New details on Canada emergency wage subsidy – Real help for employers

April 2, 2020 | Lisa Goodfellow

The Government has announced a wage subsidy of 75% of employee wages, to reimburse employers with qualifying businesses, for up to 12 weeks, retroactive to March 15, 2020.  The following details were announced today:

  • The Canada Emergency Wage Subsidy (“Subsidy”) would apply at a rate of 75% of the first $58,700 normally earned by employees (or a benefit of up to $847 per week).
    • Eligible remuneration may include salary, wages, and other remuneration. These are amounts for which employers would generally be required to withhold or deduct amounts to remit to the Receiver General on account of the employee’s income tax obligation. It does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.
  • The program would be in place for a 12-week period, from March 15 to June 6, 2020.
  • The aim of the Subsidy is to prevent further job losses, encourage employers to re-hire workers previously laid off as a result of COVID-19, and help better position Canadian companies and other employers to more easily resume normal operations following the crisis.
  • Eligible employers are those who suffer a drop in gross revenues of at least 30 per cent in March, April or May, when compared to the same month in 2019.
    • Note: An employer’s revenue for this purpose would be its revenue from its business carried on in Canada earned from arm’s-length sources calculated using the employer’s normal accounting method, and would exclude revenues from extraordinary items and amounts on account of capital.
  • Employers of all sizes and across all sectors are eligible, with the exception of public sector entities.
  • Definitions of revenue will be developed for non-profit organizations and registered charities. The government is also considering additional support for non-profits and charities, particularly those involved in the front line response to COVID-19.
  • Employers will be able to apply through an online portal (more details to come).
  • Employers must make their best effort to top-up employees’ salaries by the remaining 25% to bring them to 100% of pre-crisis level wages.
  • Employers would be required to repay amounts paid if they do not meet the eligibility requirements and pay their employees accordingly. The government is considering creating new offences that will apply to those who provide false or misleading information to obtain access to this benefit or who misuse any funds obtained under the program. Penalties may include fines or imprisonment.
  • Organizations that do not qualify for the Subsidy may continue to qualify for the previously announced wage subsidy of 10% of remuneration paid from March 18 to before June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
    • For Employers who are eligible for both the Subsidy and the 10% wage subsidy, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Subsidy in that same period.
  • An employer would not be eligible to claim the Subsidy for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is paid by the Canadian Emergency Response Benefit.
  • Finance Minister Bill Morneau estimates funds will be available in about six weeks.  The estimated cost of this program is $71 billion.

Further details can be found in these press releases:

English:

The Canada Emergency Wage Subsidy

Government Announces Details of the Canada Emergency Wage Subsidy to Help Businesses Keep Canadians in their jobs

French:

Subvention salariale d’urgence du Canada

Le gouvernement annonce les détails de la Subvention salariale d’urgence du Canada pour aider les entreprises à maintenir en poste les Canadiens

 

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