New Wage Subsidy: CEWS Rules

New Wage Subsidy: CEWS Rules

Canada Emergency Wage Subsidy

Today, July 17, 2020, the Government of Canada announced new rules for the Canada Emergency Wage Subsidy. As a CPA firm serving entrepreneurs in Chatham-Kent, Windsor, London and Sarnia, we wanted to ensure the highly complex changes are brought to your attention timely.

We also think it's worth noting that these subsidies can be prudently invested to grow your business and come out of the COVID-19 pandemic in a strong position. We know because we have been structuring very innovative re-investment programs for those employers looking to finance and enhance their
digital strategy, plan for succession and engage in advanced tax planning.

CEWS claim periods

The CEWS will now be available to businesses until December 19, 2020. Businesses will have to meet new revenue decline tests and the maximum weekly benefit per employee will be reduced and will be adjusted based on the amount of revenue decline experienced by the claimant business.

Canada Emergency Wage Subsidy

Revenue decline test

Periods beginning in July right through a period beginning in November will only have to demonstrate "any reduction" whatsoever, whereas the old CEWS required a 15% decline for the March period and 30% declines thereafter. For businesses that are methodically re-opening, or still being impacted in Stage 2 and Stage 3 re-opening in Ontario will be eligible for a subsidy that is calculated with reference to the business' overall revenue decline. For purposes of this blog posting, the calculation is far too complex to conduct an analysis of your weekly benefit.

To summarize, there is an additional subsidy available to those employers mostly adversely affected by the pandemic. A top-up of 25% to the weekly benefit per employee will be funded where the employer's revenue has declined more than 50% in the claim periods. See the summary below for the maximum weekly benefit per employee.

Decline in revenue

Maximum weekly benefit per employee

A subsidy of $960 of maximum weekly benefit is available to employer's that have been hardest hit by the pandemic. The Government has defined the most adversely affected as those with revenue declines of 50% or more in a claim period. For employers with revenue declines of less than 50%, the standard weekly benefit per employee will be up to $677 for claim periods 5 and 6 and declining to $565 for claim period 7, up to $452 for claim period 8 and up to $226 for claim period 9.

To complicate things further, if your revenues have declined by specific thresholds with respect to the prior year, there is a top up of up to 25% available. Sound complicated? It is. The probability of figuring this out properly on your own is low. And as many of our clients know, we have been extremely busy so if you need assistance, please contact us as soon as possible.

These numbers change over the periods. This base CEWS would be a specified rate, applied to the amount of remuneration paid to the employee for the eligibility period, on remuneration of up to $1,129 per week.

Illustrative tables prepared by Video Tax News (a private company) on July 17, 2020.

It's pretty obvious looking at these tables that the calculations are complex so you can anticipate that conducting an analysis of your threshold qualification would have to take place monthly and will take several hours per employer to quantify and at least one more hour to file with an approved attestation with CRA. Our fees are no reason to avoid the program though. You may have a considerable benefit available to your business.

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Rebecca Scott
Web Designer

Rebecca is a Web Designer at BluePrint CPAs. She is a graduate of St. Clair College’s Internet Applications and Web Development Program and has worked as a freelance web designer before joining the BluePrint team.

BluePrint CPAs is a management consultancy that simplifies digital, financial and talent strategies. Our team helps entrepreneurs and their teams grow profitable and modern businesses.

Kit Moore, BluePrint CPAs President & Lead Tax Advisor
Kit Moore, CPA, CA
President & Lead Tax Advisor

Kit Moore, is an entrepreneur that simplifies digital strategy for other business owners. The team at BluePrint CPAs can assist you with web design, development, analytics, management systems and, more importantly, your overall business strategy. The toughest part of digital transformation is re-training your team - and we have pros to help with that as well.

BluePrint CPAs is a management consultancy that simplifies digital, financial and talent strategies. Our team helps entrepreneurs and their teams grow profitable and modern businesses.

Kit Moore, BluePrint CPAs President & Lead Tax Advisor
Kit Moore, CPA, CA
President & Lead Tax Advisor

Kit Moore, is an entrepreneur that simplifies tax and financial strategy for other business owners. The team at BluePrint CPAs can assist you with financial technology, tax strategies, mergers & acquisitions, succession & exit planning and, more importantly, your overall business strategy.

BluePrint CPAs is a management consultancy that simplifies digital, financial and talent strategies. Our team helps entrepreneurs and their teams grow profitable and modern businesses.

Joe Marra, MBA
Senior Associate, Strategy Consulting

Joe is a Senior Associate, Strategy Consulting at BluePrint CPAs. He is a recent graduate of the MBA Program at the Schulich School of Business and has most recently worked for Bayer Inc and the Ford Motor Company of Canada. His experience in marketing, sales, and human resources spans various industries including hospitality, logistics, life sciences and automotive manufacturing. Joe loves working with entrepreneurs to develop their digital strategies and help them grow their business.

BluePrint CPAs is a management consultancy that simplifies digital, financial and talent strategies. Our team helps entrepreneurs and their teams grow profitable and modern businesses.

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