COVID-19 Update: Canada Emergency Wage Subsidy

The legislation on the Canada Emergency Wage Subsidy (“CEWS”) was passed by Parliament on Saturday.

Below is a comprehensive summary of the CEWS, including some changes that were in the final legislation.





Eligible Employers

Eligible Employers (“Employers”) include:

  • Corporations (any size – private or public), except non-taxable corporations and public sector entities
  • Individuals
  • Partnerships (consisting of individuals and corporations)
  • Non-Profits, Registered Charities, and Labour Organizations


Subsidy Amount

The Subsidy amount for an employee receiving Eligible Remuneration paid between March 15th and June 6th, 2020 will be the greater of:

  • 75% of the remuneration paid (up to a maximum of $847 per week); or
  • The remuneration paid or 75% of the pre-crisis weekly remuneration, whichever is lower (up to a maximum of $847 per week). This is to take into consideration that previously laid-off employees may be hired back but potentially at a lower remuneration amount.

For employees that do not deal at arm’s length with their Employers (i.e. shareholders and family members), the subsidy is limited to eligible remuneration paid in the pre-crisis period and is only available to those employed prior to March 15, 2020. This prevents shareholders and family members from being added to payroll that may have previously been compensated by dividends.

Eligible Remuneration includes salaries, wages, and some taxable benefits. It does not include severance pay, stock option benefits, and benefits for the personal use of a company vehicle.


Eligible Periods

The Eligible Period is the month of March, April, and May. There must be a decrease in gross revenues of 15% for March and a decrease of 30% for April and May as compared to the prior reference period.

The prior reference period is either the same month of the previous year OR the average of the January and February 2020.

Also, if you are eligible for a specific period, the Employer automatically qualifies for the next period. For example, if your revenues decreased in March by 15%, then you are automatically eligible to claim the subsidy for April as well.

Below is a summary table.











Calculating Revenue

Revenue for the purposes of the subsidy would be calculated using the normal accounting method, excluding revenues from extra-ordinary items. Employees have the option of accounting for their revenue on the accrual method or cash method, but not a combination of them. Once the accounting method has been selected, it must be used for the entire duration of the program.

Registered charities and non-profit organizations can choose to include or exclude revenue from government sources as part of their calculation. The same approach must then be used for the entire duration of the program.

Revenue excludes amounts from non-arm’s length transactions where a company is selling to a related company.

Affiliated corporations test their decrease in gross revenues on a company-to-company basis.  They are able to elect to compute their decrease in revenue on a consolidated basis.


Refund of Payroll Contributions

Employers that are eligible for the CEWS will be eligible for a 100% refund of certain employer portions of the Employment Insurance and Canada Pension Plan. The portion refunded is where the employee is paid for a specific week but does not perform any work for the employer that week. This is in addition to the maximum benefit of $847 per week. Employers would be required to collect and remit for EI and CPPs as normal, but would receive a refund as part of the CEWS.


Application Process

Companies will be able to apply for the CEWS and the refund of payroll contribution (if applicable) through the CRA’s My Business Account portal. Representatives, like Clearline, will not be able to make submissions on behalf of their clients. Further details will be announced later.

Any amounts that have been claimed under the temporary 10% subsidy will reduce the amounts of the CEWS subsidy payment. An Employer is not allowed to “double dip” between the two subsidies.



The CRA is allowed to publish the names of any Employers that apply for the subsidy.

Employers are required to keep records to demonstrate their reduction in revenue and the remuneration paid to employees.

Employers will be required to repay amounts received if they do not meet the eligibility requirements. Further, Employers that engage in artificial transactions to reduce revenue will be subject to a penalty of 25% of the subsidy claimed.


More Information

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