|Dear Clients & Friends,
Today the Government announced the following amended criteria to provide greater flexibility for businesses to access the 75% wage subsidy (the Canada Emergency Wage Subsidy, or “CEWS”):
- To measure their reduction in revenue, 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.
- For March, the Government proposes to reduce the 30% benchmark to 15% (in lost revenue), in recognition of the fact that many businesses did not begin to be affected by the crisis until partway through the month.
- Recognizing that the time between when revenue is earned and when it is collected could be highly variable, it is proposed that employers be allowed to measure revenues either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received). So if your top-line revenue has not dropped, but you are experiencing difficulties and delays collecting payment from your customers, you can choose to measure “loss of revenue” on a cash-basis.
- Registered charities and non-profit organizations would also be able to benefit from the additional flexibility being provided to employers with respect to the revenue loss calculation. In addition, to recognize that different types of organizations are experiencing different types of funding pressures, it is proposed 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.
It should be noted that this is a proposal has not yet been passed, and the application process will not be available for a few weeks. In the meantime, qualifying businesses (Canadian Controlled Private Corporations) can continue to utilize the 10% wage subsidy previously announced: 10% of remuneration paid from March 18 to June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Once the 75% subsidy becomes available, and provided your business meets the criteria, any benefit received for the 10% subsidy will be off set against the 75% CEWB over the overlapping period.
Your HS & Partners Team