20 May COVID-19 Update: CEWS and CEBA
The Prime Minister has announced further details regarding the CEWS and CEBA over the past few days.
Canada Emergency Wage Subsidy (“CEWS”)
The CEWS had previously allowed Employers that experienced a 30% decline in revenue for April and May (15% for March) to claim a 75% wage subsidy paid for eligible employees subject to some other limitations.
The Government announced the following changes:
- CEWS will be extended by 12 additional weeks to August 29, 2020. The Government plans to make some potential adjustments to the revenue decline threshold based on discussions with business and labour representatives to ensure employers continue to receive support in the “post-crisis economic recovery.”
- Additional employers are now permitted, including:
- Partnerships consisting of eligible members;
- Indigenous government-owned businesses;
- Registered Canadian Amateur Athletic Associations;
- Registered journalism organizations; and
- Non-public educational and training institutions.
- Companies formed by amalgamations or windups will be permitted to calculate their benchmark revenue based on their combined revenues.
For more information, please visit: https://www.canada.ca/en/department-finance/news/2020/05/extending-eligibility-for-the-canada-emergency-wage-subsidy.html
Canada Emergency Business Account (“CEBA”)
The CEBA had previously allowed Employers to apply for a $40,000 partially forgivable interest-free loan. Eligible Employers were previously required to have payroll for the 2019 year of between $20,000 and $1.5 million.
The Government announced the following changes:
- The CEBA program will now be available to sole proprietors, businesses that rely on contractors, and family-owned companies that pay dividends instead of payroll. Applicants with payroll lower than $20,000 would need to meet the follow expanded eligibility criteria:
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- Have a business operating account at a participating financial institution.
- Have a Canada Revenue Agency business number (GST, Import/Export, or RZ account number) and have filed a 2018 or 2019 tax return.
- Have eligible non-deferrable expenses of between $40,000 and $1.5 million. Eligible non-deferrable expenses include costs such as rent, property taxes, utilities, and insurance.
- Expenses will be subject to verification and audit. The list of eligible expenses does not include dividends/distributions to owners as these would probably be considered deferrable.
- The Government acknowledges that many sole proprietors use their personal bank account or as new businesses have not yet filed a prior year tax return. They are looking at potential solutions for these businesses.
- Businesses will apply through their financial institutions, but it may take some time for these institutions to update their processes to allow for this expanded eligibility criteria.
If you have any questions about the information outlined above, please reach out to our team at we_are@clearlinecpa.ca.
We will continue to keep you updated as things unfold.
