- it can continue to use the same approach for all of claim periods 5 to 21; or
- it can elect to apply the alternative approach for all of the claim periods 5 to 21.
- it can elect to continue to use the alternative approach for all of the claim periods 5 to 21; or
- it can apply the general approach for all of the claim periods 5 to 21 (see note 2 below).
Once an approach is chosen, the eligible employer would be required to use the same approach for all of claim periods 5 to 21.
Further, for claim periods 5 to 21, the approach chosen must be used for both the base revenue reduction percentage (see Q20-2) calculation and the top-up revenue reduction percentage (see Q20-3) calculation.
Note 1: The election (see Q12-2), must be made and retained with the eligible employer's other books and records (see Q33) in support of its wage subsidy claim and eligibility, and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
Note 2: Where an eligible employer was not carrying on a business or otherwise carrying on its ordinary activities on March 1, 2019 and is using the general approach for claim periods 5 to 21, the employer can elect to use, for claim periods 14 to 17 only, the alternative approach to calculate its revenue reduction. If the alternative approach is chosen, it must be used for both the base and the top-up revenue reduction percentage calculations in each of claim periods 14 to 17 and the employer must resume the use of the general approach for claim period 18 and subsequent claim periods.
2-1. Are there special situations when an eligible employer can change the approach to determine the prior reference period for claim period 5 and subsequent claim periods? New: September 24, 2021
Generally, once an approach is chosen, an eligible employer would be required to use the same approach for all of claim periods 5 to 21. However, an eligible employer may choose to switch from the general approach to the alternative approach for claim periods 14 to 17 (from March 14, 2021 to July 3, 2021), if the employer:
- initially chose to use the general approach for all of claim periods 5 to 21,
- was not carrying on a business or otherwise carrying on its ordinary activities on March 1, 2019; and
- elects to use the alternative approach for all of claim periods 14 to 17.
Such employers must, however, resume the use of the general approach for claim period 18 and subsequent claim periods.
Eligibility
3. Which employers are eligible for the wage subsidy? Updated: August 11, 2020
For the purposes of the wage subsidy, an eligible employer means:
- a corporation or a trust, other than a corporation or a trust that is exempt from tax under Part I of the Income Tax Act (the Act) or is a public institution (see Q3-01);
- an individual other than a trust;
- a registered charity (other than a public institution);
- a person that is exempt from tax under Part I of the Act (other than a public institution), that is:
- an agricultural organization;
- a board of trade or a chamber of commerce;
- a non-profit corporation for scientific research and experimental development;
- a labour organization or society;
- a benevolent or fraternal benefit society or order; and
- a non-profit organization;
A public institution is a school, school board, hospital, health authority, public university or college (see Q3-7). It also includes an organization described in any of paragraphs 149(1)(a) to (d.6) of the Act, for example, municipalities and local governments and tax-exempt Crown corporations.
3-01. Are all trusts eligible to claim the wage subsidy? Updated: August 11, 2020
For a claim period that begins on or after March 15, 2020 and ends before May 10, 2020, trusts may be eligible employers.
For a claim period that begins on or after May 10, 2020, the following trusts are eligible employers:
- a trust that is not exempt from tax under Part I of the Act and is not a public institution;
- a trust that is exempt from tax under Part I of the Act (other than a public institution) because it is a registered charity or is one of the other types of eligible tax-exempt entities;
- a trust that is a public institution if it is a prescribed organization (see Q3-2).
A trust that is an eligible employer may be able to claim the wage subsidy for a claim period if it satisfies all the conditions (see Q4) to qualify for the wage subsidy in respect of that claim period.
3-02. Can a non-resident corporation be an eligible employer if its income is excluded in computing its income under the Act because of a tax treaty? New: August 11, 2020
Yes. A non-resident corporation may be an eligible employer even if all of its Canadian-sourced business income is not taxable in Canada on the basis that it is excluded from the computation of its income under the Act because of a tax treaty.
For the purpose of the wage subsidy, an eligible employer includes a corporation (other than a public institution) that is not exempt from tax under Part I of the Act (see Q3). However, there are some exceptions and certain corporations that are exempt from tax can still be eligible employers (see Q3-2, Q3-3). Generally, a corporation that is exempt from tax under Part I of the Act is a corporation listed in subsection 149(1) of the Act.
Where a corporation resides in a country with which Canada has a tax treaty and carries on a business in Canada but does not have a permanent establishment in Canada, the treaty might provide that such income is not taxable in Canada. That non-resident corporation is not listed in subsection 149(1) of the Act as being exempt from tax under Part I of the Act. The fact that the treaty provides that its income is not taxable in Canada does not prevent it from being an eligible employer.
3-1. How does the wage subsidy apply to an eligible employer that is a partnership? Updated: August 11, 2020
While a partnership does not file an income tax return and is not taxed at the partnership level, it is deemed to be a taxpayer for the purposes of the wage subsidy and any related notice of determination.
For the purposes of the wage subsidy, a partnership is an eligible employer if each of its members is an eligible employer, including other partnerships that themselves are eligible employers (see Q3 and Q3-2).
Provided the partnership had an open payroll program (RP) account on March 15, 2020 or, had a payroll service provider administer its payroll service and certain conditions are met (see Q3-8), and meets all other eligibility requirements (see Q4), it can make an application for the wage subsidy (see Q26).
A wage subsidy payment will be sent by direct deposit to the bank account on file for that RP account or by cheque to the address on file for that RP account, if there is no banking information associated with the RP account (see Q28).
A partnership is also deemed to be a taxpayer for the purposes of repaying amounts received under the wage subsidy, if it is found to not meet the eligibility requirements, or that are in excess of what it was entitled to.
Finally, where the anti-avoidance rule (see Q34) in respect of the wage subsidy for a claim period applies to a partnership, the partnership will be liable to the corresponding penalty as if it were a corporation and may have to pay back any wage subsidy that it received for that claim period.
3-2. Are there any prescribed organizations that are eligible employers for the purposes of the wage subsidy?
Yes, the following prescribed organizations will be eligible employers for the purposes of the wage subsidy:
- certain Indigenous businesses; specifically:
- a tax-exempt corporation (under paragraph 149(1)(d.5) of the Act) carrying on a business that is at least 90% owned by one or more Indigenous governments (see note 2 of Q3-3);
- a tax-exempt corporation (under paragraph 149(1)(d.6) of the Act) carrying on a business that is owned 100% by one or more Indigenous governments or by tax-exempt corporations described above (see Q3-3);
- a partnership, each member of which is an eligible employer or an Indigenous government (see Q3-4);
As of March 15, 2020, the above prescribed organizations are eligible employers for the purpose of wage subsidy.
3-3. What is a tax-exempt corporation under paragraph 149(1)(d.5) or (d.6) for purposes of the prescribed organizations?
A tax-exempt corporation under paragraph 149(1)(d.5) of the Act, in the context of a prescribed organization refers to a corporation, where:
- not less than 90% of the shares or capital (subject to note 1) are owned by one or more entities that are an Indigenous government (see note 2) described in paragraph 149(1)(c) that is a public body performing a function of government in Canada;
- no more than 10% of the income of the corporation is earned from activities carried on outside the geographical boundaries of the Indigenous government (the 10% geographical boundaries income test); and
- it carries on a business.
A tax-exempt corporation under paragraph 149(1)(d.6) (i.e., wholly-owned subsidiaries of certain corporations) in the context of a prescribed organization refers to a corporation where:
- all of the shares (except directors' qualifying shares) or the capital (subject to note 1) are owned by one or more entities each of which is
- a tax-exempt corporation described in this paragraph or the paragraph above, or
- an Indigenous government (see note 2) described in paragraph 149(1)(c) that is a public body performing a function of government in Canada;
Note 1: In the context of a corporation without share capital, the determination of the ownership necessitates a review of all the relevant documents such as articles of incorporation, by-laws and agreements relating to the operation and control of the corporation and its assets.
For purposes of determining the ownership tests in paragraphs 149(1)(d.5) and 149(1)(d.6) any right to acquire shares or capital of a corporation should be considered as though the right had been exercised.
No persons other than governmental bodies own shares that, in total, give them more than 10% of the votes that could be cast at any meeting of shareholders.
No person (or a group including any person) other than governmental bodies in fact controls the corporation.
Note 2: For the purpose of these rules, an Indigenous government means an Indian, Inuit or Métis government or similar Indigenous governing bodies exempt from tax under paragraph 149(1)(c) (for the purpose of that paragraph, all bands created under the Indian Act meet the criteria to be considered municipal or public bodies performing a function of government in Canada).
3-4. If a partnership has one or more members that are Indigenous governments, will it qualify for the wage subsidy?
A partnership, each member of which is an eligible employer, or an Indigenous government (see note 2 of Q3-3), is an eligible employer for the purposes of the wage subsidy. If such a partnership meets all other conditions necessary to qualify (see Q4), it can make an application for the wage subsidy.
3-5. Where a partnership has both eligible employers (including prescribed organizations), and non-eligible employers as its members, will such a partnership qualify for the wage subsidy?
A partnership that is an eligible employer and meets all other conditions (see Q4) necessary to qualify in respect of a claim period, can make an application for the wage subsidy (see Q26) for that claim period.
Generally, for the purposes of the wage subsidy, a partnership is an eligible employer if each of its members is an eligible employer (individuals, taxable corporations, non-profit organizations, or registered charities), including prescribed organizations (see Q3-2) and other partnerships that themselves are eligible employers (see Q3).
However, where the partnership interests are held by both eligible and non-eligible employers, the partnership will be an eligible employer if, throughout the claim period, 50% or more of the FMV of all interests in the partnership are held - directly or indirectly, through one or more partnerships - by eligible employers.
3-6. If a partnership has one or more members that are prescribed organizations, will it qualify for the wage subsidy?
An entity that is a prescribed organization (see Q3-2) for the purposes of the wage subsidy is an eligible employer. Hence, a partnership that has one or more members that are prescribed organizations, will qualify for the wage subsidy provided:
- all the remaining members are eligible employers (see Q3) or Indigenous governments (see note 2 of Q3-3), or
- where the remaining members are not all eligible employers or Indigenous governments, then throughout the claim period, 50% or more of the fair market value of all interests in the partnership are held—directly or indirectly, through one or more partnerships—by eligible employers.
3-7. Are all schools and colleges eligible for the wage subsidy?
Public institutions, including colleges and schools, are not eligible employers for the purposes of the wage subsidy.
However, a person or partnership that operates a private school or private college is a prescribed organization and is an eligible employer for the purposes of the wage subsidy.
Private schools and private colleges include for-profit and not-for-profit institutions such as arts schools, language schools, driving schools, flight schools and culinary schools.
3-8. Can an eligible employer that hires a third party to facilitate the administration of its payroll, qualify for the wage subsidy? Updated: October 6, 2020
Yes. However, each eligible employer must make their wage subsidy application for a claim period in the prescribed form and manner. This means that each eligible employer requires their own business number and payroll program account to apply for and receive the wage subsidy.
Eligible employers who did not have their own payroll program account with the CRA on or before March 15, 2020, but on March 15, 2020 employed one or more individuals in Canada and allowed a third party with a business number to make payroll remittances on their behalf, through the third party’s account, will need to register for their own payroll program account. Eligible employers may also need to register for their own business number if they did not previously have one.
Once the payroll program account (and business number if applicable) is opened, the CRA will require information from the third party to verify that remittances were previously made on behalf of the eligible employer. This would include a listing of each employer the third party made remittances on behalf of, and the remittances that can be attributed to each of those employers from January 1, 2020. The listing should also include the new business number and payroll program account for each eligible employer.
The third party can provide this information to the CRA by sending an email to CEWSINFOG@cra-arc.gc.ca. Please note that this mailbox is only used to receive the applicable information from third parties. General enquiries will not be responded to.
After the information is received and verified, the CRA may transfer the applicable remittances from the third party to the eligible employer’s new account, and will advise when the eligible employer can proceed with their wage subsidy application.
Generally, in situations where a third party was making payroll remittances on behalf of an employer, the employer will be expected to continue using their new payroll program account for all future payroll remittances. However, in certain situations, future payroll remittances can continue to be made using an existing payroll program account. For example, where a group of employers have entered into a cost-sharing arrangement where an agency relationship or a mandate exists (see Q3-9) but only one member of the group, acting as an agent or as a mandatary on behalf of the other employers, remits these amounts to the CRA, the group can continue using their existing payroll program account for all future payroll remittances.
3-9. Can an employer that participates in a cost-sharing arrangement qualify for the wage subsidy? Updated: January 13, 2021
A cost sharing arrangement (CSA) is generally an agreement under which the participants share certain costs, including the salary or wages that are paid to employees. Under a CSA, there may be one or more employers in respect of the employees.
A CSA is often established as an agency relationship or a mandate. In general terms, under the common law, “agency” is an express or implied contract whereby a party (the principal) engages another party (the agent) to perform certain tasks on its behalf or to bind it. In general terms, under the Civil Code of Quebec, “mandate” is a contract by which a person (the mandator) empowers another person (the mandatary) to represent the mandator in the performance of a juridical act with a third person.
As such, where the CSA represents a type of an agency relationship or a mandate for the employers, each of the separate eligible employers may qualify for the wage subsidy in respect of their portion of eligible remuneration paid to each eligible employee by the agent or the mandatary in respect of a week in a claim period, as long as all of the other eligibility criteria have been met (see Q4). Only the actual employer(s) can apply for the wage subsidy in respect of a particular employee (see note below).
In situations where only one of the employers in such a CSA, or an entity established by the participants for this purpose, had a payroll program account with the CRA on or before March 15, 2020, the other employers will need to register for their own payroll program account to apply for and receive the wage subsidy. Where this applies, the group of employers can continue making all of their future payroll remittances for the employees using their existing payroll program account (see Q3-8).
An employer, who participates in a CSA, and whose payroll was administered through an open payroll program account with the CRA on March 15, 2020, and on whose behalf payroll remittances were made, is eligible for the CEWS (provided it meets all other criteria). This may be the case even though the business number is attached to an administrator of the payroll that is not a ‘person or partnership’ for any other purpose under the Act.
Note: Where an eligible employee is employed by two or more eligible employers that do not deal with each other at arm's length, the total amount of the wage subsidy in respect of that employee is subject to special limitations (see Q24).
A group of five medical professional corporations dealing at arm’s length, enter into a CSA to share certain costs, including the salary or wages that are paid to eight support employees. The agreement, which is an agency relationship, requires that the participants (the five medical professional corporations) use an entity established for this purpose (the agent) to perform certain tasks, such as paying employees, on each of their behalf. The medical professional corporations are each considered the employer on a proportionately agreed upon basis in respect of the employees. The entity established for this purpose has its own payroll program account to make payroll remittances for all eight support employees.
Given that an agency relationship exists, each medical professional corporation could qualify for the wage subsidy in respect of their portion of eligible remuneration paid to each eligible employee by the agent in respect of a week in a claim period, as long as all of the other eligibility criteria have been met (see Q4). Each corporation would need to obtain their own payroll program account to apply for and receive the wage subsidy.
The same results would be achieved where the CSA constitutes a civil law mandate, with the appointed entity acting as mandatary.
3-10. Can a joint venture qualify for the wage subsidy? New: October 6, 2020
The term “joint venture” is not defined in the Act. The CRA’s understanding of a joint venture is based on case law, which generally describes a joint venture as a limited business undertaking by two or more parties, in which the parties have a joint property interest in the subject matter of the venture and share control and management of the enterprise. A joint venture is not recognized as a taxpayer under the Act and does not have its own fiscal period.
A joint venture is not an eligible employer for the purposes of the wage subsidy. However, in certain circumstances, an eligible employer may use the qualifying revenue of a joint venture instead of its own qualifying revenue, in order to determine if it experienced the required reduction in revenue in order to qualify for the wage subsidy (see Q11).
4. How does an eligible employer qualify for the wage subsidy? Updated: September 24, 2021
In order to qualify for the wage subsidy in respect of a claim period, an eligible employer must meet the following conditions:
- on March 15, 2020,
- it had an open payroll program account with the CRA (see note 1 below) or,
- it employed one or more individuals in Canada, had another person or partnership (payroll service provider) administer its payroll, and that payroll service provider,
- had an open payroll program account with the CRA on March 15, 2020, and
- used its business number to make payroll remittances in respect of employees of the eligible employer; and
- the employer registers subsequently with the CRA for its own payroll program account (see Q3-8);
- January 31, 2021 (see note 2 below), and
- 180 days after the end of the claim period;
Note 1: Where an eligible employer (the acquirer) acquires the assets of a person or partnership (the seller) and satisfies the conditions described in Q8-3, the acquirer is deemed to have met the conditions related to having an open payroll account with CRA on March 15, 2020, or using a payroll service provider (see Q4) to make their payroll remittances on the eligible employer’s behalf, if the seller met those conditions.
Note 2: Since January 31, 2021 is a Sunday, the last day to apply for claim periods 1 to 5 was February 1, 2021.
5. How is the reduction in revenue determined for claim periods 1 to 4? Updated: January 13, 2021
Once an eligible employer has calculated its qualifying revenue for each relevant reference period in a particular claim period, it would determine if it has experienced the required reduction in revenue to qualify for the wage subsidy for that claim period. However, the employer is under no obligation to prove that the decline in revenue is related to the COVID-19 crisis.
An eligible employer’s reduction in revenue for a particular claim period is the decline in revenue from the relevant prior reference period to the relevant current reference period, expressed as a percentage.
Table 1 below summarizes for claim periods 1 to 4, each relevant period and the required reduction in revenue to qualify to claim the wage subsidy.
Relevant periods
Table 1 – Reduction in revenue for periods 1 to 4
Claim periods Required reduction in revenue Reference periods for comparison under the general approach Reference periods for comparison under the alternative approach Period 1 March 15 to April 11, 2020 15% March 2020 over March 2019 March 2020 over average of January and February 2020 Period 2 April 12 to May 9, 2020 30% Footnote 1 April 2020 over April 2019 April 2020 over average of January and February 2020 Period 3 May 10 to June 6, 2020 30% May 2020 over May 2019 May 2020 over average of January and February 2020 Period 4 June 7 to July 4, 2020 30% June 2020 over June 2019 June 2020 over average of January and February 2020 If an eligible employer has not experienced the required reduction in revenue to qualify to claim the wage subsidy for a particular claim period, it may still qualify to claim the wage subsidy for another claim period if it has experienced the required reduction in revenues in that other claim period.
Once an eligible employer has determined that it has experienced the required reduction in revenue for a particular claim period that is one of the first three claim periods, it is automatically considered to have experienced the required reduction in revenue for the immediately following claim period (deeming rule for claim periods 1 to 4). As a result, the employer does not have to make this determination again for the immediately following claim period (see Table 2 below).
However, this deeming rule does not automatically extend to apply to the claim period after that next claim period. For example, if an eligible employer meets the condition for the reduction in respect of the first claim period - March 15 to April 11, 2020, the employer will be considered to have met the required reduction in revenue in respect of the second reference period - April 12 to May 9, 2020, without necessarily making a determination. But the eligible employer will have to make a determination for the third claim period - May 10 to June 6, 2020 (see Table 2 below).
In a situation where the eligible employer, subsequently determines that it actually experienced the required reduction in revenue, without applying the deeming rule, for the second claim period - April 12 to May 9, 2020, the eligible employer will be considered to have experienced the required reduction in revenue for that third claim period because of the deeming rule that can now be applied to the third claim period (see Example 5A).
Table 2 below provides some generic scenarios to demonstrate how this deeming rule works.
Does not qualify under the regular rule
Example 5AXYZ Inc. started its operations in July 2019. It reported revenues of $100,000 in January 2020 and $140,000 in February 2020, for a monthly average of $120,000. In March, its revenues dropped to $90,000. Because revenues in March 2020 are 25% lower than $120,000, XYZ Inc. would be eligible for the wage subsidy for both the first claim period (March 15 to April 11, 2020), and the second claim period (April 12 to May 9, 2020), because of the deeming rule.
It should be noted that the automatic determination for the second claim period is not relevant for the determination of the required revenue reduction for the third claim period. XYZ Inc. would need to have experienced the required reduction of 30% in the third claim period to qualify for that claim period, or to have experienced the 30% required reduction for the second claim period (meaning, to have revenue of $84,000 or less – that is, 30% lower than $120,000 – for that second claim period. In that circumstance because it has qualified for the second claim period using the 30% required reduction, XYZ Inc. is automatically considered to have experienced the required reduction in revenue for the third claim period because of the deeming rule). The same logic will be applied to determine if XYZ Inc is eligible for the fourth claim period.
General “year-over-year” approach
For an eligible employer that was carrying on business—or otherwise carrying on its ordinary activities—on March 1, 2019, and is using the general year-over-year approach, the reduction in revenue determination is made by comparing the change in qualifying revenue, year-over-year, using the relevant calendar month for the current and prior reference periods for the claim period.
If the qualifying revenue for the relevant month in the current year has declined when compared to the qualifying revenue for the relevant month in the prior year, by a percentage equal to or greater than the required reduction in revenue for the claim period (see Table 1 above), then the eligible employer has experienced the required reduction in revenue for the claim period and qualifies to claim the wage subsidy for that claim period, assuming the other qualifying conditions are met (see Q4).
On the other hand, if the qualifying revenue for that current reference period has declined by a percentage less than the required reduction in revenue for the claim period, then the eligible employer has not experienced the required reduction in revenue when compared to that prior reference period and does not qualify to claim the wage subsidy for that claim period, absent the deeming rule applicable for periods 1 to 4.
An eligible employer is determining if it has experienced the required reduction in revenue to qualify in order to claim the wage subsidy for claim period 1, from March 15 to April 11, 2020. The eligible employer is using the general year-over-year approach to determine its reduction in revenue. Its qualifying revenues for March 2019 were $250,000 and its qualifying revenues for March 2020 are $180,000.
Because its qualifying revenue for March 2020 has declined by 28% when compared to its qualifying revenue for March 2019, the eligible employer has experienced the required reduction in revenue of at least 15% for claim period 1 and may qualify to claim the wage subsidy for that period.
Because it has qualified for claim period 1, the eligible employer is automatically considered to have experienced the required reduction in revenue for claim period 2 (April 12 to May 9) and does not need to make the determination again when claiming the wage subsidy for that next claim period. For clarity, it will be deemed to have met the 30% test for claim period 2.
Alternative approach
For an eligible employer that was not carrying on business—or otherwise not carrying on its ordinary activities—on March 1, 2019, or that has elected to use this alternative approach (see note below) for claim periods 1 to 4, the reduction in revenue determination is made by comparing the:
- the qualifying revenue of the relevant calendar month of the current reference period for the claim period; and
- the average of the qualifying revenues earned in both January and February 2020.
