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Wage subsidy details hugely important for retailers and retail employees

April 1, 2020

The Federal Government today made its biggest ever ($71 billion estimated) one-time investment in the economy.  A lot more system details are still to be worked out over the next few days – but the main points of the program are now clear.

All retailers (and all businesses of any size, including your vendors and business customers of course) are eligible if they have experienced a revenue decline of 30% or more (or if they experience such a decline in April or May). This also applies to charities and not-for-profit entities.

The program is intended to avert layoffs and, where possible, to allow the rehiring of employees who were furloughed or laid-off over the past few weeks due to COVID-19 economic impacts.

The main basis of comparison will be monthly revenues year-over-year: hence March 2019 for March 2020; April 2019 for April 2020; and May 2019 for May 2020.

There will be some flexibility for start-ups (perhaps using February 2020 as the baseline) and they will be prepared to look at special circumstances that might have been relevant to your 2019 revenues (if for example you had an extreme event occur that made the relevant 2019 month unusual).

The wage subsidy will cover up to $847 per week for all employees (which represents 75% of $58,700 on an annualized basis).  It will be retroactive to March 15, 2020, once up and running

An application will have to be made to the Canada Revenue Agency, which intends to have a portal up and running within three weeks.  The retailer will provide new financial information monthly, which makes sense as both revenues and payroll costs will vary.

Funds will be transferred by the Canada Revenue Agency directly to the retailer’s bank account in order to fund payroll.  There is an expectation that funds will start to flow within six weeks.  That may require some retailers to talk to your financial institution in order to bridge-finance the next payroll or two.

The system does not actually require you to pay the additional 25% of the employees’ wages if you are unable – but you are strongly encouraged to do so and you will be required to attest that you have made best efforts to do so.

There will be severe consequences in law for fraud or deliberate misrepresentation.

The small business wage subsidy of 10% on up to $250,000 of payroll will remain in place for those small businesses who have not experienced a 30% revenue loss.

The wage subsidy will be treated as revenue to retailers and as taxable income to employees.

View Federal Backgrounder on the Canada Emergency Wage Subsidy

If you have any questions, please contact Karl Littler, Senior Vice-President of Public Affairs at [email protected] or (416) 467-3783.

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