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Changes to Canada Emergency Wage Subsidy

April 13, 2020

The government has announced changes to the CEWS that will create greater flexibility and access to the relief measures.

Principal changes are as follows:

  1. For computing an employer’s decline in revenue for the purposes of determining an employer’s eligibility for the CEWS, employers can calculate their revenues under the accrual method or the cash method, but not a combination of both. An employer can select the appropriate method when first applying for the CEWS, but will be required to adhere to that method for the duration of the program. Also, registered charities and non-profit organizations can choose whether or not to include revenue from government sources in their revenue calculations.
  2. The government proposes to allow all employers to calculate their change in revenue using an alternative benchmark. Rather than comparing a month’s revenue to the revenue of the same month in 2019, an employer can instead compare a month’s revenue to the average revenue earned in January and February 2020. Employers must select one of the two approaches when applying for the CEWS and continue to use that approach for the duration of the program. This will be very helpful to new businesses
  3. Recognizing that many businesses were not affected by the crisis until partway through March 2020, the revenue decline threshold for Period 1 (i.e., March 2020) has been reduced from 30% to 15%, and can be met using either revenue comparison method. The thresholds for April and May 2020 remain at 30%.
  4. Any employer that engages in artificial transactions to reduce revenue for the purpose of claiming the CEWS will be subject to a 25% penalty equal to the value of the subsidy claimed. Such an employer will also have to repay the entire amount of the subsidy.

The Department of Finance summarized the revenue tests for each eligibility period in this helpful chart:



Claiming Period

Required reduction in Revenue

Reference period for eligibility

Period 1

March 15 to April 11


March 2020 over: March 2019 or Average of January and February 2020

Period 2

April 12 to May 9


April 2020 over: April 2019 or Average of January and February 2020

Period 3

May 10 to June 6


May 2020 over: May 2019 or Average of January and February 2020

Pre-Crisis Remuneration
In computing the amount of a subsidy with respect to an employee, the subsidy is limited to 75% of the employee’s pre-crisis weekly remuneration. The government has clarified that pre-crisis remuneration for an employee is based on the average weekly remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in respect of which the employee received no remuneration.

Refunding Payroll Contributions
The government has proposed to enhance the CEWS by refunding 100% of employer-paid contributions to EI, CPP, QPP, and QPIP. More specifically, the refund covers contributions for eligible employees for each week throughout which those employees are on leave with pay and for which the employer can claim the CEWS for those employees. There is no weekly or overall limit to the amount that can be refunded. Employers are required to continue collecting and remitting employer and employee contributions, and can soon apply for the refund at the same time as applying for the CEWS.

Eligible Employees
An eligible employee is an individual who is employed in Canada.

Eligibility for the CEWS of an employee’s remuneration is available to employees other than those who have been without remuneration for 14 or more consecutive days in the eligibility period, i.e., from March 15 to April 11, from April 12 to May 9 and from May 10 to June 6.

More information is available on the Government of Canada website.

If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.

Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.

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