If the qualifying revenue of the relevant calendar month of the current reference period for the claim period has declined, when compared to the average of the qualifying revenues earned in both January and February 2020, by a percentage equal to or greater than the required reduction in revenue for the claim period (see Table 2 above), then the eligible employer has experienced the required reduction in revenue for the claim period and may qualify to claim the wage subsidy for that claim period, assuming the other qualifying conditions are met (see Q4).
When the alternative approach is chosen, the average qualifying revenue will be calculated as follows:
Average qualifying revenue = 0.5xAx(B/C) where
A= qualifying revenues for the months of January and February of 2020
B= number of days in January and February 2020
C= number of days in January and February of 2020 during which the eligible employer was carrying on business —or otherwise carrying on its ordinary activities.
Where a business is carried on throughout January and February 2020, the factor (B/C) will be 1. Hence, there will be no adjustment to the average qualifying revenue.
In a situation where an eligible employer was not carrying on business—or otherwise not carrying on its ordinary activities— throughout the months of January or February 2020, for example, in the case of a new business that started mid January, the qualifying revenues for the months of January and February 2020 will be grossed up by the factor (B/C), to make the comparison of the qualifying revenue in the prior reference period comparable to the qualifying revenue in the current period (see Example 5-D).
Generally, if operations began anytime after February 2020, the employer would not be eligible for the wage subsidy. However, see Q6-4 or Q8-3 for exceptions.
If the qualifying revenue for that current reference period has declined by a percentage less than the required reduction in revenue when compared to that prior reference period (January and February 2020), then the eligible employer has not experienced the required reduction in revenue for the claim period and does not qualify to claim the wage subsidy for that claim period, absent the deeming rule applicable for claim periods 1 to 4.
Note: This election (see Q12-2), must be made and retained with the eligible employer's other books and records (see Q33) in support of its wage subsidy claim and eligibility, and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
Assuming an eligible employer did not experience the required reduction in its qualifying revenue in the first claim period (March 15- April 11, 2020), the eligible employer will then determine if it has experienced the required reduction in revenue to qualify in order to claim the wage subsidy for the second claim period, (April 12 to May 9, 2020). The eligible employer has elected to apply the alternative approach to determine its reduction in revenue. The average of qualifying revenues earned in both January and February 2020 were $1 million and its qualifying revenue for April 2020 is $900,000.
Because its qualifying revenue for April 2020 has declined by only 10% when compared to the average of its qualifying revenues earned in both January and February 2020, the eligible employer has not experienced the required reduction in revenue of at least 30% for the second claim period. It will therefore, not qualify for the wage subsidy for that claim period.
Because it has not qualified for the second claim period, the eligible employer must make the determination for the next claim period if it seeks to make a wage subsidy claim for that claim period.
An eligible employer is determining if it has experienced the required reduction in revenue to qualify in order to claim the wage subsidy for the first claim period, from March 15 to April 11, 2020. Since the eligible employer began operations only on January 14, 2020, it must use the alternative approach to determine its reduction in revenue. Its total qualifying revenues earned in January and February 2020 was $90,000. Its average qualifying revenue for the two months will be $57,447 [0.5x90,000x(60/47]. Its qualifying revenue for March 2020 is $39,600.
Because its qualifying revenue for March 2020 has declined by 31% when compared to the average of its qualifying revenues earned in both January and February 2020, the eligible employer has experienced the required reduction in revenue of at least 15% for the first claim period and will qualify to claim the wage subsidy for that period.
Because it has qualified for the first claim period, the eligible employer is automatically considered to have experienced the required reduction in revenue for the second claim period (April 12 to May 9, 2020).
5-01. How is the revenue reduction determined for claim periods 5 to 21? Updated: September 24, 2021
An eligible employer’s reduction in revenue for a particular claim period is its decline in qualifying revenue from the relevant prior reference period to the relevant current reference period (see Q2), expressed as a percentage.
The two available approaches for the reduction in revenue determination (i.e., the general year-over-year approach and the alternative approach; (see Q5)) continue to apply to claim periods 5 to 21.
- For claim periods 1 to 4, an eligible employer must have the required revenue reduction (see Q5) in those claim periods (unless the deeming rule for claim periods 1 to 4 applies), to be eligible for the wage subsidy.
- For claim periods 5 to 17, an eligible employer is required to have a revenue reduction of greater than 0% to be eligible for the wage subsidy, unless the deeming rule applicable to claim periods 5 to 21 applies (see Q5-03 and Q5-03.2), or for claim periods 5 to 10, the eligible employer is eligible for the top-up subsidy (see Q20-3).
- For claim periods 18 to 21, an eligible employer is required to have a revenue reduction of greater than 10% to be eligible for the wage subsidy, except that for claim periods 18 and 19 a revenue reduction of greater than 0% will allow an eligible employer to be eligible for the wage subsidy for employees on leave with pay. The deeming rule applicable to claim periods 5 to 21 applies to both these scenarios.
For claim periods 5 to 21, an eligible employer’s revenue reduction percentage in a claim period is relevant for determining its base wage subsidy and its top-up wage subsidy amount (see Q20-2 and Q20-3).
For claim periods 5 to 7, the top-up wage subsidy is calculated based on the three-month revenue-reduction test (Table 2B). For claim periods 8 to 10, the top-up wage subsidy is the greater of the amount determined under the three-month revenue-reduction test and the one month revenue reduction test (Table 2C). See Q20-3 for the safe harbour rule to calculate top up wage subsidy for the claim periods 8 to 10.
For claim periods 11 to 21 the top-up wage subsidy is calculated based on the one month revenue reduction test (see Table 2C).
Tables below summarize the relevant reference periods for the base wage subsidy and the top-up wage subsidy
Table 2A - Relevant reference periods for the base wage subsidy for claim periods 5 to 21
Claim periods Required reduction in revenue Reference periods for comparison under the general year-over-year approach Reference periods for comparison under the alternative approach Period 5 July 5 to August 1, 2020 Greater than 0% July 2020 over July 2019 or June 2020 over June 2019 Footnote * July 2020 or June 2020 Footnote * over average of January and February 2020 Period 6 August 2 to August 29, 2020 Greater than 0% August 2020 over August 2019 or July 2020 over July 2019 Footnote * August 2020 or July 2020 Footnote * over average of January and February 2020 Period 7 August 30 to September 26, 2020 Greater than 0% September 2020 over September 2019 or August 2020 over August 2019 Footnote * September 2020 or August 2020 Footnote * over average of January and February 2020 Period 8 September 27 to October 24, 2020 Greater than 0% October 2020 over October 2019 or September 2020 over September 2019 Footnote * October 2020 or September 2020 Footnote * over average of January and February 2020 Period 9 October 25 to November 21, 2020 Greater than 0% November 2020 over November 2019 or October 2020 over October 2019 Footnote * November 2020 or October 2020 Footnote * over average of January and February 2020 Period 10 November 22 to December 19, 2020 Greater than 0% December 2020 over December 2019 or November 2020 over November 2019 Footnote * December 2020 or November 2020 Footnote * over average of January and February 2020 Period 11 (see note below) December 20, 2020 to January 16, 2021 Greater than 0% December 2020 over December 2019 or November 2020 over November 2019 Footnote * December 2020 or November 2020 Footnote * over average of January and February 2020 Period 12 January 17 to February 13, 2021 Greater than 0% January 2021 over January 2020 or December 2020 over December 2019 Footnote * January 2021 or December 2020 Footnote * over average of January and February 2020 Period 13 February 14 to March 13, 2021 Greater than 0% February 2021 over February 2020 or January 2021 over January 2020 Footnote * February 2021 or January 2021 Footnote * over average of January and February 2020 Period 14 March 14 to April 10, 2021 Greater than 0% March 2021 over March 2019 or February 2021 over February 2020 Footnote * March 2021 or February 2021 Footnote * over average of January and February 2020 Period 15 April 11 to May 8, 2021 Greater than 0% April 2021 over April 2019 or March 2021 over March 2019 Footnote * April 2021 or March 2021 Footnote * over average of January and February 2020 Period 16 May 9 to June 5, 2021 Greater than 0% May 2021 over May 2019 or April 2021 over April 2019 Footnote * May 2021 or April 2021 Footnote * over average of January and February 2020 Period 17 June 6 to July 3, 2021 Greater than 0% June 2021 over June 2019 or May 2021 over May 2019 Footnote * June 2021 or May 2021 Footnote * over average of January and February 2020 Period 18 July 4 to July 31, 2021 Greater than 10% Footnote 11 July 2021 over July 2019 or June 2021 over June 2019 Footnote * July 2021 or June 2021 Footnote * over average of January and February 2020 Period 19 August 1 to August 28, 2021 Greater than 10% Footnote 11 August 2021 over August 2019 or July 2021 over July 2019 Footnote * August 2021 or July 2021 Footnote * over average of January and February 2020 Period 20 August 29 to September 25, 2021 Greater than 10% September 2021 over September 2019 or August 2021 over August 2019 Footnote * September 2021 or August 2021 Footnote * over average of January and February 2020 Period 21 September 26 to October 23, 2021 Greater than 10% October 2021 over October 2019 or September 2021 over September 2019 Footnote * October 2021 or September 2021 Footnote * over average of January and February 2020 Footnotes
Under the deeming rule
Note: The reference periods for comparison under the general year-over-year approach and the alternative approach for claim period 11 are the same as for claim period 10. This is to better align the reference periods with the claim periods (see Q5-03.2).
Table 2B - Relevant reference periods (for the three month revenue reduction test) for the top-up wage subsidy for claim periods 5 to 10
Claim periods Reference periods for comparison under the general year-over-year approach Reference periods for comparison under the alternative approach Period 5 July 5 to August 1, 2020 April to June 2020 average over April to June 2019 average April to June 2020 average over January and February 2020 average Footnote 8 Period 6 August 2 to August 29, 2020 May to July 2020 average over May to July 2019 average May to July 2020 average over January and February 2020 average Footnote 8 Period 7 August 30 to September 26, 2020 June to August 2020 average over June to August 2019 average June to August 2020 average over January and February 2020 average Footnote 8 Period 8
(see Table 2C below)September 27 to October 24, 2020 July to September 2020 average over July to September 2019 average July to September 2020 average over January and February 2020 average Footnote 8 Period 9
(see Table 2C below)October 25 to November 21, 2020 August to October 2020 average over August to October 2019 average August to October 2020 average over January and February 2020 average Footnote 8 Period 10
(see Table 2C below)November 22 to December 19, 2020 September to November 2020 average over September to November 2019 average September to November 2020 average over January and February 2020 average Footnote 8 Table 2C - Relevant reference periods (for the one month revenue reduction test) for the top-up wage subsidy for claim periods 8 to 21
Claim periods Reference periods for comparison under the general year-over-year approach Reference periods for comparison under the alternative approach Period 8 September 27 to October 24, 2020 October 2020 over October 2019 or September 2020 over September 2019 Footnote * October 2020 or September 2020 Footnote * over average of January and February 2020 Period 9 October 25 to November 21, 2020 November 2020 over November 2019 or October 2020 over October 2019 Footnote * November 2020 or October 2020 Footnote * over average of January and February 2020 Period 10 November 22 to December 19, 2020 December 2020 over December 2019 or November 2020 over November 2019 Footnote * December 2020 or November 2020 Footnote * over average of January and February 2020 Period 11 (see note under Table 2A) December 20, 2020 to January 16, 2021 December 2020 over December 2019 or November 2020 over November 2019 Footnote * December 2020 or November 2020 Footnote * over average of January and February 2020 Period 12 January 17 to February 13, 2021 January 2021 over January 2020 or December 2020 over December 2019 Footnote * January 2021 or December 2020 Footnote * over average of January and February 2020 Period 13 February 14 to March 13, 2021 February 2021 over February 2020 or January 2021 over January 2020 Footnote * February 2021 or January 2021 Footnote * over average of January and February 2020 Period 14 March 14 to April 10, 2021 March 2021 over March 2019 or February 2021 over February 2020 Footnote * March 2021 or February 2021 Footnote * over average of January and February 2020 Period 15 April 11 to May 8, 2021 April 2021 over April 2019 or March 2021 over March 2019 Footnote * April 2021 or March 2021 Footnote * over average of January and February 2020 Period 16 May 9 to June 5, 2021 May 2021 over May 2019 or April 2021 over April 2019 Footnote * May 2021 or April 2021 Footnote * over average of January and February 2020 Period 17 June 6 to July 3, 2021 June 2021 over June 2019 or May 2021 over May 2019 Footnote * June 2021 or May 2021 Footnote * over average of January and February 2020 Period 18 July 4 to July 31, 2021 July 2021 over July 2019 or June 2021 over June 2019 Footnote * July 2021 or June 2021 Footnote * over average of January and February 2020 Period 19 August 1 to August 28, 2021 August 2021 over August 2019 or July 2021 over July 2019 Footnote * August 2021 or July 2021 Footnote * over average of January and February 2020 Period 20 August 29 to September 25, 2021 September 2021 over September 2019 or August 2021 over August 2019 Footnote * September 2021 or August 2021 Footnote * over average of January and February 2020 Period 21 September 26 to October 23, 2021 October 2021 over October 2019 or September 2021 over September 2019 Footnote * October 2021 or September 2021 Footnote * over average of January and February 2020 Footnotes
Under the deeming rule
5-02. Can an eligible employer qualify for the wage subsidy if it does not have a revenue reduction in a claim period? Updated: September 24, 2021
For claim periods 5 to 17, if an eligible employer has not experienced a reduction in revenue for a particular claim period, it may still qualify to claim the wage subsidy in the particular claim period if the deeming rule (see Q5-03) applies, or for claim periods 5 to 10, if it is eligible for top-up portion of subsidy (see Q20-3).
For claim periods 18 to 21, an eligible employer must have experienced an actual reduction in revenue greater than 10% for a particular claim period, or have a reduction in revenue greater than 10% as calculated per the deeming rule that is applicable to claim periods 5 to 21 (see Q5-03). For employees on leave with pay, the eligible employer would qualify for the wage subsidy for claim periods 18 and 19 if it has experienced an actual revenue reduction of greater than 0% for a particular claim period, or have a reduction in revenue greater than 0% as calculated per the deeming rule that is applicable to claim periods 5 to 21.
An eligible employer follows the general year-over-year approach and has a reduction of qualifying revenue of 25% for claim period 4. The changes in qualifying revenue that the employer has seen in subsequent claim periods, when comparing the qualifying revenue in the current reference period with that in the prior reference period, are as follows:
- Claim period 5: a reduction in qualifying revenue of 15% (July 2020 over July 2019). Since the prior claim period actual reduction (25%) is greater than the current claim period reduction (15%), the deeming rule applies and the reduction in revenue is considered to be 25% for claim period 5.
- Claim period 6: an increase in qualifying revenue of 10% (August 2020 over August 2019). Since the prior claim period actual reduction (15%) is greater than the current claim period reduction (0%), the deeming rule applies and the reduction in revenue is considered to be 15% for the claim period 6.
- Claim period 7: an increase in qualifying revenue of 5% (September 2020 over September 2019). Regular rule applies and the employer is not eligible for the wage subsidy for claim period 7 (since the prior claim period and the current claim period have seen an increase of revenue, the deeming rule does not apply).
- Claim period 8: a reduction in qualifying revenue of 12% (October 2020 over October 2019). Regular rules applies and since the employer has a reduction in revenue for claim period 8, it will qualify for the wage subsidy for this claim period (since the prior claim period had an increase in qualifying revenue, the deeming rule does not apply).
5-03. What is the deeming rule for claim periods 5 to 21? Updated: September 24, 2021
The deeming rule that is applicable to claim periods 1 to 4 (see Q5) does not apply to claim period 5 and subsequent claim periods.
For claim period 5 and subsequent claim periods, if an eligible employer had a greater reduction in revenue in the immediately preceding claim period than it has otherwise determined for the current claim period, the reduction in revenue for the immediately preceding claim period is deemed to be the eligible employer’s reduction in revenue for the purposes of determining its base wage subsidy amount for the current claim period (deeming rule for claim periods 5 to 21 – see Table below). The exception to this rule being for claim period 11 (see Q5-03.2).
This deeming rule for claim periods 5 to 21 applies in respect of each particular claim period subsequent to claim period 4, but a reduction in revenue considered to be the current claim period’s reduction in revenue (because of the deeming rule) cannot apply beyond the current claim period.
For example, an eligible employer’s actual reduction in revenue for claim period 5 (current claim period), was 35% while the actual reduction in revenue for claim period 4 (prior claim period) was 45%. Because of the deeming rule for claim periods 5 to 21, its reduction in revenue for the fifth claim period (current claim period), will be considered to be 45%, instead of 35%. However, if the eligible employer determines its actual reduction in revenue for claim period 6 to be less than 45%, then its reduction in revenue cannot be deemed to be 45%. It will be the greater of the actual reduction of revenue for claim period 5 (prior claim period), i.e., 35% and the actual reduction of revenue for claim period 6 (current claim period).
In a situation where the eligible employer determines that its actual reduction in revenue for the current claim period is lower than its reduction in revenue from the immediately preceding claim period, that actual reduction in revenue for the current claim period will be available when applying this deeming rule to the immediately following claim period. Alternatively, in the above example, if the actual reduction in claim period 6 was 30%, the eligible employer’s deemed revenue reduction for claim period 6 will be 35%, which is the greater of the actual reduction of revenue in claim period 5 (35%) and the actual revenue reduction in claim period 6 (30%).
Similarly, where an eligible employer did not qualify for the wage subsidy for claim period 4 because its reduction in revenue was less than the required 30% for that claim period or it qualified for the wage subsidy due to the deeming rule that is applicable for claim periods 1 to 4 (see Q5), its actual reduction in revenue for claim period 4 will still be available when applying the deeming rule for claim periods 5 to 21, to claim period 5.
For example, an eligible employer’s actual reduction in revenue for claim period 5 (current claim period), was 20%. The deemed reduction in revenue for claim period 4 (immediately preceding claim period) was 40% because of the deeming rule for claim periods 1 to 4, and its actual reduction in revenue was 25%. Because of the deeming rule for claim periods 5 to 21, the eligible employer’s reduction in revenue for claim period 5 (current claim period), will be deemed to be 25%, being the greater of the actual reduction of revenue in claim period 4 (25%) and the actual revenue reduction in claim period 5 (20%).
For claim periods 18 to 21, an eligible employer will need to have a reduction in revenue greater than 10% to claim the wage subsidy, except that the wage subsidy for employees on leave with pay would continue to be available for claim periods 18 and 19 when the eligible employer has a revenue reduction of greater than 0%. For example, an eligible employer’s actual reduction in revenue for claim period 18 (current claim period) was 6% while the actual reduction in revenue for claim period 17 (the immediately preceding claim period) was 12%. Because of the deeming rule applicable to claim periods 5 to 21 applies, its reduction in revenue for claim period 18 will be considered to be 12% instead of 6%. Since the reduction in revenue is greater than 10%, the eligible employer will be able to claim the wage subsidy for claim period 18. If the actual reduction in revenue for claim period 17 was only 8%, its reduction in revenue for claim period 18 will be deemed to be 8%. However, since the deemed reduction in revenue for claim period 18 is not greater than 10%, the eligible employer’s wage subsidy amount for that claim period will be nil, unless the eligible employer has eligible employees on leave with pay and calculates a wage subsidy amount for those employees.
Table below provides examples of some generic scenarios to further demonstrate how the deeming rule for claim periods 5 to 21 works.
Reduction of revenue – July 2021 over July 2019 is 4%. Since the prior claim period actual reduction (6%) is greater than the current claim period reduction (4%), the deeming rule applies and the reduction in revenue is considered to be 6% for claim period 18.
However, as the reduction of revenue (6%) is not greater than 10% the eligible employer’s wage subsidy amount will be nil, except if the employer has employees on leave with pay, in which case the employer may be eligible for the wage subsidy for those employees.
Reduction of revenue – August 2021 over the average of January and February 2020 is 10%. Regular rule applies and the reduction in revenue is 10% for claim period 19 (since the prior claim period actual reduction (8%) is less than the current claim period reduction (10%), the deeming rule does not apply).
However, as the reduction in revenue (10%) is not greater than 10% the eligible employer’s wage subsidy amount will be nil, except if the employer has employees on leave with pay, in which case the employer may be eligible for the wage subsidy for those employees.
Reduction of revenue – September 2021 over the average of January and February 2020 is 2%. Since the prior claim period actual reduction (10%) is greater than the current claim period reduction (2%), the deeming rule applies and the reduction in revenue is considered to be 10% for claim period 20.
As the reduction in revenue (10%) is not greater than 10% the eligible employer’s wage subsidy amount will be nil.
Reduction of revenue – October 2021 over October 2019 is 2%. Since the prior claim period actual reduction (9%) is greater than the current claim period reduction (2%), the deeming rule applies and the reduction in revenue is considered to be 9% for claim period 21.
However, as the reduction in revenue (9%) is not greater than 10% the eligible employer’s wage subsidy amount will be nil, except if the employer has employees on leave with pay, in which case the employer may be eligible for the wage subsidy for those employees.
Reduction of revenue – October 2021 over the average of January and February 2020 is 11% (since the prior claim period actual reduction (2%) is less than the current claim period reduction (11%), the deeming rule does not apply).
As the reduction in revenue (11%) is greater than 10%, the employer is eligible for the wage subsidy and the reduction in revenue is 11% for claim period 21.
5-03.1. How is the reduction in revenue for the immediately preceding period calculated for purposes of the deeming rule for claim periods 5 to 21? Updated: September 24, 2021
In order to determine if the deeming rule (see Q5-03) applies, an eligible employer must compare its reduction in revenue for the current claim period with its reduction in revenue for the immediately preceding claim period. For this purpose, the reduction in revenue for the immediately preceding claim period is calculated using the rules (that is, the elections and approaches) that were applicable to that specific claim period for the eligible employer.
Corporation A and Corporation B are both eligible employers and form an affiliated group. Below are the qualifying revenues for June 2019 and June 2020 for each corporation as well as on a consolidated basis, assuming the affiliated group elected to calculate their qualifying revenue on a consolidated basis.
Example 5-03.1A – Calculating the qualifying revenue of members of an affiliated group
Qualifying revenue for June 2019 Qualifying revenue for June 2020 Reduction in Qualifying revenue in June 2020 as compared to June 2019 Corporation A $250,000 $200,000 20% Corporation B $250,000 $150,000 40% Total on a consolidated basis $500,000 $350,000 30% For claim period 4, Corporation A and B had jointly elected that the qualifying revenue of the affiliated group be determined on a consolidated basis in accordance with relevant accounting principles (see Q10), and therefore, the consolidated amount was used as the qualifying revenue to determine the reduction in revenue by each member of the group for claim period 4.
