Canada Emergency Wage Subsidy Applications Start

Evelyn Jacks & Beth Graddon

Eligible businesses can start applying this week (April 27) for the 75% Canada Emergency Wage Subsidy (CEWS) and there is some great news for many Canadians: employees can be re-hired retroactively if they were laid-off anytime from March 15 due to COVID-19. However, those employees may need to repay their CERB. Here are some details.

The CRA is promising payments will be received approximately 10-days following application, though some pre-claim reviews may take place.  As a result, it’s important for businesses to understand the application process now, and to keep a clean audit-trail so they don’t run into any issues later.

The subsidy covers 75% of wages paid to new employees and 100% of the first 75% of remuneration paid to existing employees. A maximum of $847 per week or 75% of pre-crisis weekly remuneration (whichever is less) will apply. 

Business must re-apply for the subsidy monthly and may access funding over three eligibility periods, provided that there was a decline in revenues of 30% or more:

Note that employers who are eligible for both the 10% payroll reduction provision and the 75% wage subsidy will need to make an adjustment. The 75% wage subsidy will have to be reduced by the 10% payroll reduction. The paperwork on this should be interesting, but the government has already warned there will be strictly enforced compliance.

The 75% subsidy will have to be repaid if employers don’t meet eligibility requirements and face penalties if they don’t pay their employees the amounts received from the government.  New anti-abuse rules and offenses for providing false or misleading information or misuse of funds will include fines and/or imprisonment.   

Employees also have an important thing to consider if their employers are receiving the CEWS to cover their salaries. It’s been announced that businesses can rehire retroactively and receive the CEWS, which means some might experience cross-over with CERB payments already received. Application periods for both programs are dated the same, and employees who received the CERB and CEWS (through their employer) for the same period will have to repay any excess money received as no one is eligible to receive both.

How to apply:

A separate application needs to be submitted for each RP account through one of the following options:

1. Submit an application using CRA’s My Business Account portal (the preferential option for most businesses)
2. Business representatives can sign in using Represent a Client, but must have Level 2 or 3 authorization
3. Use the Web Forms application – but you must have an access code.

Before you apply:

• Register your payroll accounts (RP) for direct deposit
• Calculate the estimated subsidy for your business
• If you are expecting a payment of more than $25 million, you will have to get your payment through the large value transfer system (LVTS). To do this, you have to be enrolled in direct deposit on your payroll account and be registered for the LVTS. If you are not already set up for LVTS, begin the registration process.

CEWS paper trail. The CRA is recommending that businesses remain audit-proof with the following required documentation:

• The CEWS must be included on your Annual Return of income, as it is a taxable benefit.
• The amount of the CEWS used to pay each employee’s salary must be recorded on their T4 slips under a special code. The government will release more information on this before the end of the year.

For more detail about the Canada Emergency Wage Subsidy, read our previous coverage then enrol for the Virtual CE Summit to get all the technical details of the COVID-19 Canada Emergency Response provisions, and their related tax audit requirements. 

By enrolling in the Virtual CE Summits now, you will also have access to the online Emergency Pandemic Response Benefits Course. This is Canada’s first online certificate training course for professionals in the Tax, Bookkeeping and Financial Services.

It’s a sought-after educational solution you need now from Knowledge Bureau in a new format: a professional online course plus interactive live virtual meeting.

Remember:  The online learning release is available now on the Virtual Campus, and the interactive Zoom event will take place on May 13.  Deadline for enrolment is May 11.

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