Canada Emergency Wage Subsidy (“CEWS”)
Prime Minister Justice Trudeau announced another anticipated update to the CEWS yesterday. The requirement of a 30 percent drop in revenue as a result of COVID-19 should be relaxed for the first month, such that an employer can qualify for the CEWS if they have incurred a drop of at least 15 percent of their revenue in March 2020, as compared to March 2019. The previously stated requirement to show at least a 30 percent drop for April and May 2020, in comparison ton April and May 2019, remains. Employers will be required to appoint someone in charge of the businesses’ finances to attest to the decline in their revenue.
Clarifications were provided as well as to which accounting method of revenues can be used to calculate revenue. Either the accrual method or the cash method may be used, but not both. Once an employer selects an accounting method, they must continue to apply it for the duration of CEWS program.
The government announced it acknowledges that not all businesses and jobs are alike, and that some employers will be allowed to calculate their change in revenue using an alternative benchmark to determine eligibility. This is to provide employers greater flexibility – especially those in high-growth firms, sectors that faced difficulties in 2019, non-profits and charities, and start ups. Employers in these areas can compare their revenue by comparing their average earned revenue in January and February 2020 as opposed to revenues during the same time period last year. Charities and non-profit organizations have been provided a choice of whether or not they would like to include revenue from government sources as part of their calculations of lost revenue. Employers can select an approach when first applying for CEWS and then are required to continue using the same approach for the duration of the program.
As the federal parties remain in discussions about the draft CEWS legislation, this will continue to evolve.
As part of getting money to employers, the government also anticipates expanding the CEWS to provide refunds for employers for certain payroll contributions. This includes expanding CEWS with a 100 percent refund for certain employer-paid contributions such as Employment Insurance, Canada Pension Plan, the Quebec Pension Plan and the Quebec Parental Insurance Plan.
Penalties for Misuse
Anyone making artificial transactions will face significant consequences. Improper CEWS claims will be subject to heavy fines of up to 225% of the amount received in addition to repayment of the improper claims and up to 5 years in prison.
Student Summer Jobs
Changes to the Canada Summer Jobs Program were also announced today. Employers who hire summer students can apply for a subsidy of up to 100% of the cost of hiring students. This is intended to help create 70,000 jobs for Canadians between the ages of 15 to 30, assisting them with not only work experience but also an income during this economic situation. Further, the time frame has been extended until winter and employers are also able to hire students on a part-time basis rather than only full-time.
As expected there will be more details and changes to come in this rapidly evolving situation. As such the information herein is subject to change. We will continue to provide updates as these matters evolve, via our blog and Newsletter.