On April 1, 2020, the Minister of Finance provided details on the proposed Canada Emergency Wage Subsidy for employers.
The Government of Canada has also launched the Canada Emergency Response Benefit (CERB) website with further details on eligibility and the application process for employees.
Canada Emergency Wage Subsidy
On April 1, 2020, the Minister of Finance provided details on the proposed Canada Emergency Wage Subsidy. Please note that Parliament is being recalled for an emergency sitting in order to pass this new relief measure. Accordingly, the following details of the proposed subsidy are all subject to change and no official guidance has been provided with respect to administration of the program to date.
Information provided on the Government of Canada website is as follows:
- Applies at a rate of 75% on the first $58,700 normally earned by employees, which translates to up to $847 per week, per employee. The program would be in place for 12 weeks, from March 15, 2020 to June 6, 2020.
- Eligible employers who suffer a drop in gross revenues of at least 30% for March, April or May when compared to the same month in 2019 would be able to access the subsidy.
- Eligible employers would include employers of all sizes and from all sectors except for public sector entities.
- For not-for-profit organizations and registered charities similarly affected by a loss of revenue, the government will continue to work with them to ensure the definition of revenue is appropriate for their circumstances.
- An eligible employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees. Employers will be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered.
Eligible employers will be able to access the subsidy by applying through an online portal with the Canada Revenue Agency. More details will be provided in due course. Organizations that do not qualify for the proposed Canada Emergency Wage Subsidy continue to qualify for the previously announced temporary wage subsidy of 10% of remuneration paid from March 18, 2020 to June 20, 2020, to a maximum of $1,375 per employee and $25,000 per employer.
As eligibility will be determined by way of revenue test (decrease in gross revenues), it will be important to keep accounting records and bookkeeping up to date. The government is also highly encouraging organizations to register for direct deposit to enable quicker access to funds.
Canada Emergency Response Benefit
The Government of Canada has also launched the Canada Emergency Response Benefit (CERB) website with further details on eligibility and the application process.
It is anticipated that applications will start being accepted April 6 and funds are expected to be received within 10 days or faster for taxpayers who have signed-up for direct deposit. It is important to note that those who are set to receive the new proposed 75% Canada Emergency Wage Subsidy will not be able to collect both.
To be eligible for the CERB, the following must apply:
- You must reside in Canada;
- You are 15 years of age or older at the time of application;
- You have stopped or will stop working for reasons related to covid-19, or because you are unable to work due to illness, or because you lost your employment for other reasons beyond your control; and
- If you are submitting for your first benefit period, that you have stopped or will stop working for at least 14 consecutive days within the 4-week benefit period; or
- If you are filing for a subsequent benefit period, you did not receive any employment or self employment income for the period for which you previously claimed the benefit and do not expect to receive any employment or self employment income in the 4 week benefit period;
- You have not quit your job voluntarily;
- You are not receiving nor have you applied for the CERB from the Canada Revenue Agency nor are you receiving Employment Insurance benefits for the same benefit period;
- You have earned a minimum of $5,000 in income within the last 12 months or in the 2019 calendar year from one or more of the following sources:
- Employment income;
- Self-employment income.
Canada Revenue Agency will be accepting online applications for the CERB through Canada Revenue Agency’s “CRA My Account”. Applicants are encouraged to register online with “CRA My Account” to be able to apply for the CERB once it is available.
If you have any questions or require assistance, please contact your McCay Duff advisor.
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