I’ve been communicating with clients and dealership owners over the past month and there seems to be confusion surrounding the wage subsidy program offered by the federal government. Who is eligible, how do I get paid and when will the funding arrive seem to be the consistent questions. I hope this summary of the program helps to alleviate some of these concerns.
Bill C-14 – COVID-19 Emergency Response Act, No. 2 has now passed through the Canadian government which implements the previously announced 75% Canada Employment Wage Subsidy, ‘CEWS’.
To qualify for the program, businesses must meet the Qualifying Entity test and below is a summary of that test:
A ‘qualifying entity’ must:
- Have a payroll remittance number with the Canada Revenue Agency (“CRA”) as of March 15, 2020
- Meet the revenue decline test
The following summarizes the revenue decline test for each of the three claim periods:
Period 1
- March 15th to April 11th
- Required Reduction in qualifying revenue 15%
- Revenue period for eligibility March 2020 compared to March 2019 or average January and February 2020
Period 2
- April 12th to May 9th
- Required Reduction in qualifying revenue 30%
- Revenue period for eligibility, eligible for Period 1 or April 2020 compared to April 2019 or average January and February 2020
Period 3
- May 10th to June 6th
- Required Reduction in qualifying revenue 30%
- Revenue period for eligibility, eligible for Period 2 or May 2020 compared to May 2019 or average January and February 2020
Calculating Wage Subsidy for Employees
There is a different calculation for different categories of employees under CEWS. The three categories are:
- Pre-existing arm’s length employees
- New arm’s length employees
- Non-arm’s length employees
For pre-existing arm’s length employees, who were employed any time between January 1 and March 15, 2020, the CEWS amount for each week in the Claim Period will be equal to the least of:
- 100% of eligible renumeration paid to the eligible employee;
- 75% of the “baseline remuneration” (defined in the Bill) in respect of the eligible employee; and
- $847.
For new-arm’s length employees, the CEWS amount for each week in the Claim Period will be equal to the least of:
- 75% of the eligible renumeration paid to the eligible employee in respect of that week; and
- $847.
For non-arm’s length employees, the CEWS amount is the same as pre-existing arm’s length employees but prevents businesses from adding non-arm’s length employees or artificially inflating wages of a non-arm’s length employee for the purpose of obtaining CEWS.
For additional information, the details of Bill C-14 can be found here: Bill C-14 and the government website has been updated and details can be found here: The Canada Emergency Wage Subsidy
During this difficult time, I hope all our dealer partners, clients and friends are staying healthy. DSMA is here for any questions, concerns and feedback for best practices to weather this storm.
