What is the Canadian Wage Bill and how do I apply?

Canada’s COVID-19 Emergency Response Act, No 2 was signed into law on April 11, 2020. The legislation provides a 75% wage subsidy for eligible employers for up to twelve weeks and a 100% refund on employer contributions to insurance and pension plans.

We’ll walk you through what you need to know about the Act, how to apply, and frequently asked questions from home service companies.

The details

Canadian Emergency Wage Subsidy (CEWS)

Employees can seek a subsidy for remunerations paid between March 15 and June 6, 2020. Remunerations include salary, wages, and things like taxable benefits.

The subsidy amount is 75% of the employee’s pre-crisis weekly remuneration up to $847 per week.

This is based on the employees’ average pay between January 1 and March 15. But employers can seek a subsidy for the salaries or wages paid to new employees, as well.

There are three program periods a business can apply for:

A subsidy for wages paid between March 15 — April 11 based on a loss of revenue in March.
A subsidy for wages paid between April 12 — May 9 based on a loss of revenue in April.
A subsidy for wages paid between May 10 — June 6 based on a loss of revenue in May.

Once you apply, the subsidy will be paid within two to five weeks.

Payroll Contribution Refund

The Act also includes a 100% refund for certain employer-paid contributions to Employment Insurance, Canada Pension Plan, Quebec Pension Plan, and the Quebec Parental Insurance Plan.

The refund is available for contributions made each week that employees are on leave with pay and if the employer is eligible to claim the wage subsidy for those employees.

There is no limit to this refund amount.

Who Is Eligible

Individuals and taxable businesses of all sizes and across all sectors are eligible for the subsidy if they’ve seen at least a 15% drop in their revenue in March or 30% drop in April or May.

Note: You cannot receive this subsidy if your employees went without pay for 14 or more days in the period you’re applying for.

How to Apply

Businesses can apply for the wages subsidy and the refund through the Canada Revenue Agency’s My Business Account portal.

FAQs

I applied for the temporary 10% wage subsidy. Am I eligible for this new subsidy, as well?

Yes, but it will reduce what you can claim under this new subsidy in the same period.

How do I calculate the drop in revenue?

There are two ways to calculate your drop in revenue. You can choose to compare your revenue of a given month between 2019 and 2020 (such as what you made in March 2020 compared to March 2019) or compare your average revenue between January and February of 2020 with the period you’re applying for (March, April or May 2020).

You can also choose to calculate your revenue via accrual accounting (as funds are earned) or cash accounting (as they are received).

Do I need to apply for each period separately?

Once you’ve proven your eligibility for one period, you will automatically qualify for the next period. For instance, if you lost more than 15% revenue in March, you will qualify for both the first and second periods (wages paid between March 15 through May 9). You’ll need to reapply for the last period (wages paid between May 10 through June 6).