce job loss, and assist businesses in returning to normal operations as quickly as possible. In May, the CEWS program was extended. It now runs retroactively from March 15 to August 29, 2020.
Who is eligible for CEWS?
Eligibility is for Canadian individuals/trusts, taxable corporations; tax exempt corporations such as non-profits, chambers of commerce, and labour organizations; registered charities; some Indigenous government-owned corporations; registered amateur athletic associations; registered journalism organizations; private education institutions; and certain partnership organizations.
Who is not eligible for CEWS?
Canadian municipalities, local governments, public education institutions, Crown corporations, and hospitals are not eligible for this benefit.
What is the eligible wage reduction?
In addition to being an eligible organization, the applicant must also meet the requirements of the wage reduction. To determine the eligible wage reduction, start with either the revenue you earned in the corresponding month in 2019 or the average revenue between January and February of 2020. It is important to determine your baseline carefully since you cannot change it for the next two pay periods.
The revenue must be earned in Canada through the sale of goods, the provision of services and/or buyers using your company’s resources. Additional provisions, such as the inclusion or not of grant monies, can be leveraged by registered charities and non-profits. For full details on the wage reduction and its requirements, visit the Government of Canada’s CEWS information page.
How to apply for CEWS
The application for CEWS is online. As the payments are made electronically, the business must first ensure that its payroll account’s direct deposit information is current. Applicants expecting payments in excess of $25 million must register to receive the funds through the large value transfer system (LVTS). A separate CEWS application must be completed for each period of eligibility.
CEWS vs the Temporary Wage Subsidy
CEWS is not the temporary wage subsidy (TWS). The TWS is a three-month program that allows for a reduced payroll deduction in the required remittance to Canada Revenue Agency. While an employer can apply and be eligible for both the CEWS and the TWS, the TWS benefit will reduce the amount available claimed under CEWS for the same time period.
AF Accounting is here to help
Canadian business owners have a lot to deal with during the pandemic on both professional and personal levels. Sorting through the myriad of benefits and their many changes and extensions while in the middle of tax season can be overwhelming. AF Accounting is here to help. From one-time assistance to full-time accounting, from bookkeeping to COVID-19 benefit application support, we are here to help you through these challenging times. Contact us to learn more.