HOW TO CALCULATE YOUR CANADA WAGE SUBSIDY

The Canada Revenue Agency’s has an online calculator for the Canada Emergency Wage Subsidy (“CEWS”).

As a Canadian employer who has seen a drop in revenue due to COVID-19, you may be eligible for a subsidy to cover part of your employee wages, retroactive to March 15. This subsidy will enable you to re-hire workers, help prevent further job losses, and ease you back into normal operations.

The CEWS is extended to December 19, 2020, but is likely to be extended to the summer of 2021.

It now uses a new variable-rate subsidy, but the subsidy is arguably now more difficult to calculate, mostly because it is comprised of two, variable-rate, subsidies:

  • the “base subsidy,” which is available to employers with any monthly revenue drop; and
  • the “top-up subsidy,” which is only available to employers with a 3-month average revenue drop of over 50%.

The base subsidy is calculated as a multiple of the employer’s monthly revenue drop percentage, and the multiple varies depending on the Claim Period. 

Both the base subsidy and the top-up subsidy are subject to a maximum threshold.

Employers may also compare revenue based on the current month or the prior month, as well as a special “safe harbour rule” for Claim Periods 5 and 6 to ensure employers receive a subsidy at least equal to what they would have received under the previous flat-rate subsidy rules. These too are of course welcome measures, but also create additional complexity.

One advantage of the calculator is that, to account for the changes to the rules beginning in Claim Period 5, it will automatically apply the best available subsidy rate based on the information entered.

The calculator is designed to assist employers in navigating the new rules, as well as to enable them to:

  • calculate (based on their particular circumstances) their base and/or top-up subsidy amounts to enter into their CEWS online application form;
  • preview their total estimated subsidy; and
  • print their results and save them to validate their claim.

For employers with under 20 employees, who are entering employee pay on a weekly basis, there is an online calculator option available, into which each employee’s data is entered directly. Employers with 20 or more employees, or who wish to enter pay on a bi-weekly basis, will need to download and complete a spreadsheet to calculate the total eligible remuneration, the base subsidy, and the top-up subsidy.

The current calculator can be used only for Claim Periods 1 to 5, with more periods to be added going forward.


Thank you for reading this - Jason Ward of WARDS LAWYERS PC.

If you would like to read more, please go to wardlegal.ca/posts.

This WARDS LAWYERS PC blog is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.

More information? We're here to help - jason@wardlegal.ca | www.wardlegal.ca