For claim period 5, Corporation A and B have decided not to elect under the special rule available for members of an affiliated group and to, instead, calculate their qualifying revenue on an individual basis.
In order to determine if the deeming rule (see Q5-03) applies, both Corporation A and Corporation B would use the reduction in revenue for the immediately preceding claim period (claim period 4) as calculated using the rules that were applicable to that claim period. Therefore, as Corporation A and Corporation B had elected to determine their qualifying revenue on a consolidated basis for claim period 4, the reduction in revenue for the immediately preceding claim period to use as a comparator for the purpose of the deeming rule would be 30% for both Corporation A and B. The reduction in revenue for the current claim period would be calculated using the rules (that is, the elections and approaches) that are applicable to the current claim period for the eligible employer.
Corporation A, an eligible employer, elected to use the alternative approach for claim periods 1 to 4 in order to determine its reduction in revenue by comparing the qualifying revenue for each current reference period with the average of the qualifying revenues earned in both January and February 2020.
For claim periods 5 to 21, the Corporation A does not elect to apply the alternative approach and so must use the general approach for all of the claim periods 5 to 21. Therefore, in order to determine its reduction in revenue, it compares the change in qualifying revenue, using the general year-over-year approach, for the calendar month in which the claim period began.
In order to determine if the deeming rule applies (see Q5-03), Corporation A would use its reduction in revenue calculated for the immediately preceding claim period using the rules that were applicable to that claim period. Therefore, Corporation A would not be able to use the general year-over-year approach for this purpose. Instead, the reduction in revenue for the immediately preceding claim period would be calculated using the alternative approach as this was the approach used during the immediately preceding claim period. The eligible employer cannot recalculate the prior claim period reduction in revenue using the rules that are applicable to the current claim period.
5-03.2. How is the reduction in revenue for the immediately preceding claim period determined for purposes of the deeming rule for claim period 11? Updated: March 30, 2021
Generally, to determine if the deeming rule (see Q5-03) applies, an eligible employer must compare its reduction in revenue for the current claim period with its reduction in revenue for the immediately preceding claim period. However, the relevant reference periods for claim periods 10 and 11 are the same (see Tables 2A and 2C). Accordingly, for the purposes of the deeming rule, the immediately preceding claim period for claim period 11 will be claim period 9 and not claim period 10.
5-04. What is the revenue reduction safe harbour rule for claim periods 5 and 6? Updated: September 24, 2021
Under the safe harbour rule for claim periods 5 and 6, if an eligible employer that qualifies for the wage subsidy has a revenue reduction of 30% or more, then the employer would be entitled to a wage subsidy not lower than the amount calculated under the rules in place for claim periods 1 to 4 in respect of an eligible employee who is not on leave with pay (see Q20-03) for that week. This means that in claim periods 5 and 6, an eligible employer with a revenue decline of 30% or more (actual or deemed reduction because of the deeming rules applicable to claim periods 5 to 21 (see Q5-03)), would receive a wage subsidy rate of at least 75% (safe harbour rule). The eligible employer could qualify for an even higher wage subsidy rate (up to 85%) using the relevant rules to calculate the wage subsidy for claim periods 5 to 21 for eligible employees who are not on leave with pay.
Under the safe harbour rule, for claim periods 5 and 6, when an eligible employee is not on leave with pay, the wage subsidy in respect of the employee for a week in the claim period will be the greater of:
- wage subsidy amount calculated based on the rules for claim periods 1 to 4 (see Q20) if the revenue reduction percentage of the eligible employer is 30% or more for the relevant claim period; and
- wage subsidy amount calculated based on the rules for claim periods 5 to 21, i.e., wage subsidy amount calculated using the rate that is the sum of the base rate (see Q20-2) and the top-up rate (see Q20-3).
When an eligible employee is on leave with pay (see Q20-03) in respect of a week in a claim periods 5 and 6, if either the revenue reduction percentage (see Q20-2) or the top-up percentage (see Q20-3) of the eligible employer for the claim period is greater than 0%, then the eligible employer will be entitled to a wage subsidy amount calculated based on the rules for claim periods 1 to 4 (see Q20). Otherwise, if neither the revenue reduction percentage nor the top-up wage percentage of the eligible employer is greater than 0%, then the employer will not be entitled to a wage subsidy in respect of that employee.
In claim period 5, an eligible employer’s qualifying revenue in July 2020 (current reference period) was $50,000. Assuming that the employer follows the year-over year approach to determine its revenue reduction for the claim period, its qualifying revenue for the prior reference period (July 2019) was $400,000. The employer’s drop in revenue for claim period 5 is $350,000. Consequently, its revenue reduction percentage will be 87.5% (1-$50,000/$400,000 = 0.875, expressed as a percentage).
In respect of a week in claim period 5, the employer paid eligible remuneration of $500 to its eligible employee who is not on leave with pay and $400 to its eligible employee who has been temporary laid off with pay due to the COVID-19 (i.e., eligible employee is on leave with pay).
Since the reduction in revenue of the eligible employer for the claim period is greater than 30%, the safe harbour rule could apply in determining the wage subsidy amount in respect of the employee not on leave with pay for a week in claim period 5.
Therefore, in respect of an employee who is not on leave with pay (see Q20-3), the wage subsidy amount will be the greater of the wage subsidy amount calculated based on the rules for claim periods 1 to 4 and the wage subsidy amount calculated based on the rules for claim periods 5 to 10 (the sum of base wage rate and top-up rate). For the employee who is on leave with pay, it will be the wage subsidy amount calculated based on the rules for claim periods 1 to 4 (see Q20).
5-1. Under the alternative approach can an eligible employer use a daily average instead of a monthly comparison to calculate the percentage decrease in revenue? Updated: January 13, 2021
No, the alternative approach provides for a comparison of qualifying revenue for the relevant calendar month for the current reference period for the claim period to the average of the qualifying revenues earned in both January and February 2020.
Calculating revenues
6. What is qualifying revenue? Updated: August 11, 2020
Qualifying revenue of an eligible employer means the inflow of cash, receivables, or other consideration arising in the course of its ordinary activities in Canada in a particular period. These inflows are generally from the sale of goods, the rendering of services, and the use—by others—of the eligible employer's resources.
In the case of an eligible employer that is a registered charity (including a prescribed organization that is a public institution), qualifying revenue generally includes gifts and other amounts received in the course of its ordinary activities. Where it operates a related business (as defined in subsection 149.1(1) of the Act), the revenue from that related business is also included in the registered charity's qualifying revenue.
In the case of an eligible employer that is a non-profit organization (including a prescribed organization that is a public institution), qualifying revenue generally includes membership fees and other amounts received in the course of its ordinary activities.
Qualifying revenue excludes amounts from extraordinary items, amounts on account of capital and amounts from persons or partnerships that the eligible employer was not dealing with at arm's length. Amounts from the Canada Emergency Wage Subsidy and the 10% Temporary Wage Subsidy for Employers are ignored when calculating qualifying revenue.
An eligible employer's qualifying revenue is used to determine the required reduction in revenue necessary to qualify for the Canada Emergency Wage Subsidy (see Q5).
6-1. Does qualifying revenue include investment revenue, such as interest or dividends from investments in securities?
The qualifying revenue of an eligible employer is generally determined in accordance with its normal accounting practices. To the extent that investment revenue, such as interest or dividends from investments in securities, arises in the course of an eligible employer’s ordinary activities in Canada in the particular period, is not an extraordinary item or on account of capital, and is included in revenue under its normal accounting practices, it would generally be included in qualifying revenue.
6-2. Is government assistance directly related to the COVID-19 crisis considered an extraordinary item for purposes of calculating the qualifying revenue of an eligible employer?
Qualifying revenue of an eligible employer is generally determined in accordance with its normal accounting practices. Qualifying revenue means the inflow of cash, receivables, or other consideration arising in the course of the ordinary activities of the eligible employer in Canada in a particular period. For greater certainty, qualifying revenue does not include extraordinary items.
“Extraordinary items” is not a term defined in the Act. Generally, the CRA would expect extraordinary items to meet all three of the following characteristics:
- Not be expected to occur regularly or frequently within several years
- Grants or other government assistance that an entity is eligible to receive on a regular or reoccurring basis would not meet this criteria.
- Not typical of the normal activities or risks inherent in the normal operations of the entity
- Consideration should be given to the nature of the services or products offered by an entity and the normal environment in which it operates.
- Primarily out of the control of owners or management
- Consideration should be given to the extent that inflows are influenced by the decision of owners or management.
The determination of whether an entity has an extraordinary item is a question of fact. However, due to the highly unusual economic impact and response resulting from the COVID-19 crisis, the CRA would generally consider emergency government assistance, including assistance from provinces and municipalities, directly related to COVID-19 to be an extraordinary item. However, the CRA would not consider COVID-19 related government assistance to be extraordinary to the extent that it replaces or is meant to replace normal or recurring government assistance.
6-2.1. If an eligible employer changes its operations to manufacture essential products during the pandemic, which generates revenues but no profit, is the revenue included in qualifying revenue? New: August 11, 2020
Yes. The qualifying revenue of an eligible employer means the inflow of cash, receivables, or other consideration arising in the course of its ordinary activities (see Q6) in Canada in a particular period. As these inflows are generally from the sale of goods, the rendering of services, and the use by others of the eligible employer’s resources, they would include the revenue arising from the sales of new products. An eligible employer’s profit margin is not a criteria used to determine whether it qualifies for the wage subsidy.
6-2.2 Is a forgivable Canada Emergency Commercial Rent Assistance (“CECRA”) loan included in qualifying revenue? New: January 13, 2021
Yes. CECRA provided rent support to eligible small business tenants by granting interest-free, forgivable loans to qualifying commercial property owners. CECRA loans covered 50% of tenants’ monthly rent payments if property owners agreed to reduce their tenants’ rent by at least 75%. CECRA loans are forgiven on December 31, 2020, unless the owner fails to comply with program terms. A forgivable CECRA loan is included in the property owner’s taxable income when the loan is received.
A CECRA loan replaces a property owner’s regular rental revenue from their normal operations. Therefore, a forgivable CECRA loan is not considered an extraordinary item and would be included in the property owner’s qualifying revenue.
6-2.3 Is the forgivable portion of a Canada Emergency Business Account (“CEBA”) loan included in qualifying revenue? New: January 13, 2021
No. CEBA provides interest-free loans to small businesses and non-profit organizations. Repaying the balance of the loan on or before December 31, 2022, will result in a portion of the loan being forgiven. Generally, the forgivable portion of a CEBA loan is included in the recipient’s taxable income when the loan is received (see Q6-2.4).
The forgivable portion of a CEBA loan meets all the characteristics of an extraordinary item (see Q6-2). Accordingly, the forgivable portion of a CEBA loan is not included in qualifying revenue.
6-2.4 Is the CEBA loan taxable to the recipient? New: March 2, 2022
Only the forgivable portion of a CEBA loan is taxable and it is taxable in the year in which the loan is received. For example, if a business received a forgivable portion of $10,000 in 2020, they would include that amount as income for the 2020 tax year, regardless of the year they repaid their CEBA loan.
However, if the forgivable loan is received in respect of an outlay or expense that is made or incurred before the end of the taxation year following the year in which the loan is received, the recipient can elect to:
- Not include the forgivable loan amount in the income of the year in which the loan is received, and
- Reduce the outlay or expense deduction by the same amount.
Recipients that make this election must do so via a signed letter accompanying the income tax return for the year the forgivable loan is received or for the year the outlay or expense is made or incurred, whichever is later. For further information on how to elect to reduce the amount of an outlay or expense, see archived Interpretation Bulletin IT-273R2.
If the amount included in income (or not deducted as outlay or expense) is subsequently repaid as a result of a legal obligation to repay the amount, a deduction for the repayment can be obtained for the year in which the repayment is made. For example, if a business was unable to meet the December 31, 2023 deadline, and then later repaid the entire loan (including the forgivable portion) in 2024, they could obtain a deduction equal to the forgivable portion for the 2024 tax year.
6-3. Can an eligible employer deduct its bad debts when determining its qualifying revenue under the accrual method?
When using the accrual method in accordance with its normal accounting practices, an eligible employer should usually not be able to deduct its bad debts (or an allowance for bad debts), when determining its qualifying revenue.
6-4. Can a corporation formed on the amalgamation of two or more predecessor corporations, or where one corporation is wound up into another, qualify for the wage subsidy? Updated: August 11, 2020
Yes, a new corporation formed on an amalgamation of two or more predecessor corporations (pursuant to subsection 87(1) of the Act), or where one corporation is wound up into another on a tax-deferred basis (pursuant to subsection 88(1) of the Act), may be eligible for the wage subsidy provided all other required conditions (see Q4) have been satisfied.
For the purposes of the wage subsidy, a new corporation formed on an amalgamation of two or more predecessor corporations pursuant to subsection 87(1) of the Act, is deemed to be the same corporation as, and a continuation of, each predecessor corporation. Consequently, the new corporation will use the combined qualifying revenue of the predecessor corporations to calculate its qualifying revenue for each relevant reference period in a particular claim period to determine if it has experienced the required reduction in revenue to qualify for the wage subsidy for that claim period. In the case of a subsidiary corporation that is wound up into its parent on a tax-deferred basis in accordance with subsection 88(1) of the Act, the parent’s qualifying revenue will be combined with its subsidiary’s qualifying revenue for each relevant reference period in a particular claim period to determine if it has the required reduction in revenue for a particular claim period.
However, in either of these situations, the wage subsidy will be denied if it is reasonable to consider that one of the main purposes for the amalgamation (or the wind-up) was to qualify for the wage subsidy or to increase the amount of the wage subsidy.
6-5. Where a sole proprietorship business is incorporated, can the corporation use the revenue of proprietorship for the prior period to determine the decline in its qualifying revenue? Updated: August 11, 2020
Yes. Where a sole proprietorship business is incorporated, it is possible, when certain conditions are met, to use the qualifying revenue attributable to the assets of the proprietorship to calculate the qualifying revenue of the corporation for the relevant reference period for a claim period. See Q8-3 for the conditions to be met as well as Example 8-3A.
6-6. Can an eligible employer's qualifying revenue for a reference period be adjusted to account for changes in business operations of an eligible employer's business? Updated: November 23, 2020
No. Subject to the special rules discussed in Q7 to Q12, an eligible employer should use its normal accounting practices when determining its qualifying revenue. Qualifying revenue means the inflow of cash, receivables or other consideration arising in the course of the eligible employer's ordinary activities in Canada in a particular period and excludes revenue received from extraordinary items (see Q6-2).
Aside from the special rules, there are no provisions that allow an eligible employer to adjust qualifying revenue from prior reference periods or current reference periods in order to account for changes in operation levels, other than as described in Q8-3. For example, an eligible employer would not be able to make adjustments to its qualifying revenue calculations for a prior reference period with unusually low revenue caused by an interruption to its operations due to damage to equipment or premises, an employee lock-out or strike, or a supply chain disruption. Likewise, qualifying revenue calculations cannot be adjusted for a recent expansion of an eligible employer's normal operations, such as adding additional locations to a business or the purchase of a competitor's assets (unless the special rules described in Q8-3 apply).
An eligible employer has the option of using the average of qualifying revenues in January and February 2020 for the prior reference period instead of using the general "year-over-year" approach (see alternative approach in Q5). For claim periods 1 to 4, an eligible employer who was not carrying on a business (including a situation described in Q6-5, unless conditions described in Q8-3 apply), or otherwise not carrying on its ordinary activities (such as a complete halt in operations) on March 1, 2019, must use this alternative approach.
6-7. How do foreign exchange rate fluctuations affect the computation of qualifying revenue? New: July 9, 2020
The qualifying revenue of an eligible employer is determined in accordance with its normal accounting practices. Where an eligible employer’s normal accounting practice is to convert the inflow of cash, receivables and other consideration to Canadian currency from a foreign currency, then the eligible employer would be expected to use the Canadian currency equivalent of the amounts in the computation of qualifying revenue.
6-8. How will an eligible employer that files its income tax returns using a functional currency compute its qualifying revenue? New: July 9, 2020
Where an eligible employer that is a corporation files its income tax return using a functional currency, that currency is the primary currency in which the eligible employer maintains its books and records for financial reporting purposes, and using that currency would likely be part of its normal accounting practice. Since the qualifying revenue of an eligible employer is determined in accordance with its normal accounting practices, and on that basis, it should be determined in such currency.
7. Are there special rules for calculating the qualifying revenue of a registered charity or non-profit organization? Updated: August 11, 2020
Yes. In addition to the qualifying revenue inclusions specific to registered charities and non-profit organizations (including prescribed organizations that are public institutions) (see Q6), these eligible employers may elect (see note below) to exclude funding received from government sources when determining their qualifying revenue.
This election applies to the determination of qualifying revenue for all of an eligible employer's prior reference periods and current reference periods.
An eligible employer can make an election retroactively, but must amend all previously submitted applications to reflect the change.
Note: This election (see Q12-2), must be made and retained with the eligible employer's other books and records in support of its wage subsidy claim and eligibility (see Q33), and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
8. Are there special rules for calculating the qualifying revenue of an eligible employer that derives its revenue from one or more non-arm's length persons or partnerships? Updated: August 31, 2020
Special rules exist for an eligible employer that derives all or substantially all of its revenue from one or more particular persons or partnerships with which it does not deal at arm's length.
Essentially, if the eligible employer and each of these particular persons or partnerships with which it does not deal at arm's length jointly elect (see note below), the eligible employer's qualifying revenue for the prior reference period is deemed to be $100 and a weighted-average approach (see Example 8B), is used to determine qualifying revenue for the current reference period.
In applying this approach, when calculating the qualifying revenue for the current reference period, the eligible employer’s qualifying revenue is based solely on amounts derived in the course of its ordinary activities in Canada from persons or partnerships not dealing at arm’s length with it.
The amount used for each of the particular person’s or partnership’s qualifying revenue includes revenues earned both inside and outside of Canada. This is a modification of the method described in Q6 where only revenues from activities in Canada are considered. The particular person or partnership can be either a resident or a non-resident (see Example 8C). Additionally, there is no requirement that the particular person or partnership be in the same trade or business as the eligible employer.
For more information about non-arm’s length, please see Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm's Length.
Note: This election (see Q12-2), must be made and retained with the eligible employer's other books and records in support of its wage subsidy claim and eligibility (see Q33), and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
Corporation A, an eligible employer, provides management services, including payroll services, to Corporation B. All of Corporation A's revenues are from Corporation B with which it does not deal at arm's length. Corporation B's revenues are from arm's-length customers.
Under the special rule, in order to determine whether Corporation A can qualify for the wage subsidy, Corporation A's qualifying revenue for the current reference period is determined by reference to the required reduction in qualifying revenue for Corporation B for that reference period.
All or substantially all of the revenues of Corporation X, (an eligible employer), are from two corporations (Corporation Y and Corporation Z) with which it does not deal at arm's length.
Corporation X's total revenue for March 2020 was $1,450 of which $400 was attributable to Corporation Y and $1,000 was attributable to Corporation Z. $50 was from an arm's-length taxpayer. Corporation X’s arm’s-length revenue is not included in the calculations.
Corporation Y's qualifying revenue for March 2020 was $1,000 and for March 2019 was $1,500.
Corporation Z's qualifying revenue for March 2020 was $1,300 and for March 2019 was $2,000.
Calculation of Corporation X's qualifying revenue for the current reference period:
Qualifying revenue (QR) calculation in relation to Corporation Y:
$100 x $400 (QR attributable to Corporation Y)/$1,400 (Corporation X's total QR from non-arm's-length persons or partnerships) x $1,000(Corporation Y QR for current reference period)/$1,500 (Corporation Y QR for prior reference period) = $19.05
QR calculation in relation to Corporation Z:
$100 x $1,000 (QR attributable to Corporation Z)/$1,400 (Corporation X's total QR from non-arm's-length persons or partnerships) x $1,300(Corporation Z's QR for current reference period)/$2,000 (Corporation Z's QR for prior reference period) = $46.43
The weighted average qualifying revenue for Corporation X for the current reference period is $65.48 ($19.05+$46.43). Since the prior reference period's qualifying revenue is deemed to be $100, Corporation X has experienced the required reduction in revenue of at least 15% for the claim period. Corporation Y and Corporation Z must jointly elect with Corporation X in order to use this special rule.
All or substantially all of the revenues of Canco, (an eligible employer), are from sales to a non-resident corporation (Forco), who then sells to arm’s length customers. Canco and Forco do not deal at arm’s length. All of Canco’s ordinary activities take place in Canada. All of Forco’s sales and other activities take place outside of Canada.
Canco’s total revenue for March 2020 was $900. All of this revenue was attributable to Forco.
Forco’s total revenue for March 2020 was $1,500 and for March 2019 was $2,000.
Calculation of Canco’s qualifying revenue for the current reference period:
Qualifying revenue (QR) calculation in relation to Forco:
$100 x $900 (QR attributable to Forco)/$900 (Canco total QR from non-arm’s-length persons or partnerships) x $1,500 (Forco QR for current reference period)/$2,000 (Forco QR for prior reference period) = 75
Since the prior reference period’s qualifying revenue is deemed to be $100, Canco has experienced the required reduction in revenue of at least 15% for the claim period. Forco must jointly elect with Canco in order to use this special rule.
8-01. Where an eligible employer elects to calculate its qualifying revenue using the special rule (see Q8), can a non-resident’s qualifying revenue be computed using a foreign currency? New: July 9, 2020
Special rules exist to calculate the qualifying revenue of an eligible employer that derives all or substantially all of its revenue from one or more particular persons or partnerships with which it does not deal at arm’s length. Under this special rule, a weighted average approach includes the qualifying revenue of the particular non-arm’s length person or partnership in the calculation (see Q8). The qualifying revenue of an employer is determined in accordance with its normal accounting practices. Where the particular non-arm’s length person’s or partnership’s normal accounting practice is to maintain books and records in a foreign currency, the eligible employer may use the foreign currency amounts used by the non-resident person or partnership to maintain its books and records to determine the particular non-arm’s length person’s or partnership’s qualifying revenue for the prior reference period and the current reference period.
8-02. Can the special rule used to calculate qualifying revenue discussed in Q8 be used in a chain of entities that are not dealing with each other at arm’s length? Updated: November 23, 2020
Special rules exist for an eligible employer that derives all or substantially all of its revenue from one or more particular persons or partnerships with which it does not deal at arm's length (see Q8). Where the conditions for applying this special rule are met, in determining the revenue reduction for the eligible employer for a particular claim period, a weighted-average approach is used to determine qualifying revenue for the current reference period.
This special rule may be used only by an eligible employer and those persons or partnerships not dealing at arm’s length with it and with whom it directly earns qualifying revenues. It cannot be used by a chain of entities where all of the particular person’s or partnership’s qualifying revenue is also received from persons or partnerships that are not dealing with each other at arm’s length.
