CEWS Audits by CRA: A Comprehensive Guide

The Canada Emergency Wage Subsidy (CEWS) has been a significant pillar of support for Canadian jobs, covering up to 75% of an employee’s wages, and in some cases, even up to 85%. As of the data available, a whopping $35.31 billion has been disbursed under CEWS to 312,750 unique applicants out of the 1,094,330 applications received. 

However, to ensure the integrity of the COVID-19 support programs, the Canada Revenue Agency (CRA) initiated audits in September 2020. This move was quicker than many had anticipated. 

What Triggers a CEWS Audit? 

The CRA, under subsection 231.1(1) of the Income Tax Act, can request access to taxpayers’ records. Recent requests to audit CEWS claims have set a stringent timeline of just 10 business days for taxpayers to provide the necessary documents. However, if there are valid reasons for delays, taxpayers can discuss them directly with the auditors. For a deeper understanding of CRA audits, one can refer to the RC4188 document. 

Documents Required for a CEWS Audit: 

• Corporate Minute Books: Many small businesses often overlook the importance of maintaining corporate minute books. These books should contain documents related to CEWS, such as shareholder registers, intercompany loans/advances, corporate structures, and more. 

• Revenue Details: CEWS eligibility hinges on the revenue drop comparison between current and past periods. Hence, revenue details for both 2019 and 2020 are crucial. Additionally, workings and calculations showing how qualifying revenues were determined are also essential. 

• Payroll Information: Since CEWS is based on salaries and wages paid to employees, detailed payroll records are typically requested. This includes payroll journals, CEWS calculations, employment contracts, and more. 

• Additional Information: Other documents that might be requested include the signed RC661 (attestation for CEWS), information on independent contractors, details on non-arms length transactions, and more. 

How to Submit Information for CEWS Audits: 

Taxpayers are advised to use the CRA’s electronic portal for submitting the required information. They can use the CRA my business account or the “Represent a client” option for accountants. 

Need Assistance with CEWS Audits? 

Maroof HS CPA Professional Corporation offers a plethora of services, including income tax, accounting, and business consultancy. If the CRA contacts you for a CEWS audit, it’s advisable to seek professional help, especially if you’ve processed your CEWS applications independently. Even if you haven’t been contacted yet, it’s wise to organize your books and records to be prepared for any potential CEWS audit.