CLIENT UPDATE April 24, 2020 Canada Emergency Wage Subsidy – Update

We are sending this communication to update you on the application process for the Canada Emergency Wage Subsidy (CEWS). 

The application will be made available on Monday, April 27, 2020 at 6:00 a.m. You will be able to apply using your CRA My Business Account or a separate online application form that will be available. You will need to obtain an online Web access code to use the application form. We also understand that we will be able to submit the authorized application on your behalf.

A separate application for each “RP” payroll account will be required. The initial applications received from April 27 to May 3, 2020 will be processed together at the same time on May 4th so there is no need to rush to apply on Monday. 

Most businesses will have their application approved using an automated process and can expect to receive payment via direct deposit on May 6 or May 7, 2020. The CRA estimates that 10% of businesses that apply for the CEWS will require manual verification and payment will be delayed. Manual verification will be required for companies with payroll information substantially different from CRA’s records, companies with sales of more than $250 million and claims for a “large sum”.

Before applying, you will need to calculate the estimated subsidy. An online calculator is available to help businesses determine what the CEWS will cover, and to simplify the application process. CRA officials said yesterday that businesses that go through the process of using the calculator will be able to print out the resulting information and use the printout to help expedite the online application process. The calculator is on the CRA’s CEWS information page. You can read our previous bulletins about how to determine eligibility for and the amount of the CEWS on our website.

We have heard that the CRA may require businesses that are or were eligible to claim the 10% Temporary Wage Subsidy (TWS) to reduce any claims for CEWS by the TWS amount they are eligible for, whether or not it has been claimed. Businesses that decided not to claim the TWS in anticipation of CEWS will still be able to claim the TWS either on their next payroll remittance or later in the year. Information on the TWS can be found on CRA’s website.

3,000 auditors have been assigned to handle manual application verification and 2,000 call centre employees have been assigned to handle CEWS inquiries from businesses.

CRA emphasized that the goal of the CEWS program is to have businesses rehire workers that have been laid off and to avoid additional layoffs. They also indicated that employees re-hired will be asked to re-pay any CERB funds they have received if the period for which they receive a CERB support overlaps with the period for which they are receiving a CEWS-subsidized paycheque from their employer. It is unclear how this will apply if the employees receive wages less than the $1,000 maximum income allowed for under the CERB program.

The amount of any wage subsidy received by for-profit employers will be considered to be income for the period in which it was received.

We are happy to discuss any questions you may have about these matters. To review any of our previous updates on COVID-19 please see our website.

This summary deals proposed matters that are complex and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect laws and practices which are subject to change. For these reasons, this material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter.

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