New CEWS Calculator for Periods 5 to 9

Evelyn Jacks & Beth Graddon

As we reported in our last KBR, the new Canada Emergency Wage Subsidy (CEWS) was extended to include 9 Periods, but this extension brings some mind-numbing complexity with it.  Businesses can apply for the subsidy starting on Monday, August 17 for Period 5, which began on July 5 and runs to August 1. CRA has also developed a CEWS calculator and spreadsheet to help make the claim.  Here are the highlights of how it works:

First, know that there is now a sliding revenue test (a 30% drop in revenue is no longer required).  There is also a special “top-up” subsidy for some employers.  Also note that the 10% temporary payroll subsidy was discontinued with Period 4.

Here’s an example:

Let’s take a look at how this calculation works in period 5 for a sample company with 5 employees, a payroll of $20,000 and experiencing a reduction in revenue of 20% for July 2020 compared to July 2019.  This was in fact a larger drop than in the previous period.  Assume that the average revenue drop for April, May, and June, compared to the previous year, was less than 50%.

• The CEWS rate for period 5 will be 120% of the revenue drop percentage or 24% (120% x 20%).
• Because the average revenue drop in the previous three months was less than 50%, the company is not eligible for an additional top-up rate.
• With a payroll of $20,000 for the period, the company is eligible for a wage subsidy of 24% x $20,000 - $4,800.

Had the percentage drop in July been more than the percentage drop in June, the company would be eligible for a higher CEWS rate based on the June over June percentage revenue drop. 

In addition, had the company’s revenue drop for the April to June period been more than 50% compared to the same period in the previous year, it would be eligible for a top-up of 125% of the revenue drop in excess of 50%.

Bottom line:  astute payroll and tax accounting consultants will find there are lots of ways to add value to relationships with their small business clients by helping them compute the new CEWS to reduce their operating costs.

Additional educational resources:

For more information on filing returns for proprietorships: see the DFA-Tax Services Specialist™ Program.

To add credentials in Advanced Payroll: see the DFA-Bookkeeping Services Specialist™ Program.

To earn credentials to consult in corporate tax compliance see:  MFA™-Business Services Specialist Program.

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