8-1. What is the meaning of the phrase “all or substantially all” in the special rules referred to in questions 8, 8-3 and 11? Updated: November 23, 2020
Generally, the phrase “all or substantially all” means at least 90%.
For example, with respect to the special rule in Q8, this requirement will be considered to be met where at least 90% of an eligible employer’s qualifying revenue is from one or more particular persons or partnerships with which it does not deal at arm’s length.
However, the “all or substantially all” test could, depending on the circumstances and context, be satisfied even if the 90% level is not strictly achieved.
8-2. What factors are used to determine if a partnership is not dealing at arm’s length with a partnership of which it is a member?
Income Tax Folio S1-F5-C1, Related Persons and Dealing at Arm's Length provides guidance on the meaning of arm’s length.
Where persons are not related to each other, the arm’s length determination is a question of fact and each transaction or series of transactions must be examined on its own merits, in light of all the facts and circumstances of that particular situation.
The following criteria have generally been used by the courts in determining whether non-related parties engaging in a transaction are not dealing at arm's length:
- whether there is a common mind which directs the bargaining for both parties to a transaction;
- whether the parties to a transaction act in concert without separate interests; and
- whether there is de facto control (that is, control in fact).
It is not required that all three tests be satisfied in every case. In any particular case, any one or more of the criteria may be of greater or lesser importance in the determination whether the parties are dealing at arm’s length.
Paragraphs 1.42 to 1.44.1 of the Folio summarize the factors to be considered in situations involving partnerships:
- Where a partnership owns a majority of the issued voting shares of a corporation, the partnership will not be considered to deal at arm's length with the corporation.
- Where one partner is in a position to control a partnership, that partner is not considered to be dealing at arm's length with the partnership. For example, a partner can be in a position to control a partnership through ownership of a controlling interest or through a mandate vested in that partner by the other partners. However, when a partner is not in a position to control a partnership and that partner has little or no say in directing the operations of the partnership, it is generally recognized that the partner is dealing at arm's length with the partnership.
- Where a related group of partners owns a controlling interest in a partnership, each member of that related group will not be considered to deal at arm's length with the partnership.
- Partners are not necessarily considered not to deal at arm’s length with each other in transactions outside of their partnership activity merely because they are members of the same partnership. However, their partnership in business would be a factor to be considered in any other transaction between them.
- The determination of whether a partnership is dealing at arm’s length with a person who is not a partner will generally be made on the basis of the relationship of the directing minds of the partnership and the person at the relevant time.
8-3. Are there special rules that apply for calculating the qualifying revenue where an eligible employer acquired assets from a third party? Updated: November 23, 2020
Special rules exist to determine qualifying revenue of an eligible employer when the employer acquires assets of a person or partnership (the seller), during a claim period or at any time before that claim period.
Conditions
The following conditions must be met for the special rules to apply to an eligible employer (the acquirer) in respect of a claim period:
- immediately prior to the acquisition of assets, the fair market value of the acquired assets constituted:
- all or substantially all (see Q8-1) of the fair market value of the property of the seller used in the course of carrying on business; or
- if the seller and the acquirer deal with each other at arm’s length, all or substantially all of the property of the seller that can reasonably be regarded as being necessary for the acquirer to be capable of carrying on a business of the seller, or part of a business of the seller, as a business (see note 1 below);
Application
Where all the above conditions are met, the acquirer, will determine its qualifying revenue for its prior reference period or current reference period, as the case may be, for a claim period in the following manner:
- for a claim period, the acquirer will include in calculating its qualifying revenue for its prior or current reference period, the amount of the qualifying revenue of the seller for that period that is reasonably attributable to the acquired assets (“assigned revenue”); and
- if a portion of the assigned revenue is from a person or partnership (third party) that did not deal at arm’s length with the seller, and if the third party deals at arm’s length with the acquirer throughout the current reference period, then that portion of the assigned revenue is deemed to not be derived from a non-arm’s length person or partnership and therefore, will be included in the qualifying revenue of the acquirer. However, if the acquirer and the third party do not deal at arm’s length throughout the current reference period, then that portion of the assigned revenue will be considered to have been derived by the acquirer from a non-arm’s length party and will not be included in the qualifying revenue of the acquirer (see Q6).
The assigned revenue is to be subtracted from the qualifying revenue of the seller for its prior reference period or current reference period, as the case may be, for the claim period.
The acquirer is deemed to have met the conditions related to having an open payroll account with CRA on March 15, 2020, or using a payroll service provider to make their payroll remittances on the eligible employer’s behalf, if the seller met those conditions (see Q4 & Q3-8). However, if the acquirer did not have an open payroll account with the CRA on March 15, 2020, they may receive an error message when submitting their wage subsidy application. In this situation, the acquirer must contact the CRA’s Business Enquiries line at 1-800-959-5525 and inform the agent that they have recently purchased assets of another business and are electing for the asset acquisition rules to apply. After a review of both the acquirer’s and seller’s payroll program accounts, the agent will advise the acquirer when they can apply for the wage subsidy.
In the formula for calculating the qualifying revenue for a prior reference period using the alternative approach (see Q5), the acquirer is deemed to have commenced carrying on the business in which the acquired assets were used, at the earlier of
- the date on which the acquirer commenced carrying on that business, and
- the date on which the seller commenced carrying on the business in which the acquired assets were used.
Note 1: For example, if the seller’s business operation has more than one division, and if the acquirer was not dealing at arm’s length with the seller, the acquirer must consider all the assets used in carrying on the business of all the divisions of the seller when determining whether the fair market value of the acquired assets constituted all or substantially all of the fair market value of the property used in the course of carrying on the business of the seller (see Example 8-3B).
Note 2: This election (see Q12-2), must be made in respect of each claim period and retained with the acquirer's other books and records in support of its wage subsidy claim and eligibility (see Q33), and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
Lysandre, as a sole proprietor, has operated a vegan restaurant in Saint-Jean-Port-Joli, Québec, since January 2018. Following the success of the restaurant she decided to incorporate her business in February 2020. She transferred all of the assets of the restaurant to a new corporation (Lyli Inc.).
Lyli Inc. and Lysandre could jointly elect to determine the revenue reduction of Lyli Inc. by including the amount of the qualifying revenue of the sole proprietorship for the prior reference period. The election is possible since Lyli Inc. acquired all the property that Lysandre used in the course of carrying on her sole proprietorship business in Canada, and none of the main purposes of the acquisition was to increase the amount of the wage subsidy.
By electing, Lyli Inc. has the option to include the qualifying revenue of her sole proprietorship business to calculate the qualifying revenue for the prior reference period. Lyli Inc. is deemed to have commenced carrying on the business at the earlier of the date it commenced carrying on the business (February 2020), and the date on which Lysandre commenced carrying on the business in which the acquired assets were used (January 2018). Consequently, since Lysandre’s sole proprietor business was in operation prior to March 2019, Lyli Inc will have the choice to use the general year-over-year approach or elect to use the alternative approach, whichever is favourable.
A corporation, Toys Inc., operates its business through two divisions. The first division manufactures and sells toys (Toy division) and the second division manufactures and sells office furniture (Furniture division). On May 1, 2020, ABC Inc. acquired all of the assets of the Toy division from Toys Inc. ABC Inc. saw a major decrease in revenue since May 2020. ABC Inc. does not deal at arm’s length with Toys Inc.
For claim period 3 (the period that begins on May 10, 2020 and ends on June 6, 2020), ABC Inc. would like to elect to include the assigned revenue of the Toy division in respect of the month of May 2019 in calculating its qualifying revenue for the prior reference period (May 2019).
Since ABC Inc. does not deal at arm’s length with Toys Inc., if the fair market value (FMV) of the assets of the Toy division do not constitute all or substantially all of the FMV of the property of Toys Inc. used in the course of carrying on its business, ABC Inc. cannot elect to include the assigned revenue in calculating its qualifying revenue for its prior reference period.
However, if ABC Inc. was dealing at arm’s length with Toys Inc. and if it acquired all or substantially all of the Toy Division such that it may carry on the business, or part of the business, that Toys Inc. carried on with the Toy Division, it may be eligible to elect to include the assigned revenue in calculating its qualifying revenue for its prior reference period.
9. Are there special rules for calculating the qualifying revenue of a group of eligible employers?
The qualifying revenue of an eligible employer is generally determined in accordance with its normal accounting practices. Consequently, when a group of eligible employers generally prepares consolidated financial statements, each member of the group will determine its qualifying revenue in accordance with those statements.
However, each member of such a group may determine its qualifying revenue separately and not based on the consolidated statements, so long as every member of the group determines its qualifying revenue on that separate basis.
Corporation A owns all the shares of Corporation B. Both corporations are eligible employers. Corporation A prepares consolidated financial statement for accounting purposes. Assume that there is no intercompany revenue. Below are the qualifying revenue for each corporation as well as their qualifying revenue on a consolidated basis for March 2019 and March 2020.
Example 9A table – Calculating the qualifying revenue of a group of eligible employers
Qualifying revenue for March 2019 Qualifying revenue for March 2020 Reduction in Qualifying revenue in March 2020 as compared to March 2019 Corporation A $1,000,000 $1,000,000 0% Corporation B $1,000,000 $800,000 20% Total on a consolidated basis $2,000,000 $1,800,000 10% In accordance with normal accounting practice Corporations A and B will not be eligible for the wage subsidy as their qualifying revenue, determined on a consolidated basis, has not experienced the required reduction in revenue of at least 15%.
Therefore, Corporation A and Corporation B have decided to determine their qualifying revenue separately. In that case, while Corporation A will not qualify for the wage subsidy, as it has not experienced the required reduction in revenue of at least 15%, Corporation B will qualify for the wage subsidy because its qualifying revenue has dropped by more than 15%.
9-1. How is the qualifying revenue arising in the course of ordinary activities in Canada determined when a consolidated group includes non-residents of Canada?
A non-resident may be part of a group of eligible employers that normally prepares consolidated financial statements (see Q9) or a member of an affiliated group of eligible employers that jointly elects to compute qualifying revenue on a consolidated basis as described in Q10. In accordance with accounting principles for consolidation, consolidated revenue excludes transactions between members of the group but includes global revenue of the group. The qualifying revenue of an eligible employer does not include the portion of consolidated revenue that does not arise in the course of ordinary activities in Canada. The eligible employer can however include the portion of the consolidated revenue that arises in the course of ordinary activities in Canada whether or not the ultimate sale to third parties occurs in Canada.
For example, an amount representing a portion of the revenue from a sale to a third party by a non-resident member of the group may be included in computing the qualifying revenue of the eligible employer if it can be demonstrated that it arose in the course of the ordinary activities of the group in Canada. In determining whether a portion of the amount of a sale to a third party arose in Canada, each transaction or series of transactions will need to be considered in light of the facts and circumstances of that particular situation.
10. Are there special rules for calculating the qualifying revenue of members of an affiliated group? Updated: July 9, 2020
If an eligible employer and each member of an affiliated group of eligible employers of which the eligible employer is a member jointly elect (see note below), the qualifying revenue of the affiliated group, determined on a consolidated basis in accordance with relevant accounting principles, is to be used for each member of the group. This rule applies even if one or more members of an affiliated group may have no revenue to report in the claim period.
If this election is made, all members of the affiliated group of eligible employers must use this method for calculating the qualifying revenue. Eligible employers that are affiliated with the group cannot choose to form smaller affiliated groups or choose to not be part of the affiliated group for the purpose of the election and calculating qualifying revenue. This means that it is the broadest affiliated group of eligible employers that must elect and not a subset of that group.
Note: This election (see Q12-2), must be made and retained with the eligible employer's other books and records (see Q33) in support of its wage subsidy claim and eligibility, and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
Individual Mr. A, owns all the shares of Corporation A and his spouse Mrs. A, owns all of the shares of Corporation B. Both corporations are eligible employers. Corporation A and Corporation B form an affiliated group and each corporation is a member of that group. Assume that there is no intercompany revenue. Below are the qualifying revenues for each corporation as well as on a consolidated basis, assuming such a consolidation was done, for March 2019 and March 2020.
Example 10A table – Calculating the qualifying revenue of members of an affiliated group
Qualifying revenue for March 2019 Qualifying revenue for March 2020 Reduction in Qualifying revenue in March 2020 as compared to March 2019 Corporation A $200,000 $200,000 0% Corporation B $200,000 $100,000 50% Total on a consolidated basis $400,000 $300,000 25% Because Corporation A and Corporation B are members of an affiliated group, they could jointly elect that the qualifying revenue of the affiliated group be determined on a consolidated basis in accordance with relevant accounting principles, and the consolidated amount will be used as the qualifying revenue by each member of the group. Thus, both Corporations A and B will be eligible for the wage subsidy, as their qualifying revenue, determined on a consolidated basis, has dropped by more than 15%. Without this election only Corporation B would qualify for the wage subsidy.
10-1. What is the meaning of the term “affiliated” and “affiliated group” in the special rules referred to in question 10?
The definitions of “affiliated persons” and “affiliated group of persons” in the Act apply for purposes of the special rule for calculating revenue of members of an affiliated group. Some examples of “affiliated persons” are:
- an individual and their spouse or common-law partner;
- two corporations if each is controlled by a person, and those two persons are affiliated with each other;
- two corporations if one corporation is controlled by one person who is affiliated with each member of a group that controls the other corporation;
- two corporations if each corporation is controlled by a group and each member is affiliated with at least one member of the other group.
An affiliated group of persons means a group of persons each member of which is affiliated with every other member.
10-2. Can affiliated corporations that are not in the same ownership chain, determine their qualifying revenue on a consolidated basis, even if they cannot prepare consolidated financial statements? Updated: July 9, 2020
On the assumption that affiliated corporations that are not in the same ownership chain, are otherwise eligible employers, they can jointly elect to determine their revenue on a consolidated basis, as though the relevant accounting principles for consolidation applied to them. This means, for example, that intercompany transactions should be eliminated.
Where there are multiple entities in an affiliated group, if an election (see Q12-2) is going to be made, all eligible employers in the affiliated group must consolidate for the purpose of calculating qualifying revenue. It is not possible to have only some of those eligible employers in the affiliated group elect to consolidate.
This consolidation would be solely for purposes of calculating qualifying revenue for members of an affiliated group for purposes of the wage subsidy.
10-3. Will the CRA accept one signed election (see Q10) by an authorized representative on behalf of all members of an affiliated group? Updated: November 23, 2020
An eligible employer and each member of an affiliated group of eligible employers of which the eligible employer is a member may jointly elect to determine the qualifying revenue of the group on a consolidated basis (see Q10).
This joint election must be signed by each eligible employer in the affiliated group that is applying for the wage subsidy (see note below). On an administrative basis, the CRA will accept a signature by the authorized representative of the overall parent entity of the affiliated group, on behalf of all eligible employers in the affiliated group that are not making a wage subsidy claim. For this purpose, the overall parent entity is the entity at the top of the organizational structure. Where the overall parent entity is signing on behalf of eligible employers who are members of the affiliated group who are not making a wage subsidy claim, a complete list of these group members must be attached to the joint election. The list should include the legal name and address of each affiliated group member represented by the parent entity’s signature on the election.
Note: This election (see Q12-2) and the list, must be made and retained with the eligible employer's other books and records (see Q33) in support of its wage subsidy claim and eligibility, and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
11. Are there special rules when an eligible employer is owned by participants in a joint venture?
If all of the interests in an eligible employer are owned by participants in a joint venture and all or substantially all of the qualifying revenue of the eligible employer is in respect of the joint venture, then the eligible employer may use the qualifying revenues of the joint venture (determined as if the joint venture were an eligible employer), instead of its qualifying revenues, to determine if it experienced the required reduction in revenue in order to qualify for the wage subsidy.
12. Can I choose between the cash and the accrual method of accounting when determining my qualifying revenue? Updated: August 11, 2020
Qualifying revenue of an eligible employer is to be determined in accordance with its normal accounting practices.
If the normal accounting practices of an eligible employer is the accrual method, the employer would be allowed to elect (see note below) to calculate its qualifying revenue under the cash method instead of the accrual method.
Similarly, if the normal accounting practices of an eligible employer is the cash method, the employer would be allowed to elect to calculate its qualifying revenue under the accrual method, in accordance with generally accepted accounting principles.
However, an eligible employer cannot use a combination of both methods. The elections referred to above will apply for all claim periods.
An eligible employer that did not elect to use either the cash or accrual method (as applicable) when filing its initial application for the wage subsidy may later elect to do so. Since the election to use either a cash or accrual method will apply for all claim periods, the employer must amend all previously submitted applications to reflect this change.
Note: This election (see Q12-2), must be made and retained with the eligible employer's other books and records (see Q33) in support of its wage subsidy claim and eligibility, and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
12-1. Can an eligible employer change their approach used for calculating the qualifying revenue from claim period to claim period? Updated: August 11, 2020
Special rules described in Q8-Q12 exist for an eligible employer to calculate its qualifying revenue.
Any of these special rules may apply to an eligible employer for the relevant reference periods used for a particular claim period, provided all the requirements of such rule have been met for that particular claim period. Once a specific rule is chosen, the eligible employer must use the same rule for calculating qualifying revenue for the prior and current reference periods used for the particular claim period.
However, for the special rules described in Q8-Q11, an eligible employer may choose to apply a different approach in a subsequent claim period, provided that all the requirements for the application of that different rule are met for that subsequent claim period.
An eligible employer that chooses to determine its revenues based on the cash method or the accrual method, as described in Q12, must use the same method for all claim periods.
12-2. Is there a specific form where an eligible employer could attest that appropriate elections have been made? New: July 9, 2020
Eligible employers will use form RC661 Attestation for owner/managers and/or senior employees (comptroller/VP Finance/CFO) of an eligible employer applying for the Canada Emergency Wage Subsidy, to certify and attest that the wage subsidy application is complete and appropriate elections have been made (or that no election is required). The elections, where applicable, must be made and retained with the eligible employer's other books and records (see Q33), in support of its wage subsidy claim and eligibility, and the individual who has principal responsibility for the eligible employer's financial activities must attest that this is the case.
12-3. Can an eligible employer amend or revoke an election? New: November 23, 2020
Yes, an eligible employer may amend or revoke an election. However the amendment or revocation must be made and the claim amended (where applicable), on or before the due date for filing the wage subsidy application for that claim period (see Q26). For elections that apply to multiple claim periods (such as the election to use the cash or accrual method for determining qualifying revenue (see Q12), or the election to use the alternative approach for prior reference periods (see Q2)), the amendment or revocation must be made before the application due date for the first claim period in respect of which the election is made.
Eligible employees
13. Who is an eligible employee? Updated: September 24, 2021
An eligible employee, in respect of a week in a claim period, means an individual employed by the eligible employer primarily in Canada throughout the claim period (or the portion of the claim period throughout which the individual was employed by the eligible employer)(see note 1 below). For the claim periods 1 to 4, it does not include an individual who has been without remuneration from the eligible employer in respect of 14 or more consecutive days in the claim period (see note 2 below).
For claim periods 5 to 21, individuals employed primarily in Canada by the eligible employer throughout the claim period are no longer excluded if they are without remuneration in respect of 14 or more consecutive days in that claim period.
Note 1: For applications submitted before November 19, 2020, an eligible employee, in respect of a week in a claim period, means an individual employed in Canada by the eligible employer in the claim period, subject to the 14 day restriction for claim periods 1 to 4 described above.
Note 2: Eligible employee status is determined in respect of each week in each claim period. So an individual that is not an eligible employee in a preceding claim period (because, for example, the 14 day remuneration condition for claim periods 1 to 4 has not been met), may become eligible in a following claim period (see Example 15A).
Q13-1. In determining who is an eligible employee, what is the meaning of the phrase, “employed in Canada”? Updated: November 23, 2020
An employee is “employed in Canada” if they are performing the duties of an office or employment in Canada. Generally, a person exercises the functions of their employment at the place where they are physically present. Thus, when that place is situated outside Canada, that person will not generally be considered as being “employed in Canada”. It is necessary for an individual to be employed primarily in Canada throughout the claim period (or the portion of the claim period throughout which the individual was employed by the eligible employer) to be an eligible employee. Generally, “primarily” means more than 50%. See Q13 for additional information on who is considered an eligible employee.
14. Can an eligible employer claim the wage subsidy for an employee that the employer hires back and pays retroactively?
Yes. It is possible for an eligible employer to hire back eligible employees and pay them retroactively in respect of a claim period, to be able to qualify for the wage subsidy. Refer to Example 20C.
Further, if such an employee has received a Canada Emergency Response Benefit (CERB) payment from the CRA for a claim period, and it is later determined that they are no longer eligible for the CERB, whether due to the employment or otherwise the employee is required to repay the CERB payment. There are ways for the employee to return or repay the CERB amount. For more details on repayment, please refer to Return or repay on the Apply for CERB web page.
14-1. If an eligible employer rehires an employee or hires a new employee who may have received CERB payments, will the employee be required to repay any or all of the CERB payments? Updated: August 31, 2020
Individuals are required to repay the CERB if they no longer meet the eligibility requirements for the four-week period in question. For example, consider a laid off employee who has applied for the CERB for the four-week period of April 12 – May 9. At the time of application, the laid off employee expected to have little or no work or income for the four-week period of April 12 - May 9. However, the laid off employee finds out immediately afterwards that their employer will rehire them and will give back-pay for that same four-week period. In this situation, the rehired employee will be asked to repay the CERB for that four-week period of April 12 – May 9.
The conditions under which an employee is required to pay back the CERB differ slightly depending on whether it is the first four-week period for which the employee claimed the CERB, or whether it is for the subsequent four-week period.
For the first four-week CERB eligibility period, the employee will need to repay the $2,000 for this period if they have or will earn, for a period of two consecutive weeks in this four-week period, more than $1,000 (before taxes) from employment and self-employment income.
For the second four-week CERB eligibility period, the employee will need to repay the $2,000 for an eligibility period if they have or will earn more than $1,000 (before taxes) from employment and self-employment income during that period.
For more details, please refer to How to return a CERB payment on the Apply for CERB web page.
15. Can an eligible employer claim the wage subsidy in respect of an eligible employee who has received payments under the CERB? Updated: October 6, 2020
Yes, in certain situations, an eligible employer may be eligible to claim the wage subsidy in respect of an eligible employee who has received payments under the CERB program. However, as explained above (see Q13), for claim periods 1 to 4, where an individual has not been paid any remuneration from the eligible employer in respect of a period of 14 or more consecutive days in a claim period, the individual will not qualify as an eligible employee for that period of employment. Therefore, the eligible employer will not be eligible for the wage subsidy in respect of that employee for that claim period.
