The revised CEWS program has been extended to December 19, 2020 – with far greater complexity. Commencing with the period of July 5, 2020, rather than realizing a revenue decline of 30% to qualify for a 75% wage subsidy, the revised program allows an Eligible Employer with any level of revenue decline to receive a subsidy that is proportional to the percentage of revenue decline. An additional “top-up subsidy” is available if the business has experienced a decline in revenue of 50% or more.
Basically, we now have a sliding-scale subsidy consisting of 2 parts: a base subsidy and a top-up subsidy – discussed in more detail below.Due to the enormous complexity of the analysis and calculations, highlighted below, it is recommended that you seek professional help – which we, at HS & Partners are happy to provide.
Phase 1 of the program, March 15-July 4 (Periods 1-4), provided 75% wage support based on a revenue decline of 15% (March 15-April 10); and a 30% decline during each of the 3 subsequent Claim Periods (2, 3 & 4), through to July 4. Phase 1 included a provision whereby if you qualify for CEWS in any one Claim Period, you do not have to prove revenue decline in the immediate subsequent Claim Period. In effect, this meant than any company that could qualify, would automatically receive CEWS wage support for 8 weeks but would then have to re-qualify for any later Claim Period. The maximum subsidy actually paid, per eligible employee was $847 per week.
Phase 2 applies to the period of July 5-August 29 (Periods 5 and 6) and contains 2 parts to the subsidy and 2 methods from which to choose to determine the extent of revenue decline.
1) The base subsidy provides up to 60% for businesses that have experienced a revenue decline of any level in the Claim Period, with the subsidy being proportional – on a straight-line basis (for revenue reductions between 1% and 50%).
During Periods 5 and 6, wage support percentages will be 1.2x the percentage of revenue decline experienced by the employer. For example, businesses that have seen a 10% revenue decline can get a wage subsidy of 12%. Those that have seen a 20% decline can get a wage subsidy of 24%. This base subsidy reaches its maximum 60% level at a revenue decline of 50%.
2) The top-up subsidy provides up to 25% additional wage support for businesses that have experienced a revenue drop in excess of 50% during the Claim Period – resulting in a maximum wage subsidy of 85% for Periods 5 and 6, where a business has sustained a revenue decline of 70% or more. The top-up subsidy is calculated as 1.25x the percentage of revenue decline in excess of 50%. For example, companies that have seen a 60% revenue decline can get a top-up subsidy of 12.5% for a total subsidy of 72.5% (i.e., 60% base subsidy + 12.5% top-up subsidy). However, during Phase 2, the business can choose to use the Phase 1 criteria to raise that subsidy to 75%.
Businesses that have seen a 70% revenue decline can get a top-up subsidy of 25%, for a total subsidy of 85% (i.e., 60% base subsidy + 24% top-up subsidy), that being the maximum subsidy level in total.
Phase 3 applies to Claim Periods between August 30 – November 21 (Periods 7,8 and 9) and begins the wind-down of the program by reducing the maximum subsidy levels in successive months from 60% to 20%. Unlike the base subsidy, which is reduced over Periods 7, 8 and 9, the top-up subsidy is not reduced and will remain constant until Period 10 (November 22 – December 19). The rules for Period 10 have not been released yet.
The base subsidy rate declines as the CEWS periods pass, with the maximum weekly benefit per employee is set to fall from $960 in Periods 5 and 6 to $508 in Period 9 (Oct. 25 to Nov 21).
Excluding the top-up subsidy, the maximums are $677 in Periods 5 and 6; dropping down to $226 in Period 9.
Your HS & Partners Team