Canada Emergency Wage Subsidy (CEWS) update:
- What is it: 75% Subsidy of employee wages and payroll taxes aimed to help employers keep their staff OR re-hire employees that were recently laid off
- Eligibility change: Previously, businesses needed to be able to show a 30% drop in revenue for March 2020 as compared to March 2019. This has now changed to a 15% drop in revenue. For the months of April and May, the revenue drop over the same months last year needs to be 30%
- New businesses that were not operating in March 2019: will take their average revenue of Jan and Feb 2020 as a comparison with March 2020 to be able to prove a revenue drop.
- How to apply: Through your My CRA Business account. Now is the time to make sure you can login. Test it out and see if you need to reset your password. Set up your direct deposit info now to receive your payment faster.
- When can you apply: Specific details have not been released yet. We will let you know as soon as it is announced. Hopefully in the next 3-6 weeks.
- How does this subsidy interact with the Temporary Wage Subsidy: any amount you claim for the Temporary wage Subsidy will reduce the amount you receive under the CEWS. Homeroom will continue to calculate the Temporary Wage Subsidy on a monthly basis and keep track of it all so you don’t have to.
Re-hiring employees: things to consider
- Employers will not be eligible to claim the CEWS for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the Canadian Emergency Response Benefit (CERB).
- So let’s say someone gets the CERB this week which is for the period March 15-April 15, they should not be rehired until April 16.
- As employers, you need to figure out with the employees that you are re-hiring if they have already applied for EI or CERB.
- If the employee has already started receiving EI benefits, then they will be declaring their earnings to Service Canada, which will mean that their EI benefits will stop after you rehire them.
- What to do about recent ROE’s: I still haven’t figured out if we need to change ROE’s, but based on my research I’m quite sure that we leave the ROE’s as is because the employees would still be eligible for EI for the weeks since they were laid off.
- The most important point I would like to share is that as employers, we must strive to ensure that we use these programs honestly so that there is no double-dipping. Thanks in advance for your help with this.
Temporary layoffs: must be less than 13 weeks to avoid a deemed dismissal where severance would be owing. Keep in mind that temporary layoffs are just that – temporary. They can only last a maximum of 13 weeks in a period of 20 weeks (about three months in a period of five months), i.e. they cannot continue indefinitely.
Have you applied for the CEBA (Canada Emergency Bank Account) yet?
This is a $40K loan from your financial institution that is guaranteed by the government. Applications can be done online and the money should be flowing in the next week. Funds can be used for operating expenses that cannot be deferred (rent, bills, insurance, payroll). Some businesses will be eligible for more than $40K. 25% of the first $40K is forgivable if it is repaid by Dec 2020. This means a government grant of $10K.
- Cash is king. Do a 13 week cash flow projection and see what your business needs in the next 13 weeks to stay afloat. The more info you have, the better your chance of getting help from your bank.
- Change/shift installments for corporate tax that you are have made to pay for payroll tax or GST. Talk to Homeroom if you think this is could apply to you.