The onus is on the eligible employer to ensure that an employee, who has not been paid eligible remuneration in respect of 14 or more consecutive days in a claim period for claim periods 1 to 4, is not included for that claim period. However, it is the employee's responsibility to determine their eligibility for the CERB for any period.
Where an employee has received a CERB payment from the CRA and it is later determined that they are no longer eligible for the CERB, whether due to the employment or otherwise, the employee is required to return or repay the CERB payment. For more details, please refer to Return or repay on the Apply for CERB web page.
Carl, as a sole proprietor, owns a corner store in London, Ontario, where he normally employs Molly on a full-time basis and two other employees on a part time basis. Carl had laid off all his employees on March 15, 2020, due to a decreased demand for his shop's goods and services. However, following the announcement of the wage subsidy, Carl has determined that he is an eligible employer and decided to re-hire Molly—effective April 5, 2020—. He also hires a new employee, Paul, on April 12th. Paul was laid off by his previous employer due to the COVID-19 crisis.
Even though Molly was employed for a week in the first claim period (March 15, 2020, to April 11, 2020), she is not an eligible employee in that claim period because she was without remuneration from Carl for more than 14 consecutive days (21 days - March 15, 2020, to April 4, 2020). However, she may be an eligible employee in the following claim period (April 12-May 9, 2020), assuming Carl keeps Molly on his payroll and continues to pay her.
If Carl had instead chosen to rehire and pay Molly retroactively to March 15, 2020, she would have qualified as an eligible employee for the first claim period. In this scenario, Carl would have been eligible to claim the wage subsidy for the first claim period, in respect of the eligible remuneration paid to Molly.
Paul receives eligible remuneration starting April 12. Assuming Paul is not without eligible remuneration in respect of 14 or more consecutive days in the second claim period (April 12, 2020 - May 9, 2020), Paul would qualify as an eligible employee and Carl would be eligible to claim the wage subsidy with respect to the eligible remuneration paid to Paul, for the second claim period.
Now assume that both Paul and Molly received CERB payments during the time they were laid off, and Paul continued to receive CERB payments after he was hired. Carl's eligibility for the wage subsidy will not change because of the CERB payments to Molly and Paul. However, it is Paul and Molly's responsibility to determine their eligibility for the CERB for any period. If they have received a CERB payment and they are no longer eligible, they are required to repay the CERB payment.
16. Can a non-resident employee be an eligible employee? Updated: November 23, 2020
Yes, since eligible employee status is determined based on where the individual is employed and not where the individual resides. Generally, a non-resident individual employed primarily in Canada throughout a claim period (or the portion of the claim period throughout which the individual was employed by the eligible employer) will qualify as an eligible employee as long as all other conditions to be an eligible employee are met (see Q13 and Q13-1).
Eligible remuneration
17. What is eligible remuneration?
Eligible remuneration of an eligible employee means amounts paid to the employee as salary, wages, and other remuneration, certain taxable benefits (provided such amounts are actually paid), and fees, commissions or other amounts paid for services. These are amounts for which an eligible employer would generally be required to make payroll deductions to be remitted to the CRA. The following amounts are not considered eligible remuneration:
- a retiring allowance;
- an amount deemed to have been received by the eligible employee as an employment benefit in respect of a stock option agreement;
- any amount received that can reasonably be expected to be paid or returned, directly or indirectly, to the eligible employer or to a person (or a partnership) at the direction of the eligible employer or with whom the eligible employer does not deal at arm's length;
- any amount that is paid in respect of a week in the claim period, if, as part of an arrangement involving the eligible employee and the eligible employer:
- the amount is in excess of the eligible employee's baseline remuneration (see Q18),
- after the claim period, the eligible employee is reasonably expected to be paid a lower weekly amount than their baseline remuneration, and
- one of the main purposes for the arrangement is to increase the amount of the wage subsidy.
17-01. Can the value of a non-cash taxable benefit, such as a stand-by charge for the personal use of a corporate vehicle, be claimed for the wage subsidy? New: August 11, 2020
No. Non-cash taxable benefits are not remuneration eligible for the wage subsidy. Only eligible remuneration paid to an eligible employee qualifies for purposes of computing the wage subsidy. Although the value of a stand-by charge is a taxable benefit derived because of employment, the value of such benefit is not eligible remuneration paid to an eligible employee for purposes of computing the wage subsidy.
17-02. Are non-taxable employee benefits, such as employer contributions to a registered pension plan or a private health services plan, included in eligible remuneration paid to an eligible employee? New: August 11, 2020
No. Eligible remuneration of an eligible employee means amounts paid to an employee as salary, wages, and other remuneration for which an eligible employer would generally be required to make payroll deductions to be remitted to the CRA. Non-taxable benefits are not eligible remuneration paid to an eligible employee.
17-1. Are tips included in eligible remuneration?
Whether tips are included in eligible remuneration depends on the type of tips received by the eligible employee. Controlled tips as well as declared tips are eligible remuneration for the purpose of the wage subsidy. However, direct tips are not eligible remuneration for the purposes of the wage subsidy.
The CRA webpage on Tips and gratuities describe three types of tips:
- Controlled tips: The term controlled tips refers to tips that an employer controls or possesses and then must pay to the employee.
- Direct tips: Direct tips are paid directly by the customer to the employee. The employer has no control over the tip amount or its distribution. The employer is merely a conduit for the tip from the customer to the employee.
- Declared tips (in the province of Quebec only): Declared tips are the amount of tips that provincial law requires an employee to declare to their employer along with their controlled tips. Employees working in a regulated establishment in Quebec must declare their direct tips to their employer.
17-2. In an owner-managed corporation, is the salary and dividends paid to the owner-manager considered eligible remuneration for the purpose of the wage subsidy? Updated: August 31, 2020
In an owner managed corporation, the owner-manager may pay themselves dividends rather than salaries. In addition, such payments may not be made on a regular basis throughout the year.
For the purpose of the wage subsidy, dividends are not considered eligible remuneration. Accordingly, an eligible employer that pays a dividend instead of salary to an owner-manager that is also an eligible employee in a claim period, will not be eligible for the wage subsidy in respect of that dividend. Further, where an eligible employer pays the owner-manager both dividends and salary in a claim period but has not paid any salary during the period that begins on January 1, 2020 and ends on March 15, 2020 (or during the relevant baseline remuneration period indicated in Q18 that the eligible employer has elected in respect of that owner-manager), it will not be eligible for the wage subsidy in respect of eligible remuneration paid to the owner-manager in the claim period.
Katherine, who manages the operations of XYZ Inc., also owns all of the issued shares of the corporation. XYZ Inc. is an eligible employer and has continuously employed two employees in Canada. Katherine is an active employee, that is, she is an employee who is not on leave with pay.
During the period from January 1 to March 15, 2020, Katherine received average weekly eligible remuneration of $500 (baseline remuneration) and also received a dividend of $2,000 per month.
On account of decreasing revenues during the COVID-19 crisis, XYZ Inc. is no longer able to retain its two employees and lays them off. Katherine continues to operate XYZ Inc.’s business.
XYZ Inc. maintains Katherine’s weekly salary of $500, but her dividend payment is reduced to $1,000 per month.
Since Katherine does not deal at arm’s length with XYZ Inc., the wage subsidy amount in respect of a week in a claim period, for periods 1 to 4, will be limited to the lesser of the amount of the eligible remuneration paid in respect of the week (up to a maximum of $847) and 75% of the eligible employee's baseline remuneration.
Accordingly, XYZ Inc.’s wage subsidy amount for a week in a claim period for periods 1 to 4, is $375, which represents 75% of the baseline remuneration of $500. It does not include the dividend that was paid to Katherine, as dividends are not considered eligible remuneration. XYZ Inc. is thus entitled to a total wage subsidy amount of $1,500 for the 4 week claim period (i.e., $375 x 4 weeks = $1,500).
Note: XYZ Inc. may elect to use an alternative period (as indicated in Q18), to calculate Katherine’s baseline remuneration for the applicable claim period if it is more favourable. However, XYZ Inc. cannot retroactively increase Katherine’s salary for any of those periods to increase her baseline remuneration and therefore claim a higher wage subsidy (see Q 18-1).
In Example 17-2A now consider a situation where XYZ Inc. pays Katherine no salary but only a dividend of $2,000 per month for the period from January 1 to March 15, 2020. All other facts remain the same.
Since Katherine does not deal at arm’s length with XYZ Inc., the wage subsidy amount in respect of a week in a claim period will generally be limited to the lesser of the amount of the eligible remuneration paid in respect of the week (up to a maximum of $847) and 75% of the eligible employee's baseline remuneration.
In this scenario, though Katherine received eligible remuneration during the claim period, her baseline remuneration is nil because she received only dividends from January 1 to March 15, 2020, and dividends are not considered eligible remuneration for the purposes of the wage subsidy. Therefore, in this situation, the wage subsidy amount of XYZ Inc. for the claim period is nil.
Note:However, if Katherine was paid eligible remuneration during the relevant alternative baseline remuneration period indicated in Q18, XYZ Inc. may elect for a claim period in respect of Katharine, to use that alternative period to calculate her baseline remuneration. XYZ Inc. may then be eligible for a wage subsidy in that claim period. For example, assume that XYZ Inc. resumed to paying Katherine an average weekly salary of $500 instead of a dividend, during the period of July 1, 2019 to December 31, 2019. In this situation, for the claim periods 5 to 9, if XYZ Inc. elects for that baseline period to apply in respect of Katherine, it may be eligible for a wage subsidy for those claim periods.
XYZ Inc. however, will not be eligible for a wage subsidy for the claim periods 1 to 4 since XYZ Inc. did not pay eligible remuneration to Katherine during the period from January 1 to March 15, 2020 or March 1, 2019 to May 31, 2019 (or during the period March 1, 2019 to June 30, 2019)
17-3. Are sick pay, vacation pay and statutory holiday pay included in eligible remuneration? New: July 9, 2020
Amounts paid by an eligible employer to an eligible employee as sick pay, vacation pay or statutory holiday pay is generally considered part of an employee’s normal salary, wages, and remuneration and would qualify as eligible remuneration.
However, to be eligible for the wage subsidy, the eligible remuneration paid to an eligible employee must be in respect of a week in a claim period (see Q26-1). Therefore, to qualify for the wage subsidy, the sick pay, vacation pay or statutory holiday pay must have been paid to the eligible employee in respect of a particular week in the claim period. This would generally be the case where an eligible employee is absent from work on paid sick or vacation time during a week in the claim period or when a statutory holiday falls during a week in the claim period. If an eligible employee’s vacation pay entitlement is paid out in addition to their base salary or wages on every paycheque (for example, if 4% is added to each paycheque in lieu of paid vacation time off), the vacation pay would be considered in respect of the same week as the salary or wages paid and also qualify for the wage subsidy.
Sick pay or vacation pay would not be considered in respect of a week in the claim period and would not qualify for the wage subsidy where an employee receives a lump-sum amount that accrued in a prior period. However, where an eligible employee receives a lump-sum amount of vacation pay for a week when the employee is taking what would otherwise be unpaid vacation time, a reasonable amount of the lump-sum may be considered to have been paid in respect of the week (see Example 17-3A).
Note: If an eligible employer enters into an arrangement to change the method used for paying an eligible employee’s vacation pay or uses accrued vacation pay to increase the employee’s remuneration during a claim period when the employee is not taking vacation time, the amount may be excluded from the employee’s eligible remuneration.
Chad works part time and earns $350 per week before vacation pay. Chad is entitled to two weeks of unpaid vacation time a year and 4% vacation pay (accrued on his gross wages). Under an agreement with his employer, Chad may request to have all or a portion of the accrued vacation pay paid out at any time.
Chad took one week of unpaid vacation time between May 3 and May 9, 2020. On May 3, 2020, Chad had a $600 balance of accrued vacation pay and requested that $500 of that balance be paid out for the week of May 3, 2020. In this scenario, $350 of the $500 vacation pay Chad received would generally be considered to be in respect of the week of May 3, 2020 and will qualify for the wage subsidy.
Angelica receives an annual salary of $31,200, or the equivalent of $600 per week. Angelica is also entitled to four weeks of paid vacation time a year. Under Angelica’s contract of employment, she is not allowed to carry over more than six weeks of vacation time into her employer’s following fiscal year. All accrued vacation in excess of six weeks is paid out in cash at the employee’s current rate of pay. On April 30, 2020, the fiscal year end of her employer, Angelica had eight weeks of accrued paid vacation time. Angelica’s employer will therefore pay out her excess two weeks of vacation, and proposes to do so in a lump sum payment of $1,200 on her next paycheque in addition to her normal salary for the pay period. In this scenario, the $1,200 lump sum payment for Angelica’s excess vacation will not qualify for the wage subsidy.
17-4. Are maternity or parental top-up payments included in eligible remuneration for purposes of computing the wage subsidy? New: October 6, 2020
Amounts paid by an eligible employer to an eligible employee as a maternity or parental top-up amount are generally considered salary, wages, and remuneration and would qualify as eligible remuneration.
To qualify for the wage subsidy, the maternity or parental top-up payments must be paid to the eligible employee by an eligible employer that qualifies for the wage subsidy, in respect of a particular week in the claim period. An employee on maternity leave will not be considered to be on leave with pay for purposes of the wage subsidy (see Q20-03).
17-5. Are bonuses paid to an eligible employee included in eligible remuneration for purposes of computing the wage subsidy? Updated: January 13, 2021
An amount paid as a bonus by an eligible employer to an eligible employee is generally considered salary, wages and remuneration, and would be considered eligible remuneration.
However, only eligible remuneration paid by an eligible employer to an eligible employee in respect of a week in a claim period is included for purposes of computing the wage subsidy. Therefore, an eligible employer may need to do a manual calculation to determine the amount that was paid in respect of each week in the claim period where a payment is in respect of more than one week.
For example, in the case of an annual bonus paid by an eligible employer to an eligible employee, it would generally be reasonable to consider that the annual bonus was earned throughout the fiscal period to which it relates.
Further, for the purposes of computing baseline remuneration in respect of an eligible employee for a claim period, a bonus amount must be paid during the relevant baseline remuneration period as described in Q18 to be considered. As the payment relates to more than one week, it would not be reasonable, for purposes of computing baseline remuneration, to include the full amount of the bonus. To calculate the average weekly eligible remuneration, the amount of the bonus is divided by the number of weeks included in the period to which it relates (see Q18-2).
An eligible employer will not be eligible for the wage subsidy in respect of eligible remuneration paid to an eligible employee with which it does not deal at arm’s length (for example, an owner-manager) for a week in the claim period, if it did not pay any eligible remuneration during the employee’s relevant baseline remuneration period described in Q18 (see Q17-2). If a bonus was paid in a relevant baseline period, a proration will generally be necessary to determine a weekly amount.
Max manages the operations of XYZ Inc. and also owns all of the issued shares of the corporation. XYZ Inc. is an eligible employer. Max’s only remuneration is a semi-annual bonus paid on January 15 and July 15, 2020.
During the period from January 1 to March 15, 2020, Max received a semi-annual bonus of $20,000 that relates to the 26 week period ending on December 31, 2019. As the bonus was paid during the relevant baseline period for Max, he will have baseline remuneration for purposes of the wage subsidy. In this situation, for the purposes of computing Max’s baseline remuneration, Max’s average weekly eligible remuneration would be calculated by dividing the total eligible remuneration paid by XYZ Inc. ($20,000) by the total number of weeks to which the eligible remuneration paid relates (26 weeks). Accordingly, Max’s baseline remuneration for the period January 1 to March 15, 2020, would be $769.23 per week ($20,000/26 = $769.23.)
It is now July 15, 2020, and Max has received his second semi-annual bonus of $15,000 that relates to the 26 week period ending on June 30, 2020. Given that only eligible remuneration paid by an eligible employer to an eligible employee in respect of a week in a claim period is included for purposes of computing the wage subsidy, XYZ Inc. will need to do a manual calculation to determine the amount that was paid in respect of each week in the claim period for which it wishes to apply (i.e., one or all of claim periods 1 to 4). In this situation, given that the semi-annual bonus relates to the 26 week period ending on June 30, 2020, it would be reasonable to consider that $576.92 ($15,000/26 = $576.92) was paid in respect of each week during this period for purposes of computing the wage subsidy.
17-6. How are commissions paid to an eligible employee included in eligible remuneration for purposes of computing the wage subsidy? New: November 23, 2020
An amount paid as a commission by an eligible employer to an eligible employee is generally considered salary, wages and remuneration, and would be considered eligible remuneration. However, only eligible remuneration paid by an eligible employer to an eligible employee in respect of a week in a claim period, is included for purposes of computing the wage subsidy.
To determine whether a commission payment is in respect of a specific week, it is necessary to review the complete set of facts pertaining to a particular situation, including the employment contract, which would normally describe the conditions required to be met for an employee to be entitled to a commission. Other factors may also be relevant, such as the practices specific to a particular industry, which may provide a reasonable methodology to determine whether a commission relates to a given week.
For example, if a car salesperson, who is remunerated by commission when a car is sold as provided in the employment contract, sells two cars in a given week in a claim period, it could be reasonable to consider that those commissions are paid “in respect of the week” in which those two sales occurred.
Andrea is a salesperson for a car dealership that is an eligible employer. Andrea is remunerated by commission the week following a car sale, as provided in her employment contract. If Andrea sells two cars in a given week, she will receive her commission the following week in respect of those two car sales. For purposes of computing the wage subsidy for a claim period, it would be reasonable to consider that those commissions are paid “in respect of the week” in which those two sales occurred (rather than the week in which her commission is received).
17-7. Are payments of wages in lieu of termination notice and salary continuance payments eligible for the wage subsidy? New: November 23, 2020
An amount received by an individual arising out of or in consequence of the termination of their employment may be considered income from employment or a retiring allowance. A retiring allowance is not eligible remuneration for purposes of the wage subsidy.
A payment in lieu of earnings for a period of reasonable notice of termination (wages in lieu of termination notice) that is made under the explicit or implied terms of an individual’s employment is considered salary or wages from employment. However, wages in lieu of termination notice are not considered to have been paid in respect of a week, and therefore are not eligible for the wage subsidy.
Salary continuance payments are generally periodic amounts paid to an employee who is being terminated but who remains on payroll and remains entitled to benefits available only to employees, even if they are no longer required to report to work. Where pension benefits continue to accrue to the individual, an employment relationship continues to exist (as pension benefits only accrue to employees) even though the individual is not required to report to work.
Where the employment relationship continues to exist, salary continuance payments to an eligible employee are salary or wages from employment, that would generally be considered eligible remuneration paid in respect of a week, and would be eligible for the wage subsidy. However, an employee receiving salary continuance payments will not be considered to be on leave with pay for purposes of the wage subsidy (see Q20-03).
17-8. Does a payment to an eligible employee under a supplementary unemployment benefit plan (“SUBP”) qualify for the wage subsidy? New: November 23, 2020
A SUBP, often described as a top-up plan, provides benefits that supplement the employment insurance benefits that employees receive during a period of unemployment due to a temporary work stoppage. A SUBP can be funded through a trust or unfunded and can be registered with Service Canada or with both Service Canada and CRA. More information about these registration processes is available on the Service Canada and CRA websites.
Direct pay plan
If the SUBP benefits are paid to eligible employees by the eligible employer directly, rather than through a trustee, these payments would be remuneration paid to the employees. Accordingly, these payments would also generally qualify as eligible remuneration paid to an eligible employee for purposes of the wage subsidy.
If an eligible employee was receiving Employment Insurance benefits between January 1 and March 15, 2020 and the eligible employer paid a supplementary top-up amount directly to the eligible employee during that period, the top-up payment would also be included in baseline remuneration in respect of the employee for purposes of the wage subsidy.
Trusteed plan
If the SUBP is one under which the eligible employer makes payments to a trustee in trust for the purpose of providing periodic amounts to laid-off employees, payments by the trustee to eligible employees would not be considered to be salary, wages or other remuneration of the employees. Accordingly, these payments would not qualify as eligible remuneration for purposes of the wage subsidy.
In addition, employer contributions made by an eligible employer to the trustee under this type of trusteed SUBP would not be considered eligible remuneration paid to an eligible employee for purposes of the wage subsidy.
18. What is baseline remuneration? Updated: September 24, 2021
Baseline remuneration means the average weekly eligible remuneration paid to an eligible employee by an eligible employer during the period that begins on January 1, 2020, and ends on March 15, 2020. Any period of seven or more consecutive days for which the employee was not remunerated is excluded from the calculation. However, the eligible employer may elect for each claim period in respect of an employee, a different period to calculate the average weekly eligible remuneration, as described in table 3 below. Further, since the election is in respect of an employee, the eligible employer must keep a list of names of such employees for each claim period for which it makes an election.
Table 3 – Additional baseline remuneration periods in respect of an eligible employee
Claim period(s) (see Q2) If the eligible employer elects for an employee for each claim period, then average weekly eligible remuneration paid during the period that begins on: 1 to 3 March 1, 2019 and ends on May 31, 2019 4 March 1, 2019 and ends on May 31, 2019 Footnote 5 or
March 1, 2019 and ends on June 30, 2019 Footnote 55 to 13 Footnote 9 July 1, 2019 and ends on December 31, 2019 14 to 17 Footnote 9 March 1, 2019 and ends on June 30, 2019 Footnote 5 or
July 1, 2019 and ends on December 31, 2019 Footnote 518 to 21 Footnote 9 July 1, 2019 and ends on December 31, 2019 Consider the following example:
Cold Brothers Inc. (CBI) is an ice cream shop in Winnipeg, Manitoba, and has been in business since 2015. Since its business is seasonal, it pays its employees a lower weekly salary during the months of November to March and then pays higher amounts during the months of April until October. Due to the COVID-19 crisis, it paid a reduced salary for its employees beginning in April of 2020.
