With consumer spending dramatically decreasing due to COVID-19, many businesses across Canada are relying on the Canada Emergency Wage Subsidy (CEWS) to partially fund their employees’ wages. With coronavirus cases on the rise in many provinces and the threat of another lockdown looming over businesses, many Canadian employers are relying on the 75% wage subsidy to prevent layoffs and keeping their business afloat. According to Canada.ca, CEWS has approved 1,300,000+ applicants and paid $42.63 billion in wage subsidies since the program started in March.
CEWS covers 75% of an employee’s first $58,700 earned, which equates to a subsidy of up to $847/week per employee.
The CEWS program was originally announced in March of 2020 and put in place until August 29, 2020. An announcement was made mid-July that the CEWS program would be receiving its first extension until December 2020, and now the program has recently received its second and longest extension to date, until June 2021. As it stands, the CEWS program will be in effect for at least 15 months in total.
Use the following hyperlinks to jump to the designated categories below:
- Can I Still Apply?
- Is My Business Eligible?
- Are My Employees Eligible?
- How Do I Calculate How Much I Am Eligible for?
- Alternatives to CEWS
- Income Support Options
Can I Still Apply for the Canada Emergency Wage Subsidy (CEWS)?
Yes. The CEWS program is currently accepting applications for employees that will be brought on, as well as providing retroactive funding for employee wages earned from March 15, 2020. This program was designed to encourage employers to re-hire workers previously laid off as a result of COVID-19, as well as help to prevent further job losses and put business owners in a better position to resume normal operations following the crisis.
Apply for the Canada Emergency Wage Subsidy (CEWS) on Canada.ca.
Is My Business Eligible for CEWS?
Over time, the federal government has expanded their eligibility criteria for CEWS to be more inclusive for Canadian businesses that are struggling with revenues during the pandemic. During the throne speech, the federal government removed the minimum drop in revenue compared to last year for future claim periods.
CEWS no longer requires a minimum drop in revenue for claim periods 5 (on or after July 5, 2020) and onwards, but your reduction in revenue will be used to calculate how much funding you can receive.
Businesses must fit within each of the two main eligibility criteria. Click the links below to scroll down:
If you are seeking retroactive funding for wages paid between March 15 – July 4, 2020, you must also:
1. The Full List of CEWS-Eligible Employers:
- Corporations and trusts that are not exempt from income tax (Part I of the Income Tax Act);
- The following persons that are exempt from income tax (Part I of the Income Tax Act):
- Non-profit organizations;
- Agricultural organizations;
- Boards of trade;
- Chambers of commerce;
- Non-profit corporations for scientific research and experimental development;
- Labour organizations or societies; and
- Benevolent or fraternal benefit societies or orders.
- Registered charities;
- Certain Indigenous government-owned corporations that carry on a business;
- Partnerships consisting of eligible employers and certain Indigenous governments;
- Registered Canadian amateur athletic associations;
- Registered journalism organizations;
- Private schools or private colleges; and
- Partnerships consisting of eligible employers (including partnerships where at least 50% of the interests in the partnership are held by eligible employers).
Canada.ca warns that public institutions such as municipalities, local governments, Crown corporations, public universities, colleges and schools, and hospitals are not eligible for this subsidy. View the full list of eligible employers on Canada.ca.
2. CRA Payroll Account in Place on or Before March 15, 2020
To prevent abuse of the Canada Emergency Wage Subsidy (CEWS), the federal government requires all applicants to have already had a CRA payroll account in use before they apply. Businesses who initiated a CRA account from March 16 onward will be ineligible to receive funding.
3. Reduction in Revenue
CEWS allows businesses to retroactively claim wage subsidies for previous periods if they met the eligibility criteria during those periods.
Update: Effective December 20, 2020, a business must continue to use the same comparative benchmark they used from Period 5 (beginning on July 5, 2020) onwards.
A reduction in revenue is no longer required for claims made after July 5, 2020.
The following information is only relevant to those seeking retroactive funding for retroactive claims made for wages paid between March 15 – July 4, 2020.
In order to be eligible for the first four claim periods of CEWS, a business must prove they had a drop in revenues when compared to their revenues of the same time period in 2019. The current list of claim periods is shown in the chart below. Find additional info on these dates on Canada.ca.
Reduction in your business’ revenues can be calculated by comparing your eligible revenue for the starting month of the claim period with your baseline revenue. Your baseline revenue can be calculated as either (1) the revenue you earned in the corresponding month in 2019, or (2) the average of the revenue you earned in January and February 2020.
Learn more about calculating your business’ revenue reduction and future claim periods on Canada.ca.
Which of My Employees Are Eligible for this Wage Subsidy Program?
Canada.ca defines eligible employees as individuals employed in Canada by you (the eligible employer) during the claim period, except if there was a period of 14 or more consecutive days in that period in respect of which they were not paid eligible remuneration by you.
Retroactive funding for employees who have been laid off or furloughed can become eligible, as long as your business rehires them at their retroactive pay level and their status meets the eligibility criteria for the claim period. You must rehire and pay such employees before you include them in your calculation for the subsidy.
Support for furloughed employees has been extended until March 13, 2021 and can reach up to $595 per employee, per week.
Read more information on employee eligibility for the CEWS program on Canada.ca.
How Do I Calculate How Much I Am Eligible for?
Canada.ca has an easy-to-use CEWS Wage Subsidy Calculator that can tell you exactly how much your business will be eligible for during each claim period.
What COVID-19 Support Programs Should I Apply for if I Am Not Eligible for CEWS?
We strongly urge all businesses not eligible for the Canada Emergency Wage Subsidy (CEWS) to view our blog outlining all CEWS-alternative funding programs. We have summarized a few of the top COVID-19 financial support programs below:
This program provides interest-free $40,000 loans, of which 25% is forgivable, to support Ontario SMEs ineligible for other COVID-19 funding programs. Funding for this program was recently topped up by $600M due to overwhelming demand and we strongly encourage you to reach out to a member of the Mentor Works team to begin the application process.
The government of Canada has increased support and flexibility to the Work-Sharing (WS) program to support families and businesses throughout COVID-19.
The CECRA program will lower small businesses’ rent by up to 75% for three months if their revenue has decreased by 70% when compared to pre-COVID-19 revenues.
This federal loan program is for large businesses with over 500 employees that require financial support from the Canadian government in response to the COVID-19 pandemic.
We’ve put together a list of the top Canadian government funding programs related to COVID-19, as well as other ongoing loans/grant programs for business cash flow.
The Ontario provincial government has allocated $50M in funding towards the Ontario Together Fund, which seeks to provide medical grade equipment to healthcare workers.
What to Do if You Cannot Bring Your Employees Back
Layoffs should always be a last resort option and we strongly encourage you to research the programs listed above to help bring your workforce back. If your business remains unable to bring its employees back to work, you can help them navigate their income support options after CERB, including the Canada Recovery Benefit (CRB).
If you are interested in finding out which Canadian government funding programs your business may be eligible for, both related to COVID-19 and for growth projects, contact a member of the Mentor Works team to start the application process. Find out the latest news about funding programs related to the coronavirus by visiting our COVID-19 support page.