On April 8, 2020, changes were announced to the eligibility criteria for employers to claim the Canada Emergency Wage Subsidy (the Subsidy).
In summary, the proposed changes include the following:
- When measuring revenue loss, eligible employers can either compare their revenue of March, April and May 2020 to that of the same month in 2019 or to the average of their revenue earned in January and February 2020. Once chosen, the approach must remain consistent for all months.
- For March only, employers will need a minimum 15 percent reduction in revenue to be eligible. This change reflects the fact that many businesses did not begin to experience a revenue reduction until partway through the month. Employers will still need a minimum 30 percent reduction in revenue in April and May to be eligible.
- It is proposed that employers be allowed to measure revenues on either an accrual basis or on a cash basis. Once chosen, the approach must remain consistent.
- It is proposed that eligible employers will now be entitled to a 100 percent refund for employer-paid contributions to Employment Insurance, Canada Pension Plan, Quebec Pension Plan and Quebec Parental Insurance Plan contributions.
- Registered charities and not-for-profit organizations are also eligible to receive the wage subsidy. It is proposed that these organizations can choose to include or exclude government funding in their revenues for the purposes of applying the above-mentioned revenue reduction tests.
Additional announcements are expected to address corporate groups, non-arms’ length entities and joint ventures.
Please click on this link to see the announcement.
If you have any questions, please contact your Lipton advisor.