Average weekly salary paid during January 1, 2019 to March 31, 2019 — $500
Average weekly salary paid during April 1, 2019 to October 31, 2019 — $1,500
Average weekly salary paid during November 1, 2019 to March 31, 2020 — $500
Average weekly salary paid beginning April 1, 2020 — $750Table 4 – Baseline remuneration calculation for an eligible employee of CBI
Claim period(s) Options available – 1 to 3 Average weekly salary paid during:
January 1, 2020, to March 15, 2020 = $500
or Elect for period beginning
March 1, 2019 and ends on May 31, 2019 = $1,192 (approx.)Since the higher average weekly salary paid is for the period that begins on March 1, 2019 and ends on May 31, 2019, the employer may elect to use that period to calculate the employees baseline remuneration 4 Average weekly salary paid during:
January 1, 2020, to March 15, 2020 = $500
or Elect for period beginning
March 1, 2019 and ends on May 31, 2019 = $1,192 (approx.)
or
March 1, 2019 and ends on June 30, 2019 = $1,265 (approx.)Since the higher average weekly salary paid is for the period that begins on March 1, 2019 and ends on June 30, 2019, the employer may elect to use that period to calculate the employees baseline remuneration 5 to 13 Average weekly salary paid during:
January 1, 2020, to March 15, 2020 = $500
or Elect for period beginning
July 1, 2019 and ends on December 31, 2019 = $1,192 (approx.)Since the higher average weekly salary paid is for the period that begins on July 1, 2019 and ends on December 31, 2019, the employer may elect to use that period to calculate the employees baseline remuneration 14 to 17 Average weekly salary paid during:
January 1, 2020, to March 15, 2020 = $500
or Elect for period beginning
March 1, 2019 and ends on June 30, 2019 = $1,250 (approx.) or
July 1, 2019 and ends on December 31, 2019 = $1,192 (approx.)Since the higher average weekly salary paid is for the period that begins on March 1, 2019 and ends on June 30, 2019, the employer may elect to use that period to calculate the employees baseline remuneration 18 to 21 Average weekly salary paid during:
January 1, 2020, to March 15, 2020 = $500
or Elect for period beginning
July 1, 2019 and ends on December 31, 2019 = $1,192 (approx.)Since the higher average weekly salary paid is for the period that begins on July 1, 2019 and ends on December 31, 2019, the employer may elect to use that period to calculate the employees baseline remuneration 18-1. Can eligible remuneration be retroactively paid to increase baseline remuneration? Updated: August 11, 2020
No. A payment of eligible remuneration from an eligible employer to an eligible employee made subsequent to the time frames described in Q18, with respect to a specific claim period, is excluded from baseline remuneration. For a payment of eligible remuneration to be included in baseline remuneration, such an amount must be paid during the relevant baseline remuneration period indicated in Q18.
18-2. How is the average weekly eligible remuneration amount calculated for the purposes of determining baseline remuneration? New: October 6, 2020
In general terms, for the purposes of computing baseline remuneration, “average weekly eligible remuneration” is calculated by dividing the total eligible remuneration paid by the eligible employer to the eligible employee during the baseline remuneration period (see Q18 for various baseline remuneration periods) by the total number of weeks to which the eligible remuneration paid relates [total eligible remuneration paid/number of weeks]. Any period of seven or more consecutive days for which the employee was not remunerated is excluded from the calculation.
An eligible employer paid an eligible employee $1,400 during each two week period between January 1 and March 15, 2020. During this period, the eligible employer paid, to the eligible employee, eligible remuneration totalling $7,000 covering a period of 10 weeks and the employee was not without remuneration for any period of seven or more consecutive days. In this situation, the eligible employee’s average weekly eligible remuneration would be calculated by dividing the total eligible remuneration paid by the eligible employer ($7,000) by the total number of weeks to which the eligible remuneration paid relates (10 weeks). Accordingly, the baseline remuneration for the employee would be $700 per week ($7,000/10 = $700).
An eligible employer paid an eligible employee between January 1 and March 15, 2020, eligible remuneration totalling $7,200 covering a period of 10 weeks. However, during the period for which the employee was paid, the employee took unpaid leave for one of the weeks and therefore, the employee was not remunerated for a period of seven consecutive days. In this situation, the eligible employee’s average weekly eligible remuneration would be calculated by dividing the total eligible remuneration paid by the eligible employer ($7,200) by the total number of weeks to which the eligible remuneration paid relates, excluding any period of seven or more consecutive days for which the employee was not remunerated (10 weeks minus 1 week = 9 weeks). Accordingly, the baseline remuneration for the employee would be $800 per week ($7,200/9 = $800).
An eligible employer calculates wages on an hourly basis but pays the employee on the 16th of every month for hours worked during the preceding month. For the period between January 1 and March 15, 2020, the employer paid an eligible employee $3,200 on January 16, 2020, for hours worked December 1 to 31, 2019,and $2,800 on February 16, 2020 for hours worked January 1 to January 31, 2020. The employee was not without remuneration for any period of seven or more consecutive days during that period. In this situation, the eligible employee’s average weekly eligible remuneration would be calculated by dividing the total eligible remuneration paid by the eligible employer ($6,000) by the total number of weeks to which the eligible remuneration paid relates ((31 days + 31 days /7 days per week = 8.86 weeks). Accordingly, the baseline remuneration for the employee would be $677.20 per week ($6,000/8.86 = $677.20).
An alternate calculation that is reasonable in the circumstances may also be acceptable as shown in the following example.
In the scenario described in Example 18-2C, if the employee is paid for Monday-Friday working days, during the period December 1, 2019 to January 31, 2020, there are nine full working weeks. Therefore, the eligible employee’s average weekly eligible remuneration could alternately be calculated by dividing the total eligible remuneration paid by the eligible employer ($6,000) by the total number of weeks to which the eligible remuneration paid relates (9 work weeks.) Accordingly, the baseline remuneration for the employee would be $667.67 per week ($6000/9 = $667.67).
19. Will an eligible employer qualify for the wage subsidy in respect of eligible remuneration that it pays, if the amount is not taxable to the eligible employee?
Eligible remuneration of an eligible employee means amounts for which the eligible employer would generally be required to make payroll deductions to be remitted to the CRA, irrespective of whether the amounts are taxable to the eligible employee. For example, salaries and wages paid to a status Indian Footnote 3 whose income is exempt from tax under a specific provision of the Act are considered eligible remuneration and would qualify for the purpose of calculating the wage subsidy.
Calculating the wage subsidy
20. How is the wage subsidy calculated for claim periods 1 to 4? Updated: August 31, 2020
For an eligible employer that qualifies for the wage subsidy, the amount of the wage subsidy for a claim period in claim periods 1 to 4, is the total of the following amounts in respect of the claim period (there is no overall limit on the wage subsidy amount that an eligible employer may claim):
- Total of all amounts, each of which is for an eligible employee in respect of a week in the claim period, equal to the greater of
- the least of
- 75% of eligible remuneration paid to the eligible employee in respect of that week,
- $847, and
- if the eligible employee does not deal at arm's length with the eligible employer in the claim period, $0, and
- the amount of eligible remuneration paid to the eligible employee in respect of that week,
- 75% of baseline remuneration in respect of the eligible employee determined for that week, and
- $847;
Note 1: In general, for the amount in (II), an eligible employee will be considered to be on leave with pay throughout a week if that employee is remunerated by the eligible employer for that week but does not perform any work for the employer in that week. This amount in (II), would not be available for eligible employees that are on leave with pay for only a portion of a week. In addition, regular rules will apply in calculating the employer contributions in respect of that employee.
Note 2: On an administrative basis, the CRA will accept a reasonable estimate of work sharing benefits received by eligible employees if the eligible employer does not have the exact amount.
John and Zac own a corporation, XYZ Ltd. that operates a garage in London, Ontario. They are working full time, but do not draw any salary, and have two full time employees each earning a weekly salary of $1,200 (their baseline remuneration), for an annual salary of $62,400, and two part-time employees, each earning $500 per week (their baseline remuneration), for an annual salary of $26,000. John and Zac have reduced their opening hours due to decreased demand for their service following the COVID-19 crisis, and laid off all their employees effective March 15, 2020. Following the announcement of the wage subsidy, they decide to re-rehire, effective April 12, 2020, two of their laid off employees, Ahmed (full time employee) and Ken (part-time employee). These employees are paid the same weekly salary that they received before being laid-off - $1,200 and $500 respectively (eligible remunerations).
Assume that XYZ Ltd. is an eligible employer that qualifies for the wage subsidy and it does not receive any other subsidy. Further assume that the rehired employees are employed for the entire claim period April 12 - May 9, 2020. The weekly qualifying remuneration for the claim period is calculated as follows:
Example 20A table – Calculation for 2 employees of XYZ Ltd.
Ahmed Ken 75% of eligible remuneration [A] $900 $375 Maximum amount (i.e. $847) [B] $847 $847 Nil, for non-arm's length employees [C] N/A N/A Lesser of Amounts A to C [D] $847 $375 Eligible remuneration [E] $1,200 $500 75% of baseline remuneration [F] $900 $375 Maximum amount (i.e. $847) [G] $847 $847 Lesser of Amounts E to G [H] $847 $375 Qualifying weekly remuneration per employee; Greater of Amounts D and H [I] $847 $375 Total number of eligible employees [J] 1 1 Total Qualifying remuneration; Amount I multiplied by Amount J [K] $847 $375 Total for the claim period; Amount K multiplied by 4 (number of weeks in the claim period) $3,388 $1,500 Total Canada Emergency Wage Subsidy that XYZ Ltd. is eligible to claim for the claim period is: $4,888 ($3,388 + $1,500)
In the above Example 20A, now consider a situation where the owners, John and Zac draw a weekly salary of $1,500 (annual salary of $78,000), and continue to do so during the claim period indicated in the above example. In addition, the two employees are now rehired for a reduced weekly salaries of $900 for Ahmed and $300 for Ken (their respective eligible remunerations). The weekly qualifying remuneration for the claim period is calculated as follows:
Example 20B table – Calculation for 2 employees and owners of XYX Ltd.
Ahmed Ken Owner (John and Zac) 75% of eligible remuneration [A] $675 $225 $1,125 Maximum amount (i.e. $847) [B] $847 $847 $847 Nil, for non-arm's length employees [C] N/A N/A $0 Lesser of Amounts A to C [D] $675 $225 $0 Eligible remuneration [E] $900 $300 $1,500 75% of baseline remuneration [F] $900 $375 $1,125 Maximum amount (i.e. $847) [G] $847 $847 $847 Lesser of Amounts E to G [H] $847 $300 $847 Qualifying weekly remuneration per employee; Greater of Amounts D and H [I] $847 $300 $847 Total number of eligible employees [J] 1 1 2 Total Qualifying remuneration; Amount I multiplied by Amount J [K] $847 $300 $1,694 Total for the claim period; Amount K multiplied by 4 (number of weeks in the claim period) $3,388 $1,200 $6,776 Total Canada Emergency Wage Subsidy that XYZ Ltd. is eligible to claim for the claim period is: $11,364 ($3,388 + $1,200 + $6,776)
Note: As can be seen in Example 20B, for claim periods 1 to 4, where the eligible remuneration is equal to or less than 75% of the baseline remuneration for an eligible employee, the employer is eligible for 100% wage subsidy in respect of that employee (in this case, salary paid to Ken in respect of the claim period) to a maximum of $847 per week.
Eliza and Abdi own a corporation, Alpha Ltd., that operates a take-out restaurant in Sudbury, Ontario. They are working full time, each drawing a salary of $1,000 per week (baseline remuneration), and have four part-time employees, each earning $500 per week (baseline remuneration), for a total weekly payroll of $4,000. Eliza and Abdi have reduced their opening hours due to decreased demand for their service following the COVID-19 crisis, and laid off two of their employees effective March 15, 2020. Following the announcement of the wage subsidy, they decide to re-hire them effective March 28, 2020. Eliza and Abdi also decided to pay their two employees retroactively for the entirety of the time they had been laid off.
However, these two rehired employees are not being asked to report to work during this challenging period and will be paid only $300 per week while the retained employees will be paid a weekly salary of $600, (both eligible remunerations). Alpha Ltd. did not receive any other subsidy or work-sharing benefits during the claim period, beginning March 15, 2020 and ending April 11, 2020.
Assuming that Alpha Ltd. is an eligible employer that qualifies for the wage subsidy, the qualifying weekly remuneration for the claim period is calculated as follows:
Example 20C table – Calculation for Alpha Ltd.
Retained employee Rehired employee Owner (Eliza and Abdi) 75% of eligible remuneration [A] $450 $225 $750 Maximum amount (i.e. $847) [B] $847 $847 $847 Nil, for non-arm's length employees [C] N/A N/A $0 Lesser of Amounts A to C [D] $450 $225 $0 Eligible remuneration [E] $600 $300 $1,000 75% of baseline remuneration [F] $375 $375 $750 Maximum amount (i.e. $847) [G] $847 $847 $847 Lesser of Amounts E to G [H] $375 $300 $750 Qualifying weekly remuneration per employee; Greater of Amounts D and H [I] $450 $300 $750 CPP withholdings eligible for refund; [J] (see note below) $0 $15.75 $0 EI withholdings eligible for refund; [K] (see note below) $0 $6.60 $0 Total of Amounts I to K [L] $450 $322.35 $750 Total number of eligible employees [M] 2 2 2 Total Qualifying remuneration; Amount L multiplied by Amount M [N] $900 $644.70 $1,500 Total for the claim period; Amount N multiplied by 4 (weeks) [O] $3,600 $2,579 $6,000 10% Temporary subsidy received for the claim period [P] $0 $0 $0 Work-sharing benefit received for the claim period [Q] $0 $0 $0 Amounts that reduce the wage subsidy; Amount P plus Amount Q [R] $0 $0 $0 Canada Emergency Wage Subsidy that Alpha Ltd. is eligible to claim for the claim period; Amount O minus Amount R $3,600 $2,579 $6,000 Total Canada Emergency Wage Subsidy that Alpha Ltd. is eligible to claim for the claim period is: $12,179 ($3,600 + $2,579 + $6,000)
Note: The CPP and EI amounts eligible for refund is provided for illustrative purposes only.
20-01. How is the wage subsidy calculated for claim periods 5 and 6? New: August 11, 2020
For an eligible employer that qualifies for the wage subsidy, the amount of the wage subsidy in respect of an eligible employee for claim periods 5 and 6, depends on three factors - the revenue reduction percentage (see Q20-2) in the claim period, the employer’s 3-month average revenue drop (top-up revenue reduction percentage- see Q20-3), and whether the eligible employee is on leave with pay in respect of that week in the claim period, or is not on leave with pay (see Q20-03).
Depending on whether the eligible employee is on leave with pay (see II below), or is not on leave with pay (see I below) in respect of a week in the claim period, the wage subsidy is the total of the following amounts in respect of the claim period (there is no overall limit on the wage subsidy amount that an eligible employer may claim):
I. Where an eligible employee is not on leave with pay in respect of a week in the claim period 5 or 6, the wage subsidy in respect of the week is the greater of 1. and 2. where:
- is an amount equal to:
- $0, if the revenue reduction percentage of the eligible employer for the claim period is less than 30%; and
- if the revenue reduction percentage is equal to or greater than 30%, an amount equal to the greater of :
- the least of
- 75% of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week,
- $847, and
- if the eligible employee does not deal at arm's length with the eligible employer in the claim period, $0, and
- the amount of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week,
- 75% of baseline remuneration in respect of the eligible employee determined for that week, and
- $847;
- the amount of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week;
- $1,129; and
- if the eligible employee does not deal at arm’s length (see Q8-2) with the eligible employer in the claim period, the baseline remuneration in respect of the eligible employee determined for that week.
II. Where an eligible employee is on leave with pay in respect of a week in the claim periods 5 or 6, the amount of wage subsidy in respect of the week in the claim period is:
- $0, unless:
- the revenue reduction percentage (see Q20-2) of the eligible employer for the claim period is greater than 0%, or
- the top-up percentage (see Q20-3) of the eligible employer for the claim period is greater than 0%, and
- the least of
- 75% of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week,
- $847, and
- if the eligible employee does not deal at arm's length with the eligible employer in the claim period, $0, and
- the amount of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week,
- 75% of baseline remuneration in respect of the eligible employee determined for that week, and
- $847;
III. In respect of each week in the claim period throughout which the employee is on leave with pay and for which claim period the employer is eligible for the wage subsidy for the employee:
- $0, unless:
- the revenue reduction percentage of the eligible employer for the claim period is greater than 0%, or
- the top-up percentage of the eligible employer for the claim period is greater than 0%, and
Less:
IV. Total of all amounts claimed or intended to be claimed under the 10% Temporary Wage Subsidy for Employers, by the eligible employer that qualifies for the Canada Emergency Wage Subsidy for the claim period; and
V. Total of all amounts received by the eligible employee for each week in the claim period as a work-sharing benefit under the Employment Insurance Act (see note below).
Note: On an administrative basis, the CRA will accept a reasonable estimate of work sharing benefits received by eligible employees if the eligible employer does not have the exact amount.
20-02. How is the wage subsidy calculated for claim periods 7 to 21? Updated: September 24, 2021
For an eligible employer that qualifies for the wage subsidy, the amount of the wage subsidy for a claim period, in claim periods 7 to 21, is the total of the following amounts (there is no overall limit on the wage subsidy amount that an eligible employer may claim):
I. Where an eligible employee is not on leave with pay (see Q20-03), in respect of a week in the claim period, the amount determined by the result of the sum of the eligible employer’s base percentage (see Q20-2) and the eligible employer’s top-up percentage (see Q20-3) for the claim period, multiplied by the least of the following amount:
- the amount of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week;
- $1,129; and
- if the eligible employee does not deal at arm’s length (see Q8-2) with the eligible employer in the claim period, the baseline remuneration in respect of the eligible employee determined for that week.
II. Where an eligible employee that is on leave with pay in respect of a week in the claim period, the least of:
- the amount of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week,
- an amount determined by regulation in respect of the eligible employer for the claim period (see note 1 below),
- $0, if
- the eligible employee does not deal at arm’s length with the eligible employer in the claim period, and
- the baseline remuneration of the eligible employee for that week is $0, and
- the revenue reduction percentage (see Q20-2) of the eligible employer for the claim period is greater than 0%, or
- the top-up percentage (see Q20-3) of the eligible employer for the claim period is greater than 0%;
III. For each week in the claim periods 7 or subsequent claim periods (see note 2 below) throughout which week the employee is on leave with pay and for which claim period the employer is eligible for the wage subsidy for the employee:
- $0, unless:
- the revenue reduction percentage of the eligible employer for the claim period is greater than 0%, or
- the top-up percentage of the eligible employer for the claim period is greater than 0%,
Less:
IV. Total of all amounts claimed or intended to be claimed under the 10% Temporary Wage Subsidy for Employers, by the eligible employer that qualifies for the Canada Emergency Wage Subsidy for the claim period; and
V. Total of all amounts received by the eligible employee for each week in the claim period as a work-sharing benefit under the Employment Insurance Act (see note 3 below).
Note 1: For claim periods 7 and 8 the amount is the greater of:
- the least of
- 75% of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week,
- $847, and
- if the eligible employee does not deal at arm’s length with the eligible employer in the claim period, nil, and
- the amount of eligible remuneration paid to the eligible employee by the eligible employer in respect of that week,
- 75% of baseline remuneration in respect of the eligible employee determined for that week, and
- $847
For claim periods 9 and 10 the amount is the greater of
- $500, and
- the lesser of
- 55% of baseline remuneration in respect of the eligible employee determined for that week, and
- $573.
For claim periods 11 to 19 the amount is the greater of
- $500, and
- the lesser of
- 55% of baseline remuneration in respect of the eligible employee determined for that week, and
- $595.
For claim periods 20 and 21 the amount is $0.
Note 2: Based on the proposed legislation referred to in the Finance Canada news release of July 30, 2021, this amount is not available for claim period 20 and subsequent claim periods. The eligible employer can decide whether or not to claim this amount. If the employer chooses to claim the amount based on the current rules, once the proposed legislation becomes law, the eligible employer is expected to take immediate steps to file an amended application based on the new rules and repay any excess amount claimed. Amounts owing by the employer as a result of the employer not filing on the basis of proposed legislation will be subject to interest.
Note 3: On an administrative basis, the CRA will accept a reasonable estimate of work sharing benefits received by eligible employees if the eligible employer does not have the exact amount.
20-03. When is an employee considered to be on leave with pay? Updated: November 23, 2020
An eligible employee will generally be considered to be on leave with pay throughout a week if that employee is remunerated by the eligible employer for that week but does not perform any work for the employer in that week. Generally, this will only apply to employees on paid furlough (that is, employees that have been temporarily laid off with pay). An employee will not be considered to be on leave with pay for purposes of the wage subsidy if they are on a period of paid absence, such as vacation leave, sick leave, or a sabbatical. An employee would not be on leave with pay in situations where the employment relationship has been severed, such as when the employer pays wages in lieu of termination notice or where the employment relationship continues to exist but the employee is receiving salary continuance payments (see Q17-7).
Additionally, an eligible employee will not be on leave with pay for a week if the employee continues to perform any of their employment duties during the week, including only minimal duties.
20-04. Does an eligible employer have to reduce the eligible remuneration of an employee for amounts received that are funded by another government program? Updated: November 23, 2020
No. If an eligible employer has received or is reasonably expected to receive an amount as a subsidy or other assistance based on the salary, wages or other remuneration paid to an eligible employee that would otherwise be eligible for the wage subsidy, the amount of the government subsidy or assistance does not reduce the amount of the eligible remuneration used to calculate the wage subsidy for that employee.
However, if the government entity providing the subsidy pays the eligible employee directly, the eligible employer would only be able to claim, for the wage subsidy, the amount of eligible remuneration the employer actually paid to the employee.
The amount that may be claimed by an eligible employer for the wage subsidy is reduced by amounts claimed under the 10% Temporary Wage Subsidy for Employers and by amounts received by the employee as a work-sharing benefit under the Employment Insurance Act.
Note that the amount of the wage subsidy received could affect an eligible employer’s entitlement under other federal or provincial funding programs.
20-1. What is meant by base wage subsidy and top-up wage subsidy for the claim periods 5 to 21? Updated: September 24, 2021
Effective for claim periods 5 to 21, the wage subsidy calculation consist of two parts:
- a base portion of the wage subsidy (base wage subsidy) available to all eligible employers that are experiencing a decline in qualifying revenues, with the wage subsidy amount varying depending on the scale of qualifying revenue decline; and
- a top-up portion of the wage subsidy (top-up wage subsidy), for those eligible employers that have been most adversely affected by the COVID-19 crisis, of up to an additional
- 25% for claim periods 5 to 10;
- 35% for claim periods 11 to 17;
- 25% for claim period 18;
- 15% for claim periods 19 and 20;
- 10% for claim period 21.
20-2. How is the base wage subsidy determined for claim periods 5 to 21? Updated: September 24, 2021
The base portion of the wage subsidy consists of a specified base percentage applicable to the amount of eligible remuneration paid to the eligible employee by the eligible employer for a claim period, on remuneration of up to $1,129 per week. The specified base percentage would vary depending on the level of decline in qualifying revenue (see Table below). In addition, for claim periods 18 and later, the eligible employer must have a revenue reduction percentage greater than 10% to be eligible for the wage subsidy. However, the wage subsidy for employees on leave with pay would continue to be available for claim periods 18 and 19 when the eligible employer has a revenue reduction of greater than 0%.
While a maximum base wage subsidy applies to eligible employers with a revenue reduction percentage of 50% or more, eligible employers with a revenue reduction of less than 50% would be eligible for a lower base wage subsidy, with a phase-out measure when the revenue reduction is between 50% and 0% for claim periods 5 to 17 or between 50% and 10% for claim periods 18 and later (see below).
