Maximum subsidy rate set at 40 per cent for those with revenue drop of 50 per cent or more
The federal government has detailed proposed changes to the Canada Emergency Wage Subsidy (CEWS) program that are meant to make it more flexible and generous.
Ottawa just recently introduced legislation that would extend the program until June 2021.
Under the redesigned program, coverage details under Period 8, covering Sept. 27, 2020 to Oct. 24, 2020, would continue to apply for both Period 9, covering Oct. 25, 2020 to Nov. 21, 2020, and Period 10, covering Nov. 22, 2020 to Dec. 19, 2020.
The maximum base subsidy rate would be set at 40 per cent for those with a revenue drop of 50 per cent or more. Meanwhile, the program will cover 80 per cent of the revenue drop for companies with losses below 50 per cent.
Maximum coverage per employee is set at up to $452 per week.
New rate structure of the base subsidy
Top-up subsidy
A top-up wage subsidy of up to 25 per cent is also available to employers most adversely impacted by the pandemic, according to the government.
Currently, an eligible employer’s top-up wage subsidy is generally determined based on the revenue drop over the preceding three months compared to the same months in the prior year. Under the alternative approach, the top-up wage subsidy is determined based on the revenue drop experienced when comparing average monthly revenue in the preceding three months to the average monthly revenue in January and February 2020.
The combined base subsidy and the top-up wage subsidy is set at 65 per cent for employees with losses of 70 per cent and up. This applies to Periods 8, 9 and 10.
Meanwhile, companies with revenue losses of 50 per cent to 69 per cent would be eligible for 40 per cent + 1.25 x (revenue drop - 50 per cent), while those with 0 per cent to 49 per cent in losses are eligible for 80 per cent of their revenue drop.
Maximum benefit per employee is set at up to $734 per week.
Rate structure of the combined base subsidy and top-up wage subsidy
In August, the federal government launched an updated CEWS calculator for employers to help with their calculations.
Safe harbour, furloughed employees
The federal government also outlined the reference periods and calculations for the top-up wage subsidy safe harbour rule, furloughed employees and employees returning from leave.
The wage subsidy calculation for a furloughed employee would be the lesser of:
- the amount of eligible remuneration paid in respect of the week; and
- the greater of:
- $500, and
- 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $573.
In September, more than three-quarters of Canadian employers said the redesigned CEWS was a good investment to get people back to work and boost the economy, according to a survey.
