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Trudeau unveils more detail, new measures in relation to wage subsidy for employers hit by COVID-19

Wednesday, April 08, 2020 @ 5:10 PM | By Cristin Schmitz

The federal government has modified — and provided significant new details about — the eligibility criteria and other aspects of the 12-week Canada Emergency Wage Subsidy (CEWS) offered employers for up to 75 per cent of the first $58,700 normally earned by their employees — a program that was first announced March 2.

On April 8 Prime Minister Justin Trudeau also announced that his government is proposing that employers eligible for the CEWS be entitled to receive a 100-per-cent refund for certain employer-paid contributions to employment insurance, the Canada Pension Plan, the Quebec Pension Plan and the Quebec Parental Insurance Plan.

The refund would apply to the entire amount of employer-paid contributions in respect of remuneration paid to furloughed employees in a period where the employer is eligible for the CEWS.

“I know many of you are anxious to see this subsidy delivered,” Trudeau said during his daily COVID-19 briefing in Ottawa April 8. “We’re calling on the opposition [parties] to join us in bringing the House [of Commons] back to pass [enabling] legislation, so you can get the support you need as soon as possible.”

Trudeau said that in order to address the particular realities faced by the not-for-profit sector, high-growth companies and new businesses, the government is adding flexibility to the eligibility requirements.

Specifically, in order measure their revenue loss, it is proposed that all employers have the flexibility to compare their revenue of March, April and May 2020 to that of the same month of 2019, or to an average of their revenue earned in January and February 2020.

Moreover, in respect of the month of March, the government proposes to make it easier to access the CEWS than was originally announced by reducing the eligibility requirement of a 30-per-cent drop in revenue to only 15 per cent, given that many businesses did not begin to lose revenue due to COVID-19 until part way through last month.

A government backgrounder indicates that because the time between when revenue is earned and when it is paid can be highly variable in certain sectors of the economy, the government is proposing that employers be allowed to measure their revenues either on the basis of accrual accounting (i.e. as revenues are earned) or cash accounting (i.e. as revenues are received).

Special rules will also be provided to address issues for corporate groups, non-arm’s length entities and joint ventures.

The government said that registered charities and non-profit organizations will also be able to benefit from the additional flexibilities for revenue-loss calculation.

In that respect, the government is proposing that charities and non-profit organizations be allowed to choose to include, or exclude, government funding in their revenues for the purpose of applying the revenue reduction test.

“The government will continue to do whatever it takes to support Canadians and the economy during this very difficult time,” Finance Minister Bill Morneau said in a press release April 8. “We are listening to the feedback that Canadians and the business community have provided and will make sure this subsidy serves the needs of Canadians.”