For each of claim periods 5 to 17, when the revenue reduction is less than 50%, the base percentage is determined by multiplying the revenue reduction percentage by a factor that declines as described below.
For each of claim periods 18 to 21, when the revenue reduction is less than 50% but greater than 10%, the base percentage is determined by multiplying the difference between the revenue reduction percentage and 10% by a factor that declines as described below.
Structure of the base wage subsidy
Claim periods 5 and 6
- 60%, if the employer’s revenue reduction percentage is greater than or equal to 50%; and
- in any other case, 1.2 multiplied by the revenue reduction percentage;
- 50%, if the employer’s revenue reduction percentage is greater than or equal to 50%; and
- in any other case, 1 multiplied by the revenue reduction percentage;
Claim periods 8 to 17
- 40%, if the employer’s revenue reduction percentage is greater than or equal to 50%; and
- in any other case, 0.8 multiplied by the revenue reduction percentage;
Claim period 18
- 35%, if the employer’s revenue reduction percentage is greater than or equal to 50%;
- 0.875 multiplied by the difference between the revenue reduction percentage and 10%, if the employer’s revenue reduction percentage is greater than 10% but less than 50%; and
- in any other case, nil;
Claim periods 19 and 20
- 25%, if the employer’s revenue reduction percentage is greater than or equal to 50%;
- 0.625 multiplied by the difference between the revenue reduction percentage and 10%, if the employer’s revenue reduction percentage is greater than 10% but less than 50%; and
- in any other case, nil;
Claim period 21
- 10%, if the employer’s revenue reduction percentage is greater than or equal to 50%;
- 0.25 multiplied by the difference between the revenue reduction percentage and 10%, if the employer’s revenue reduction percentage is greater than 10% but less than 50%; and
- in any other case, nil.
For a claim period after claim period 21 (see Q2), a percentage determined by regulation, or if there is no percentage determined by regulation for the particular claim period, it is nil. Currently there is no percentage determined by regulation.
Revenue reduction percentage
The revenue reduction percentage, of an eligible employer for a claim period, means the result (expressed as a percentage) of the formula (1 − A/B), where:
- A is the eligible employer’s qualifying revenue for the current reference period for the claim period; and
- B is the eligible employer’s qualifying revenue for the prior reference period for the claim period – or, if the prior reference period is January and February 2020, the amount determined by the formula (see note below), or a period prescribed by regulation in respect of the eligible employer for the claim period (currently there is no period prescribed by regulation).
If the above formula results in a lower revenue reduction percentage in respect of an eligible employer for a particular claim period than for the immediately preceding claim period, then the revenue reduction percentage in respect of the eligible employer for the particular claim period is deemed to be equal to its revenue reduction percentage for the immediately preceding claim period.
Note: the formula is: 0.5xAx(B/C) where
A= qualifying revenues for the months of January and February of 2020
B= number of days in January and February 2020
C= number of days in January and February of 2020 during which the eligible employer was carrying on business —or otherwise carrying on its ordinary activities.
An eligible employer had $50,000 in qualifying revenue in September 2020 (current reference period). For claim period 7, assuming that the employer follows the year-over-year approach to determine its revenue reduction for the claim period, for the prior reference period (September 2019) qualifying revenue was $400,000, the employer has a drop in revenue of $350,000. Consequently, its revenue reduction percentage will be 87.5% (1- $50,000/$400,000, expressed as a percentage).
In respect of a week in the claim period 7, the employer paid eligible remuneration of $500 to its only eligible employee, who at arm’s length and who is not on leave with pay (see Q20-03).
As the revenue drop percentage was more than 50%, the base percentage is 50% and the employer will be eligible for a maximum weekly benefit of $250 ($500 x 50%) in respect of that employee. This amount will be included in the calculation of the wage subsidy (see Q20-01 and 20-02) of the employer.
An eligible employer had $100,000 in qualifying revenue in October 2020 (current reference period). For the claim period 8, the employer uses the alternative method to determine its revenue reduction. Its total qualifying revenue for the months of January and February 2020 (the prior reference period) was $250,000. The qualifying revenue for its prior reference period is 125,000 [0.5x$250,000x(60/60)].Therefore, the employer has a decline in revenue of $25,000. Its revenue reduction percentage is 20% (1- $100,000/$125,000, expressed as a percentage).
In respect of a week in the claim period 8, the employer paid eligible remuneration of $600 to its only eligible employee, who is at arm’s length and who is not on leave with pay (see Q20-03).
As the revenue drop is less than 50%, for claim period 8 the base percentage is calculated as 0.8 multiplied by the revenue reduction percentage, i.e., (0.8 x 20%)=16%. The employer will be eligible for a maximum weekly benefit of $96 ($600 x 16%) in respect of that employee. This amount will be included in the calculation of the wage subsidy of the eligible employer for the claim period 8 (see Q20-02).
The following table shows the structure and calculation of the base portion of the wage subsidy:
Calculation of the base portion of the wage subsidy for claim periods 5 to 17
Period 5
(see note below)Period 6
(see note below)Period 7 Periods 8 to 17 Maximum weekly benefit per employee $677.40 (60%x $1,129) $677.40 (60%x $1,129) $564.50 (50%x $1,129) $451.60 (40%x $1,129) Revenue reduction (RR) Base percentage Base percentage Base percentage Base percentage 50% and over 60% 60% 50% 40% Less than 50% 1.2 x RR (e.g., 1.2 x 20% Footnote 7 = 24%) 1.2 x RR (e.g., 1.2 x 20% Footnote 7 = 24%) 1.0 x RR (e.g., 1.0 x 20% Footnote 7 = 20%) 0.8 x RR (e.g., 0.8 x 20% Footnote 7 = 16%) Calculation of the base portion of the wage subsidy for claim periods 18 to 21
Period 18 Periods 19 and 20 Period 21 Maximum weekly benefit per employee $395.15 (35% x $1,129) $282.25 (25% x $1,129) $112.90 (10% x $1,129) Revenue reduction (RR) Base percentage Base percentage Base percentage 50% and over 35% 25% 10% More than 10% but less than 50% (RR- 10%) x 0.875 (e.g., (20% Footnote 7 – 10%) x 0.875 = 8.75%) (RR- 10%) x 0.625 (e.g., (20% Footnote 7 – 10%) x 0.625 = 6.25%) (RR- 10%) x 0.25 (e.g., (20% Footnote 7 – 10%) x 0.25 = 2.5%) 10% or less 0% Footnote 11 0% Footnote 11 0% Note: Transition rules (see Q5-04)- Under the safe harbour rule for claim periods 5 and 6, if the eligible employer has a revenue reduction of 30% or more, then the employer is entitled to a wage subsidy not lower than the amount calculated under the rules that were in place for claim periods 1 to 4 in respect of an eligible employee who is not on leave with pay (see Q20-03) for that week.
The overall wage subsidy percentage would be equal to the base percentage plus the top-up percentage.
20-3. How is the top-up wage subsidy calculated for claim periods 5 to 21? Updated: September 24, 2021
Under the general year-over-year approach, for claim periods 5 to 7, the top-up wage subsidy is calculated based on the revenue drop experienced when comparing the average monthly qualifying revenues of the eligible employer in the last 3 calendar months that ended prior to the current reference period for the claim period, to the average monthly qualifying revenues for the same months in the prior year. For claim periods 8 to 10, the top-up wage subsidy is based on the greater of the revenue reduction as calculated above (three month revenue reduction test) and the revenue reduction for the claim period (one month revenue reduction test) (see Q20-2). For claim periods 11 to 21, the top-up wage subsidy is based solely on the one month revenue reduction test for the claim period.
Under the alternative approach, for claim periods 5 to 7, an eligible employer’s top-up wage subsidy would be determined based on the revenue drop experienced when comparing average monthly qualifying revenue in the last 3 calendar months that ended prior to the current reference period for the claim period, to the average monthly revenue in January and February 2020. For claim periods 8 to 10, it will be based on the greater of the percentage calculated as above (three month revenue reduction test) and the revenue reduction percentage (one month revenue reduction test) of the eligible employer for the claim period. For claim periods 11 to 21, the top-up wage subsidy is based solely on the one month revenue reduction test for the claim period.
Top-up revenue reduction percentage
For claim periods 5 to 7 (three month revenue reduction test)
The top-up revenue reduction percentage of an eligible employer for claim periods 5 to 7, means the result, expressed as a percentage, of:
- A is the average monthly qualifying revenue of the eligible employer for the last three calendar months that ended prior to the current reference period for the claim period;
- B is the average monthly qualifying revenue of the employer for:
- (a) if the prior reference period for the claim period is January and February 2020, then January and February 2020, and
- (b) in any other case, the last three calendar months that ended before the prior reference period for the claim period.
For claim periods 8 to 10 (safe harbour rule for top-up wage subsidy calculation)
The top-up revenue reduction percentage of an eligible employer for claim periods 8 to 10 is the greater of (see Example 20-3B):
- the result (expressed as a percentage) of the formula described above (three month revenue reduction test), and
- its revenue reduction percentage (see Q 20-2) for the claim period (one month revenue reduction test)
For claim periods 11 to 21 (one month revenue reduction test)
The top-up revenue reduction percentage of an eligible employer for claim periods 11 to 21 is equal to its revenue reduction percentage (see Q 20-2) for each of those claim periods.
Top-up percentage
For claim periods 5 to 10, the top-up percentage, of an eligible employer for a claim period, means the percentage determined by regulation for the claim period (currently there is none) or, if there is no percentage determined by regulation for the claim period, the lesser of 25% and the percentage determined by the formula:
1.25 × (employer’s top-up revenue reduction percentage for the claim period − 50%)
If the top-up revenue reduction percentage of the eligible employer is equal to or less than 50%, the employer will not be eligible for the top-up wage subsidy.
As with the base percentage, the top-up percentage applies to eligible remuneration of up to $1,129 per week.
The following table shows the top-up percentage for selected levels of top-up revenue reduction percentage for claim periods 5 to 10.
Top-up percentage examples for claim periods 5 to 10
Top-up revenue reduction percentage Top-up percentage Top-up percentage= 1.25 x (top-up revenue reduction percentage – 50%) 70% and over 25% 1.25 x (70% - 50%) = 25% 65% 18.75% 1.25 x (65% - 50%) = 18.75% 60% 12.5% 1.25 x (60% - 50%) = 12.5% 55% 6.25% 1.25 x (55% - 50%) = 6.25% 50% and under 0.0% 1.25 x (50% - 50%) = 0% The overall wage subsidy percentage would be equal to the top-up percentage plus the base percentage.
For claim period 7 (August 30 to September 26, 2020), the last three calendar months that ended before the relevant reference period for the claim period (September) would be June, July and August. Assuming that the employer follows the year-over-year approach to determine its revenue reduction for the claim period, the eligible employer had $900,000 as its average monthly qualifying revenue between June 1 and August 31, 2019. The employer’s average monthly qualifying revenue between June 1 and August 31, 2020 was $180,000. Therefore, the employer has a drop in revenue of $720,000. Consequently its top-up revenue reduction percentage is 80% (1- $180,000/$900,000, expressed as a percentage).
The top-up percentage is 25%, being the lesser of 25% and 37.5% [1.25 x (80%-50%)].
In respect of a week in the claim period, the employer has paid eligible remuneration of $600 to its sole eligible employee. As its top-up revenue reduction percentage is over 50%, it would receive a top-up rate equal to 1.25 times the average monthly revenue drop that exceeds 50%, up to a maximum top-up rate of 25%. It would be eligible for a maximum top-up wage subsidy of $150 ($600 x 25%) in respect of that employee. This amount will be included in the calculation of the wage subsidy (see Q20-02).
Assume that an eligible employer follows the year-over-year approach to determine its revenue reduction for claim periods 5 to 10. The employer would like to determine its wage subsidy for claim period 8.
For claim period 8 (September 27 to October 24, 2020), the last three calendar months that ended prior to the relevant reference period for the claim period (October) would be July, August and September.
The employer had $900,000 as its average monthly qualifying revenue between July 1 and September 30, 2019. The employer’s average monthly qualifying revenue between July 1 and September 30, 2020 was $350,000. Therefore the employer has experienced a drop in revenue of $550,000. Consequently, its top-up revenue reduction percentage is 61.11% (1-$350,000/$900,000, expressed as a percentage).
The employer had $50,000 in qualifying revenue in October 2020 (current reference period), and $400,000 for the prior reference period (September 2019). The employer has a drop in revenue of $350,000. Therefore, its revenue reduction percentage will be 87.5% (1- $50,000/$400,000, expressed as a percentage).
For claim period 8, the top-up revenue reduction percentage of the employer is the greater of:
- 61.11% (1-$350,000/$900,000) – based on the three month revenue reduction test, and
- 87.5% (1- $50,000/$400,000) –based on the one month revenue reduction test,
Therefore, its top-up revenue reduction percentage is 87.5%.
The top-up percentage is 25%, which is the lesser of 25% and 46.85% [1.25 x (87.5%-50%)].
In respect of a week in claim period 8, assume that the employer has paid eligible remuneration of $600 to its only arm’s length eligible employee, who is not on leave with pay (see Q20-03).
It would be eligible for a top-up wage subsidy of $150 ($600 x 25-%). This amount will be included in the calculation of the wage subsidy (see Q20-02).
The overall wage subsidy percentage would be equal to the top-up percentage plus the base percentage. Eligible remuneration to be included in the wage subsidy calculation for claim period 8 in respect of an employee for a week in the claim period is calculated as:
((base rate +top-up rate for period 8) x eligible remuneration paid to the employee (subject to a maximum of $1,129), for the week).
The total $390 will be included in the calculation of the wage subsidy of the employer for the claim period 8 (see Q20-02).
The top-up percentage of an eligible employer for claim periods 11 to 21 means:
- For claim periods 11 to 17, the lesser of 35% and the percentage determined by the formula: 1.75 × (employer’s top-up revenue reduction percentage for the claim period − 50%)
- For claim period 18, the lesser of 25% and the percentage determined by the formula: 1.25 × (employer’s top-up revenue reduction percentage for the claim period − 50%)
- For claim periods 19 and 20, the lesser of 15% and the percentage determined by the formula: 0.75 × (employer’s top-up revenue reduction percentage for the claim period − 50%)
- For claim period 21, the lesser of 10% and the percentage determined by the formula: 0.5 × (employer’s top-up revenue reduction percentage for the claim period − 50%)
If the top-up revenue reduction percentage of the eligible employer is equal to or less than 50%, the employer will not be eligible for the top-up wage subsidy.
As with the base percentage, the top-up percentage applies to eligible remuneration of up to $1,129 per week.
The following table shows the top-up percentage for selected levels of top-up revenue reduction percentage for claim periods 11 to 17.
Top-up percentage examples for claim periods 11 to 17
Top-up revenue reduction percentage* Top-up percentage Top-up percentage= 1.75 x (top-up revenue reduction percentage* – 50%) 70% and over 35% 1.75 x (70% - 50%) = 35% 65% 26.25% 1.75 x (65% - 50%) = 26.25% 60% 17.5% 1.75 x (60% - 50%) = 17.5% 55% 8.75% 1.75 x (55% - 50%) = 8.75% 50% and under 0.0% 1.75 x (50% - 50%) = 0% The overall wage subsidy percentage would be equal to the top-up percentage plus the base percentage.
* For claim periods 11 to 17, an eligible employer’s top-up revenue reduction percentage is equal to its revenue reduction percentage (see Q 20-2) for the claim period.
The following table shows the top-up percentage for selected levels of top-up revenue reduction percentage for claim periods 8 to 21.
Period 18 Periods 19 and 20 Period 21 Top-up revenue reduction percentage* Top-up percentage= 1.25 x (top-up revenue reduction percentage* – 50%) Top-up percentage= 0.75 x (top-up revenue reduction percentage* – 50%) Top-up percentage= 0.5 x (top-up revenue reduction percentage* – 50%) 70% and over 1.25 x (70% - 50%) = 25% 0.75 x (70% - 50%) = 15% 0.5 x (70% - 50%) = 10% 65% 1.25 x (65% - 50%) = 18.75% 0.75 x (65% - 50%) = 11.25% 0.5 x (65% - 50%) = 7.5% 60% 1.25 x (60% - 50%) = 12.5% 0.75 x (60% - 50%) = 7.5% 0.5 x (60% - 50%) = 5.0% 55% 1.25 x (55% - 50%) = 6.25% 0.75 x (55% - 50%) = 3.75% 0.5 x (55% - 50%) = 2.5% 50% and under 1.25 x (50% - 50%) = 0% 0.75 x (50% - 50%) = 0% 0.5 x (50% - 50%) = 0% The overall wage subsidy percentage would be equal to the top-up percentage plus the base percentage.
* For claim periods 18 to 21, an eligible employer’s top-up revenue reduction percentage is equal to its revenue reduction percentage (see Q 20-2) for the claim period.
20-4. When will an employer be eligible for both the base portion and the top-up portion of the wage subsidy? Updated: September 24, 2021
An eligible employer may be eligible for both the base wage subsidy (see Q20-2) and the top-up wage subsidy (see Q20-3) for the same claim period. The example below describes a situation when an eligible employer may be eligible for both the base and top-up wage subsidy.
For claim period 7 (August 30 to September 26, 2020), Aco Inc., an eligible employer, had $300,000 in qualifying revenue in September 2019 (prior reference period), and $80,000 in qualifying revenue in September 2020 (current reference period). Aco Inc. follows the general year-over-year approach to calculate its drop in qualifying revenue. Under this approach, Aco Inc. has a revenue reduction percentage of 73.33% (1-$80,000/$300,000, expressed as a percentage).
Aco Inc.’s base percentage = 50% (since its revenue reduction percentage is greater than 50%, see Table in Q20-2)
Aco Inc., had $600,000 as its 3-month average qualifying revenue between June 1 and August 31, 2019. Its 3-month average qualifying revenue between June 1 and August 31, 2020 was $210,000. Under the general year-over-year approach, Aco Inc. has a top-up revenue reduction percentage of 65% (1-$210,000/$600,000, expressed as a percentage). Since Aco Inc.’s top-up revenue reduction percentage is greater than 50%, it is eligible for the top-up portion of the wage subsidy for claim period 7 (August 30 to September 26, 2020).
Aco Inc.’s top-up percentage = 18.75% [1.25x(65% -50%), expressed as a percentage]
Note: Unlike for claim periods 8 to 10 (see Example 20-3C), the eligible employer does not have the option to determine the top-up revenue reduction percentage based on the one month revenue reduction test.
In respect of a week in claim period 7, Aco Inc. has paid an eligible remuneration of $1,200 to each of its two employees (who are arm’s length and not on leave with pay).
The overall wage subsidy percentage would be equal to the top-up percentage plus the base percentage.
Eligible remuneration to be included in Aco Inc.’s wage subsidy calculation for claim period 7 in respect of an employee for a week in the claim period is:
((base rate +top-up rate for claim period 7) x eligible remuneration paid to the employee (subject to a maximum of $1,129), for the week).
The total for the two employees, $1,552.38, will be included in the calculation of the wage subsidy of Aco Inc. for the claim period 7 (see Q20-02).
The following table shows the maximum combined base portion (BP) and top-up portion of the wage subsidy percentages for claim periods 5 to 17.
The maximum combined base portion (BP) and top-up portion of the wage subsidy percentages for claim periods 5 to 17
Period 5 (see note below) Period 6 (see note below) Period 7 Periods 8 to 10 Periods 11 to 17 Maximum weekly benefit per employee $959.65 (85%x $1,129) $959.65 (85%x $1,129) $846.75 (75%x $1,129) $733.85 (65%x $1,129) $846.75 (75%x$1,129) Revenue reduction (RR) in the current 1-month reference period 50% and over 85% (60% BP + 25% top-up Footnote 6 ) 85% (60% BP + 25% top-up Footnote 6 ) 75% (50% BP + 25% top-up Footnote 6 ) 65% (40% BP + 25% top-up Footnote 6 ) 75% (40% BP + Footnotes 6 and 10 35% top-up) Less than 50% 1.2 x RR + 25% Footnote 6 (e.g., 1.2 x 20% Footnote 7 + 25% top-up = 49%) 1.2 x RR + 25% Footnote 6 (e.g., 1.2 x 20% Footnote 7 + 25% top-up = 49%) 1.0 x RR + 25% Footnote 6 (e.g., 1.0 x 20% Footnote 7 + 25% top-up = 45%) 0.8 x RR + 25% Footnote 6 (e.g., 0.8 x 20% Footnote 7 + 25% top-up = 41%) 0.8 x RR Footnote 10 Note: Transition rules (see Q5-04) Under the safe harbour rule for claim periods 5 and 6, if the eligible employer has a revenue reduction of 30% or more, then the employer is entitled to a wage subsidy not lower than the amount calculated under the rules that were in place for claim periods 1 to 4 in respect of an eligible employee who is not on leave with pay (see Q20-03) for that week.
The maximum combined BP and top-up portion of the wage subsidy percentages for claim periods 18 to 21.
Period 18 Periods 19 and 20 Period 21 Maximum weekly benefit per employee $677.40 (60% x $1,129) $451.60 (40% x $1,129) $225.80 (20% x $1,129) Revenue reduction (RR) in the current 1-month reference period 50% and over 60% (35% BP + 25% Footnote 6 top-up) 40% (25% BP + 15% Footnote 6 top-up) 20% (10% BP + 10% Footnote 6 top-up) More than 10% but less than 50% (RR- 10%) x 0.875 Footnote 10 (e.g. (20% Footnote 7 - 10%)x 0.875 = 8.75%) (RR- 10%) x 0.625 Footnote 10 (e.g. (20% Footnote 7 - 10%)x 0.625 = 6.25%) (RR- 10%) x 0.25 Footnote 10 (e.g. (20% Footnote 7 - 10%)x 0.25 = 2.5%) Equal or less than 10% 0% Footnote 11 0% Footnote 11 0% 20-5. Can an eligible employer round its revenue reduction percentage or related percentages when calculating the wage subsidy? Updated: September 24, 2021
Yes, an eligible employer can round their revenue reduction percentage and related percentages to the nearest hundredth (second decimal place) for purposes of calculating the amount of their wage subsidy. However, rounding of the revenue reduction percentage is not permitted for purposes of meeting a particular threshold (i.e., the 50% top-up threshold; the 30% threshold for claim periods 1 to 4; the 10% threshold for claim periods 18 to 21 and the safe harbour rule). Related percentages include base percentage, top-up percentage, and top-up revenue reduction percentage.
