Subsidize 75% of Employee Wages with the Canada Emergency Wage Subsidy Program (CEWS)
Update: Please see our latest blog on the Canada Emergency Wage Subsidy Program (CEWS) for the most up to date information.
Canadian employers have an obligation to their payroll employees, but due to the recent COVID-19 pandemic, they may be unable to meet those commitments. With the Ontario Ford government requiring a minimum 14-day shutdown of non-essential businesses that are unable to telecommute, many employers have been forced to lay off their employees to help flatten the curve.
To alleviate a portion of payroll expenses for eligible businesses that remain open, or will re-open after the mandatory shutdown, the government has introduced the Canada Emergency Wage Subsidy. The subsidy will allow qualifying employers to have up to 75% of employee wages reimbursed, with a weekly cap of $847 per employee and for a maximum period of 90 days. This program will provide employee wage subsidies retroactively to March 15, 2020 up to 1,000 employees. The program would be in place for a 12-week period, from March 15 to June 6, 2020. It’s also expected that the employer would make their best efforts to top up the salary to 100% of the maximum wages earned.
The subsidy will cover up to 75% of the first $58,700 earned per employee. This equates to a subsidy of up to $847/week per employee.
Businesses not eligible for this wage subsidy can apply for the previously announced 10% temporary wage subsidy program through the Canada Revenue Agency (CRA).
Who is Eligible for the Canada Emergency Wage Subsidy?
APRIL 8 UPDATE: Businesses now can show a 15% decline in revenue during March compared to the previously announced 30% threshold. Businesses can compare March revenue to January and February 2020.
To help ensure Canadian employers have the financial capacity to bring employees back to work after mandatory non-essential business closures, the eligibility for the Canada Emergency Wage Subsidy has been expanded to include far more employers than the previously announced 10% wage subsidy.
Eligible employers include:
- Individuals;
- Taxable corporations; and
- Partnerships consisting of eligible employers, non‑profit organizations and registered charities. Those that see a drop of at least 15% of their revenue in March 2020 and 30% for the following months.
What Does the Application Process Look Like?
UPDATE: The federal government has released additional details on the wage subsidy program, including how businesses can apply for this subsidy through the Canada Revenue Agency online portal.
Once an approach is selected by the employer on calculations, this approach must be applied throughout the program period of March 15 to June 6. Employers are not able to change their calculation method. Funds will be paid out within 6 weeks and it’s highly suggested to set up direct deposit in CRA’s online portal to facilitate the payments.
The complexity of applying for the Canada Emergency Wage Subsidy will depend heavily on your business’ size and payroll structure. Contact a member of the Mentor Works team for more information, or visit our COVID-19 support page to find additional government funding programs.
Due to the rapid changes in government funding programs related to COVID-19, Mentor Works is hosting weekly webinars to keep Canadian business owners informed about the financial support programs they have available to them. Register for our upcoming COVID-19 Support for Canadian Businesses webinars.
Updated: April 14, 2020.
My husband has taken a leave of absence from work because of the virus.
He is a diabetic older and in health care working with patients in the community.
As stated by drs and government officials he should stay home as he has an underlying condition.
Can he apply for one f the benefits.
Hi Sharron – Thanks for reaching out. Your husband should investigate each of the different income support incentives offered by the government in response to COVID-19 to determine which option makes the most sense for his situation. For an interactive description of each option, please refer to our “Which income support option is right for me?” Infographic and click on the program you’re interested in to be directed to the relevant government program’s webpage. Stay well and all the best.
I am a small business owner who’s sales are down much more than the 30% needed to qualify for CEWS. I understand that my employees salaries qualify but what about my salary as a business owner?
Hi Don – Canada.ca mentions arm’s length employees on their CEWS page: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
Please note that this is subject to change after this comment was posted.
I own a daycare thus deemed non-essential. My accountant seems to think we would not qualify as we were forced to shut down- she says this is for essential businesses only and we should use CERB.
