Updated Overview of the Canada Emergency Wage Subsidy (CEWS) Extension

On July 17, 2020, the Department of Finance unveiled major changes to the Canada Emergency Wage Subsidy (CEWS). These modifications primarily affect self-employed individuals and incorporated doctors with consistent employee payroll.

Key Highlights:

Duration: The revamped CEWS will be in effect from July 5 to December 31, 2020. The details provided pertain to the timeframe from July 5, 2020, to November 21, 2020 (Periods 5 – 9). Information regarding November 22 to December 31, 2020 (Period 10) has yet to be disclosed.

Eligibility: All qualifying employers witnessing a decline in revenue can now benefit from the CEWS in the form of a foundational subsidy. The prior requirement of a 30% revenue drop under the old CEWS guidelines has been removed. The new CEWS assistance will fluctuate based on the extent of the revenue downturn.

Subsidy Structure: The updated CEWS comprises two components: a foundational subsidy and an additional top-up subsidy. The foundational subsidy is accessible to all qualifying employers experiencing a dip in revenues, with the subsidy amount varying based on the magnitude of the revenue drop. An extra top-up subsidy, up to 25%, is available for businesses most severely impacted by COVID-19. The maximum CEWS amount is capped at $960 per employee weekly (for remuneration up to $1,129 weekly).

Rate Structure: Due to the removal of the 30% revenue drop prerequisite, the new CEWS will cater to a broader range of employers. However, in many instances, the CEWS assistance will be reduced, both because of the rate structure and the diminishing subsidy rate available for each subsequent period.

Safe Harbor Provision: For the duration from July 5 to August 29, 2020 (periods 5 and 6), a safe harbor provision ensures that employers can access a CEWS rate that’s at least as beneficial as the original CEWS structure.

Base Subsidy Calculation: The foundational CEWS is determined based on a set rate, which is contingent on the revenue decline and period. This rate is applied to the remuneration paid to the employee for the qualifying period, up to a maximum of $1,129 weekly.
Top-up Subsidy: In addition to the foundational subsidy, a top-up CEWS of up to 25% is available for businesses most severely affected by the pandemic.