Canadian Emergency Wage Subsidy (CEWS) Overview

What is CEWS?

Retailers in Canada who have seen a drop in revenue due to the COVID-19 pandemic, may be eligible for a subsidy to cover part of their employee wages.

Overview

Claim Periods After December 19, 2020

The CEWS program has been significantly adjusted twice since October (most recently in the Fall Economic Update released on November 30, 2020) and now provides for two different levels of assistance depending on the claim period.

Looking forward, the major change is with respect to support for those businesses that experience revenue reduction of more than 50% (the most deeply affected, to use government’s terminology), for which there will be an enhanced subsidy that kicks-in on December 20, 2020 and will run until at least March 13, 2021.  

The existing 0.8x multiple for the base subsidy on your revenue drop between 0% and 50% will remain in place, so 40% maximum. But for those down by >50%, the multiple for the top-up subsidy will be raised to 1.75x (from the current 1.25x), so there is another 35% in that tranche between >50% and <70%, hence 75% maximum in total. 

For example:

  • Revenue loss 30% = 24% subsidy
  • Revenue loss 40% = 32% subsidy
  • Revenue loss 50% = 40% subsidy
  • Revenue loss 60% = 57.5% subsidy
  • Revenue loss 70% (or more) = 75% subsidy  

As noted, that increase to 1.75% on revenue reduction >50% and <70% will kick-in on December 20, 2020 and continue until at least March 13, 2021.  The rates thereafter until June 2021 will be announced at some future point and will, obviously, be set in reference to whether we are in a recovery by then.

The subsidy for furloughed employees will be capped at the greater of $500 or 55% of pre-crisis remuneration up to a maximum subsidy of $590/week*, in line with the maximum amount available under EI/CRB. Employers will also continue to be entitled to claim under the wage subsidy their portion of contributions in respect of the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan in respect of furloughed employees but not for active employees. 

*Note: The $590/week maximum subsidy for furloughed employees after December 19, 2020 is $17/week higher than that available for periods before December 20, 2020, as the corresponding EI rate has also increased.

Also, it should be noted that the measures announced on November 30, 2020 will still need to be legislated by parliament, so it is conceivable that they could be adjusted further during the parliamentary negotiations, but it is highly unlikely that parliament would make the program less generous.

Claim Periods Before December 20, 2020

Claims for the twelve weeks running from September 27, 2020 through December 19, 2020 will continue to provide a subsidy for up to 65% of eligible wages.

The CEWS base subsidy for the period September 27, 2020 until December 19, 2020 subsidy rate of 0.8x revenue reduction between 0% and 50%), Hence the maximum assistance through the CEWS base subsidy is 40% of eligible wages.

Your revenue for a month is measured either against revenue in the same month last year (or against the average of January and February 2020).

You can also choose to compare either the current month or the immediate past month to its corresponding month in 2019 as the basis to determine the assistance due for the current month (or can compare either the current month or the immediate past month against the average of January and February 2020).  That ensures that you will receive at least two months at consistent levels of financial support.

The CEWS subsidies continue to apply as a percentage of wages up to $1,129 per week.

The subsidy for furloughed employees is capped at the greater of $500 or 55% of pre-crisis remuneration up to a maximum subsidy of $573/week, in line with the maximum amount available under EI/CRB. Employers will also continue to be entitled to claim under the wage subsidy their portion of contributions in respect of the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan in respect of furloughed employees but not for active employees.

For those with YOY revenue reductions in excess of 50%, there is a top-up subsidy on eligible wages of 1.25x the revenue loss between 50% and 70%, which maxes out at a subsidy for 25% of eligible wages, bringing the maximum total subsidy to 65% (i.e., 40% base + 25% top-up).

For periods beginning September 27, 2020, applicants for the top-up subsidy can use the current month (or immediate prior month) YOY comparison in the same way as they do for the base CEWS subsidy.  However, you can still opt to use the previous rolling three-month average YOY comparison if it would be advantageous to do so. 

Hence, the CEWS top-up subsidy will now be calculated based on the better of (a) the same current month/previous month year-over-year comparison as exists for the base CEWS; or (b) the three-month revenue decline compared year-over-year.  

The newly introduced CERS rent assistance program now mirrors the CEWS program in most respects, though unlike some of the design elements in CERS, CEWS does not have any additional caps on eligible expenses for a company or location.

Also note that is you do choose to use the January & February 2020 average for comparison purposes for CEWS, you must also use that method for CERS and vice versa.

Further detail on the CEWS program can be found at on the Government of Canada website.

Reference periods

In a similar vein to the two-month deeming rule that existed during the early phases of CEWS, an employer will have the option to choose the greater of the percentage revenue decline in the current period and that in the previous period for the purpose of determining its eligibility for base CEWS and its base CEWS rate in the current period.

This essentially means automatic qualification at the same revenue decline level for two periods in a row. It also means that you would get one last month of CEWS support even if your revenues show no decline in the current month as long as your previous month did have a revenue decline.

Those who happen to experience deeper relative revenue drops in successive months would of course be free to use the revenue decline of the current month if that would deliver a better CEWS outcome.

How to apply

There are three options for retailers to apply for CEWS with CRA:

More information

Q&As

  • Can I have employees on Work-Share and receive the Canada Emergency Wage Subsidy (CEWS) for them at the same time?

    Employers can combine the CEWS and the WS program. However, WS benefits received by employees will reduce the amount of CEWS on a dollar for dollar basis. For example, an employer eligible for $500 in CEWS with an employee who received $275 through WS benefits, would receive a subsidy of $225 ($500 – $275).

    For further information regarding the interaction between WS and CEWS you can find more information on the government’s site. View information.

  • What is the federal government offering in terms of wage subsidies for retailers?

    The federal government has established the Canada Emergency Wage Subsidy (CEWS) to help employers keep staff on payroll despite revenue declines caused by COVID-19.  

    CEWS support takes the form of a government subsidy based on specific criteria. First established in the early stages of the pandemic, the CEWS program has undergone various developments.

    View RCC’s CEWS overview.

  • For further information, please contact: Karl Littler, Senior Vice President, Public Affairs at klittler@retailcouncil.org or 416-906-0040.

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