Is this true? I cannot find that info anywhere and that is not at all what I understood from reading all the info on the wage subsidy right off CRA website.
Hi Stacey – This program might be relevant if you keep paying your payroll employees and don’t lay them off. There are also other factors, such as your business’ registration type and if you’ve seen a reduction in revenues. Please refer to our COVID-19 Income Support Options Infographic to compare your possible options.
I still have the same question regarding the business owner’s salary. is it covered not? the statement on the CRA site is very confusing.
Also regarding the $40,000 loan. the requirements are $50,000 payroll in 2019. my business pays lots of Associate employee . and provide T4A. Can I consider the amount paid on T4A’s to fulfill the minimum requirement?
My campground just informed us that they were shut down but they still want the yearly fees, don’t they get some type of compensation from the government
Hi Chris – The Canada Emergency Wage Subsidy (CEWS) would be specific to businesses that kept their employees on payroll, along with other eligibility factors. If the campground did not retain its employees on payroll, then as it turns out, they would not be eligible for the CEWS.
Hi William – We would recommend that you consult with your accountant on the calculation and inclusion/exclusion of salaries based on your corporate structure and payroll.
What about the option of a business amending their 2019 payroll filing to ensure that they are above $20,000? I have not found anything that says that this is expressly forbidden. It is simply amending a tax document as one might amend a tax return for changes in information. Take care.
Hi Aaron – For payroll elements, we recommend that you consult your accountant directly, as the rules are changing rapidly and they will have sound advice on how these incentives impact your overall financial plan.
I coach in a NFP community sports program, the program is still offering services via distance coaching so a small amount of revenue is still being generated however the majority of the clubs revenues are generated via bi-annual registration for our spring / summer and fall / winter programs. Missing our spring / summer registration (revenues) for these programs equals a reduction of revenues of approx 40%, however we can not provide month to month revenue details because we collect training fees in Oct and April which account for about 70-75% of the clubs revenues.
Are we still able to apply for the program?
Hi Greg – The program details are evolving and we would recommend you refer to the Canada Emergency Wage Subsidy page directly for the latest eligibility criteria, including their CEWS Calculator Tool. All the best.
Hi Chris.
I operate a small music teaching business with one employee, and that’s me… however, I’m paid via dividends. My business is incorporated and pays taxes as I do personally pay my share of taxes on the dividends. I’m having troubles slotting my situation into any of the financial programs offered to businesses that are hurt by Covid19. Ive converted to online teaching and had to purchase equipment to do this. However, not everyone is keen to have online lessons for long term. My May to August term is looking to lose upward of 30 -32 % revenue. This result in me being able to take any payment from the company in the way of dividends. This will result in my personal being affected quite substantially. How and where do I go to speak or apply based on my circumstance.
Hi Paul – We recommend you review our COVID-19 Income Support Options Infographic to explore your options, as CEWS doesn’t seem like a good fit for your non-payroll situation. You might want to investigate BCAP and CERB as possible cash flow stimulus options for yourself. Your bank might have more options for you as well. Stay well and we wish you all the best.
with wage subsidy how mush are the employers getting and how much are they suppose to give each enployee per hour,I heard some places get $5 per hour per employee and do they give the employee $2 per hour
Hi Tony – With CEWS, the employer is expected to make all attempts to top up their employees’ salaries to 100% with the subsidy covering up to 75% of their typical payroll if eligible. To determine your subsidy amount, please use the government’s official Canada Emergency Wage Subsidy Calculator.
My employer won’t apply for the wage top up and I think that’s unfair. Is there anyway I can apply on my own?
Hi Amy – As it turns out, CEWS is meant for employers, however there are a number of income support options to be aware of. It’s worth noting that these are mostly for unemployed Canadians: What to Apply for After CERB – All Canadian Income Support Options.
CEWS a great program indeed. Many of our clients are using it.