Note that both the wage subsidy application form and the wage subsidy on-line calculator use two decimal places (i.e., are rounded to the nearest hundredth), for the revenue reduction percentage and related percentages. While an employer can choose to calculate the wage subsidy amount with a revenue reduction percentage containing more than two decimal places, a maximum of two decimal places can be entered for that percentage on their application form.
An eligible employer using the general year-over-year approach to determine its reduction in revenue has qualifying revenues in June 2019 of $100,000 and June 2020 of $70,005, which is a revenue reduction of 29.995% for claim period 4 [1-$70,005/$100,000 expressed as a percentage]. Its revenue reduction for claim period 3 was 25.75%. This employer is not eligible for the wage subsidy for claim period 4 as its revenue reduction for the claim period is less than 30%. The employer cannot round the calculated percentage to 30% in order to meet the 30% revenue reduction threshold.
An eligible employer using the general year-over-year approach to determine its reduction in revenue has qualifying revenues in July 2019 of $50,000 and July 2020 of $35,002, which is a revenue reduction percentage of 29.996% for claim period 5 [1-$35,002/$50,000 expressed as a percentage]. Its revenue reduction percentage for claim period 4 is 20.05%. This employer is not eligible to use the safe harbour rule (see Q5-04) for claim period 5 in respect of eligible employees who are not on leave with pay, because its revenue reduction percentage for the claim period is less than 30%. The employer cannot round the calculated percentage up to 30% in order to meet the safe harbour threshold. The employer can use a rounded percentage of 36.00% for claim period 5 (base percentage calculation is 29.996% x 1.2 = 35.9952%). The employer may also be eligible for an additional top-up wage subsidy (see Q20-3).
An eligible employer using the general year-over-year approach to determine its reduction in revenue has qualifying revenues in September 2019 of $40,000 and September 2020 of $16,555, which is a revenue reduction percentage of 58.612% for claim period 7 [1-$16,555/$40,000 expressed as a percentage]. Its revenue reduction percentage for claim period 6 was 36.56%. The employer can use a rounded percentage 58.61% for claim period 7 (base percentage calculation is 58.612% x 1.0 = 58.612%).
For claim period 7, an eligible employer’s monthly average qualifying revenue for the 3 months immediately before its current reference period is $343,500 and its average monthly qualifying revenue for the 3 months immediately before its prior reference period is $900,000.
The employer can use a rounded top-up revenue reduction percentage of 61.83% (1-$343,540/$900,000 = 0.61829) for claim period 7.
21. Will I be eligible for both the Canada Emergency Wage Subsidy and the 10% Temporary Wage Subsidy for Employers?
You may be eligible for both the Canada Emergency Wage Subsidy (CEWS) and the 10% Temporary Wage Subsidy for Employers (10% temporary wage subsidy). However, for an eligible employer that is eligible for both subsidies for a period, all amounts that the employer claims under the 10% temporary wage subsidy for remuneration paid in a specific claim period, reduce the amount available to be claimed under the CEWS in that same period.
The 10% temporary wage subsidy is equal to 10% (or a lower percentage that the employer elects - see note below), of the remuneration that an eligible employer pays from March 18, 2020 to June 19, 2020, up to $1,375 for each employee, to a maximum of $25,000 total per employer.
If the income taxes you deduct with respect to the remuneration you paid are not sufficient to offset the value of the subsidy in that period, you can reduce future payroll remittances to benefit from the subsidy. However, the entire amount claimed under the 10% temporary wage subsidy must be applied to reduce the CEWS for the claim period in which the remuneration is paid.
Note: If an eligible employer completes their CEWS application and does not enter any amount for the 10% temporary wage subsidy, the CEWS will be determined as if the employer is electing 0% as the prescribed percentage for calculating their 10% temporary wage subsidy and requesting the maximum CEWS. However, the eligible employer should indicate the 0% election on the self-identification form under the 10% temporary wage subsidy program.
Assume an eligible employer is eligible for both the subsidies. It calculates its 10% temporary wage subsidy as $2,050 on remuneration paid from April 12 to May 9, 2020 (which coincides with the second claim period), using the 10% rate. However, it only deducted $1,050 of federal, provincial, or territorial income tax from its employees for that period.
While the eligible employer can still reduce a future payroll remittance by $1,000 in respect of the balance (even if that remittance is in respect of remuneration paid after May 9, 2020), its CEWS claim for the same period (April 12 to May 9, 2020), is reduced by the entire amount of $2,050.
In Example 21A, assume the eligible employer elects to apply a percentage less than 10% to determine the 10% temporary wage subsidy such that the subsidy is now only $1,050. It is now able to offset the entire $1,050 of the subsidy against the $1,050 from the federal, provincial, or territorial income tax withheld from its employees for that period. In this situation, its CEWS claim for the same period (April 12, to May 9, 2020), is reduced by only $1,050.
Now assume in Example 21A, the eligible employer elects a percentage of 0% for the 10% temporary wage subsidy. Consequently that subsidy will be nil on remuneration paid from April 12, to May 9, 2020 (which coincides with the second claim period). In this situation, it does not reduce the amount of federal, provincial, or territorial income tax withheld from its employees for that period. In addition, its CEWS claim for the same period (April 12, to May 9, 2020), is not reduced. Where the eligible employer does not claim any amount, it should indicate the 0% election on the self-identification form under the 10% temporary wage subsidy program.
21-1. Can I claim both the wage subsidy and the Canada Recovery Hiring Program (CRHP) for the same claim period? New: July 2, 2021
No. If an eligible employer is eligible for both the wage subsidy and the CRHP for a claim period, it must claim the greater of the two subsidy amounts for that claim period, but not both. If the CRHP amount is the greater of the two, then the wage subsidy amount will be deemed to be nil, and vice versa. For example, in claim period 17, if the CRHP amount is greater than the wage subsidy, the eligible employer will apply for the CRHP and the wage subsidy amount will be deemed to be nil. For more details, please refer to the questions and answers (Qs & As) on the Canada Recovery Hiring Program on the CRA webpage Budget 2021 - A Recovery Plan for Jobs, Growth, and Resilience.
21-2. Which subsidy should I claim if my wage subsidy amount and my CRHP amount are equal for the same claim period? New: July 2, 2021
If the CRHP amount and the wage subsidy amount are equal for the same claim period, the eligible employer must claim the wage subsidy amount, and the CRHP amount will be deemed to be nil.
21-3. Will I be able to claim the wage subsidy for a claim period if I claimed the CRHP in a previous claim period or vice versa? New: July 2, 2021
Yes. You can claim the wage subsidy for a claim period if you claimed the CRHP in a previous claim period or vice versa. There is no legislative provision which requires that the subsidy you claim in the current claim period be the same as the one you claimed in the previous claim period.
22. Can I claim the wage subsidy for an eligible employee even if they were hired after March 15, 2020? Updated: August 31, 2020
Yes, an eligible employer may be able to claim the wage subsidy for eligible remuneration paid to eligible employees hired after March 15, 2020.
However, for an eligible employee that does not deal at arm's-length with the eligible employer, it may be able to claim the wage subsidy only if that employee was employed by the eligible employer and has been paid eligible remuneration during the period that begins on January 1, 2020 and ends on March 15, 2020 (or where the eligible employer elects, such an amount has been paid during the relevant baseline remuneration period indicated in Q18).
ABC Ltd. is an eligible employer and John is the sole shareholder of the corporation having two employees. It laid off its employees at the beginning of March 2020. However, on March 16, ABC Ltd. hires two new employees, Ali and John's wife Sally. Since Sally does not deal at arm's length with ABC Ltd. and she was not an employee of ABC Ltd. prior to March 16, 2020, ABC Ltd. will not be eligible for wage subsidy in respect of eligible remuneration paid to Sally. Provided Ali otherwise qualifies as an eligible employee of ABC Ltd. and receives eligible remuneration, ABC Ltd. may be eligible to claim wage subsidy in respect of the eligible remuneration paid to Ali.
23. Can an eligible employer claim the wage subsidy for an eligible employee even if they do not deal at arm's length with each other? Updated: August 31, 2020
An eligible employer may be eligible to claim the wage subsidy in respect of an eligible employee who does not deal at arm's length with it, provided the individual was an eligible employee of the eligible employer anytime during the period beginning January 1 and ending March 15, 2020, and was paid eligible remuneration for that time or, where the eligible employer elects, such an amount was paid during the relevant baseline remuneration period indicated in Q18. Further, the eligible employer may elect, for each claim period in respect of an employee, a different baseline remuneration period (relevant for that claim period), to calculate the average weekly eligible remuneration.
In Example 22A, if Sally was an eligible employee of ABC Ltd. who received eligible remuneration anytime during the period beginning January 1 and ending March 15, 2020 or during the relevant baseline remuneration period indicated in Q18 (and ABC Ltd. elects for the relevant period to apply in respect of Sally). In this scenario, even if Sally was laid off and rehired after March 15, 2020, ABC Ltd. may be eligible for a wage subsidy for a claim period that Sally was employed, provided she received baseline remuneration during the relevant period that is applicable to the particular claim period.
24. Is there a special rule for the amount of wage subsidy that can be claimed if an eligible employee is employed by two or more eligible employers?
Generally, there is no limit on the wage subsidy amount that an eligible employer may claim or the total number of eligible employees it could employ during the claim period. However, there is a special rule where an eligible employee is employed in a week by two or more eligible employers that do not deal with each other at arm's length. In this situation, the total amount of wage subsidy in respect of the eligible employee for that week cannot exceed the amount that would arise if the eligible employee's eligible remuneration for that week were paid by only one eligible employer that qualifies for the wage subsidy.
25. Is the wage subsidy considered taxable income?
Yes. The wage subsidy received by an eligible employer is considered assistance received from a government immediately before the end of the claim period to which it relates. The amount is taxable and is to be included in computing the income of the eligible employer. The eligible remuneration paid to the employee will be a deductible expense for the employer.
However, the wage subsidy received by the eligible employer will not be included in the calculation of its qualifying revenue.
Claiming the wage subsidy
26. When can I claim the wage subsidy? Updated: September 24, 2021
The wage subsidy program opened for applications from qualifying eligible employers on April 27, 2020.
Applications in respect of a claim period can be made only after the end of the claim period. In addition, at the time of application, the amount of eligible remuneration used to calculate the wage subsidy amount for that claim period must have already been paid.
Furthermore, wage subsidy applications must be made on or before the later of
- January 31, 2021 (see note below), and
- 180 days after the end of the claim period.
Application due dates
Claim period Due date Period 1 – March 15 to April 11, 2020 Monday, February 1, 2021 Period 2 – April 12 to May 9, 2020 Monday, February 1, 2021 Period 3 – May 10 to June 6, 2020 Monday, February 1, 2021 Period 4 – June 7 to July 4, 2020 Monday, February 1, 2021 Period 5 – July 5 to August 1, 2020 Monday, February 1, 2021 Period 6 – August 2 to August 29, 2020 Thursday, February 25, 2021 Period 7 – August 30 to September 26, 2020 Thursday, March 25, 2021 Period 8 – September 27 to October 24, 2020 Thursday, April 22, 2021 Period 9 – October 25 to November 21, 2020 Thursday, May 20, 2021 Period 10 – November 22 to December 19, 2020 Thursday, June 17, 2021 Period 11 – December 20, 2020 to January 16, 2021 Thursday, July 15, 2021 Period 12 – January 17 to February 13, 2021 Thursday, August 12, 2021 Period 13 – February 14 to March 13, 2021 Thursday, September 9, 2021 Period 14 – March 14 to April 10, 2021 Thursday, October 7, 2021 Period 15 – April 11 to May 8, 2021 Thursday, November 4, 2021 Period 16 – May 9 to June 5, 2021 Thursday, December 2, 2021 Period 17 – June 6 to July 3, 2021 Thursday, December 30, 2021 Period 18 – July 4 to July 31, 2021 Thursday, January 27, 2022 Period 19 – August 1 to August 28, 2021 Thursday, February 24, 2022 Period 20 – August 29 to September 25, 2021 Thursday, March 24, 2022 Period 21 – September 26 to October 23, 2021 Thursday, April 21, 2022 Note: Since January 31, 2021 is a Sunday, the last day to apply for claim periods 1 to 5 was February 1, 2021.
26-01. Under what circumstances will the CRA accept my late-filed amended application for the wage subsidy? New: April 21, 2021
The CRA will accept your late-filed amended wage subsidy application in certain circumstances.
If you determine that you received a wage subsidy amount in excess of what you are entitled to then you can submit an amended application to reduce your wage subsidy amount (referred to as a downward adjustment) at any time, even after the deadline for the particular claim period. You can submit your amended application using My Business Account or Represent a Client, or by calling Business Enquiries if you filed via the web application.
If, after the deadline for a claim period has passed, you determine that you might have been entitled to a higher wage subsidy amount than what you previously claimed for that claim period, contact the CRA Business Enquiries phone line to see if you are eligible to file an amended application to increase the wage subsidy amount (referred to as an upward adjustment) after the applicable deadline. If you are eligible, you can then submit your amended application using My Business Account or Represent a Client, or by obtaining further direction from Business Enquiries if you filed via the web application.
The circumstances in which the CRA may accept your amended application for review after the filing deadline include:
- You made an error in filing your wage subsidy application prior to the filing deadline as a result of an arithmetic error, transposition error, or unintended omission of additional business activities or employment expenses;
- You relied upon inaccurate information provided to you inadvertently by the CRA that directly affected your ability to file your amended wage subsidy application on time;
- There was an identified outage of CRA secure portals that prevented you from filing the amended application prior to the applicable deadline; or
- There was undue delay on the part of the CRA in processing an application or providing required guidance impacting the particular application.
- The upward adjustment request is not the result of professional advice the fee structure for which was dependent on the upward adjustment amount; and
- The late-filed amended wage subsidy application request for an upward adjustment was made to the Business Enquiries phone line within 30 calendar days following the later of:
- April 21, 2021; and
- The applicable filing deadline.
In the case of late-filed amended wage subsidy application that is accepted for review through the secure portal, and after the review is either accepted, adjusted or denied, a Notice of Determination will be issued to you by the CRA. Please see Q #36 for an explanation of your recourse rights when you receive a Notice of Determination.
If your late-filed amended wage subsidy application was rejected for review by the CRA and not processed through the secure portal because you did not meet one of the above noted criteria, you may then seek a further review by submitting your request online by logging into My Business Account and selecting “Register a formal dispute”.
26-02. Under what circumstances will the CRA accept my late-filed original application for the wage subsidy? New: April 21, 2021
The CRA will accept your late-filed wage subsidy original application only in exceptional circumstances. You must make every attempt to file your wage subsidy application on or before the deadline. If, however, you determine that you are entitled to a wage subsidy amount for a particular claim period for which you did not file an application on or before the applicable filing deadline, contact the CRA Business Enquiries phone line to see if you are eligible to file the application after the applicable deadline. If you are eligible, you can then submit your late-filed application using My Business Account, Represent a Client or via the web application.
The circumstances in which the CRA may accept your original application for review after the filing deadline include:
- It is evident that you attempted to file your application before the applicable deadline but there was an identified outage of CRA secure portals that prevented you from filing the application prior to the applicable deadline;
- It is evident that you attempted to file your application before the applicable deadline but your specific account was temporarily suspended or there was some other account limitation that prevented the filing of the application prior to the applicable deadline;
- It is evident that you attempted to file your application before the applicable deadline, and there was undue delay on the part of the CRA in receiving and processing your wage subsidy application before the deadline; or
- You relied upon inaccurate information provided to you inadvertently by the CRA that directly affected your ability to file your original wage subsidy application on time.
- The late filed wage subsidy claim is not the result of professional advice the fee structure for which was dependent on the claim amount; and
- The late-filed wage subsidy application request was made to the Business Enquiries phone line within 30 calendar days following the later of:
- April 21, 2021; and
- The applicable filing deadline.
In the case of a late-filed wage subsidy application that is accepted for review through the secure portal, and after the review is either accepted, adjusted or denied, a Notice of Determination will be issued to you by the CRA. Please see Q #36 for an explanation of your recourse rights when you receive a Notice of Determination.
If your late-filed wage subsidy application was rejected for review by the CRA and not processed through the secure portal because you did not meet one of the above noted criteria then you may seek a further review by submitting your request online by logging into My Business Account and selecting “Register a formal dispute”.
26-1. How do my biweekly, monthly, or semi-monthly pay periods align with the eligible remuneration paid in respect of each week?
An eligible employer’s payroll frequency (whether biweekly, semi-monthly, monthly, etc.) has no effect on the calculation of eligible remuneration paid for purposes of the wage subsidy. While the eligible remuneration must have been paid to the eligible employee, it does not matter whether the employee receives their paycheque for a week at the end of the week, at the end of the month, or otherwise. If an employer’s payroll cycle does not align with the wage subsidy for the claim periods, they will have to do a manual calculation to reflect the remuneration paid in respect of that claim period. Employers will not be permitted to use an average of the daily wages paid. The eligible remuneration reported on an employer’s wage subsidy application must reflect the actual amount paid in respect of the claim period.
Below are two examples of when an eligible employer can claim the wage subsidy if it pays their eligible employees on a monthly basis.
An eligible employer pays its sole eligible employee monthly, on the first of each month for the previous month, based on an annual salary of $52,000 per year. The eligible employee would therefore have $1,000 of pay for each of the four weeks in the first claim period (that begins on March 15, 2020 and ends on April 11, 2020 ).
Once the eligible employer has paid the eligible employee for each of the weeks in the claim period, the eligible employer would be able to apply for the wage subsidy. In this example, that would be after the eligible employee is paid on May 1, 2020 , because the eligible employee's April 1, 2020 paycheque does not reflect the eligible employee's salary for a portion of the first claim period (i.e., April 1, 2020 to April 11, 2020 ).
The wage subsidy would be calculated based on the $1,000 per week that the eligible employee is paid for each of the weeks in the first claim period.
Similarly, the eligible employer would be able to apply for the wage subsidy for the second claim period (that begins on April 12, 2020 and ends on May 9, 2020 ) after it has paid the eligible employee for each of the weeks in that claim period. This would be after the June 1, 2020 paycheque is paid and would also be calculated based on the $1,000 per week that the eligible employee is paid for each of the weeks in the second claim period.
If the eligible employer does not qualify for the wage subsidy in the third claim period (that begins on May 10, 2020 and ends on June 6, 2020 ), the eligible employer would still be entitled to the wage subsidy in respect of the eligible employee's salary for the second claim period even though the June 1, 2020 paycheque is paid during the third claim period. That is because the wage subsidy calculation is based on an eligible employee's pay for each of the weeks in the relevant claim period regardless of the eligible employer's pay cycle.
The facts are the same as in example 26-1A, except that the eligible employer had laid off the eligible employee in early March 2020 and, in May 2020 , the eligible employer rehired the eligible employee retroactive to March 15, 2020 . In this example, the eligible employee is paid for the period from March 15 to the end of May in their June 1, 2020 paycheque.
As with the first example, the eligible employer would be able to apply for the wage subsidy in respect of each of the first two claim periods after it pays its eligible employee for the weeks covering these claim periods (i.e., on June 1, 2020 ) and the wage subsidy would be calculated based on the $1,000 per week that the eligible employee is paid for those weeks. The wage subsidy in relation to remuneration paid in respect of the third claim period (from May 10 to June 6 ) could then be claimed after the July 1, 2020 paycheque, assuming the eligible employer qualifies for wage subsidy for the third claim period.
26-2. Can I use an average daily wage if my payroll cycle does not align exactly with the wage subsidy claim period or do I have to use an exact daily figure?
In calculating the wage subsidy for an eligible employee for a particular week in a claim period, the eligible employer takes into account amounts paid to the employee in respect of that week. If an employee’s remuneration fluctuates from day to day, for example depending on shifts and hours worked, employers will not be permitted to use an average of the daily wages paid to calculate the subsidy. In addition, an employer cannot use an average of total daily wages for all eligible employees to calculate the total subsidy for each week, as the subsidy must be determined on an employee-by-employee basis.
27. How do I claim the wage subsidy?
Eligible employers will be able to apply for the wage subsidy through the CRA's My Business Account portal or the Web Forms application.
Representatives (authorized at a level 2 or 3) will be able to apply for the wage subsidy on behalf of their clients through the Represent a Client service, as well as through the Web Forms application.
To log in to or register for the CRA's online services, go to canada.ca/taxes-business-online.
To use the Web Forms application, or if you have misplaced or do not have a web access code, go to canada.ca/taxes-iref.
When completing the application, you will need:
- your payroll program account number (123456789RP0001, for example);
- to know which claim period you are applying for;
- all of the information necessary to complete the applicable fields in the application.
The processing of the wage subsidy will be performed at the payroll program account level, so you will have to file a separate application for each payroll program account. For example, if you have two payroll program accounts (123456789RP0001 and 123456789RP0002, for example) and are claiming wage subsidy for eligible employees under each account, you must file 2 separate applications.
When you apply for the wage subsidy, you will be asked to enter amounts such as the number of eligible employees and total eligible remuneration paid to those employees in respect of the claim period. To get ready, we have created a web page where you can determine these amounts and preview your subsidy now, based on information you enter. For more information, go to Calculate your subsidy amount.
Upon completion of your application, you will be required to keep records supporting your wage subsidy claim (see Q33).
28. How soon can I expect to receive my wage subsidy after applying?
For most complete applications that pass our system validations, a payment will be issued automatically, though some applications may be selected for a pre-claim review.
While delays may occur if additional review is required or the CRA needs to contact you, you can generally expect to receive your payment within 10 business days if you are registered for direct deposit on your payroll account.
If you are not registered for direct deposit, please allow additional time for your cheque to be delivered by mail to the address on your payroll account.
Direct deposit is a fast, convenient, reliable, and secure way to get your CRA payments directly into your account at a financial institution in Canada. To enrol for direct deposit or to update your banking information, go to Direct deposit.
Note: If you are expecting an amount of $25 million or more, you need to be registered for both direct deposit and the Large Value Transfer System.
28-1. In what circumstances will I have to return or repay any or all of the wage subsidy that I received? Updated: July 2, 2021
Generally, an employer would be required to repay all amounts paid under the wage subsidy if the CRA determined during the post-payment review or audit, that it did not meet the eligibility requirements (see Q4).
An employer will also have to return or repay all or part of the wage subsidy where:
- it made an error in the calculation of the amount claimed for a period, thereby reducing the amount originally claimed;
- it noticed that it did not qualify for the wage subsidy after submitting the application and receiving the wage subsidy;
- it noticed that it made a data entry error (typo), thereby reducing the amount originally claimed for a period;
- on a review of its claim by the CRA after it received the subsidy, the claim amount was either rejected or reduced by the CRA;
- it is subject to the executive compensation wage subsidy repayment rule (see Q28-2).
Note: Interest may apply to excess wage subsidy amounts received. Penalties may also apply in cases of fraudulent claims (see Q34).
28-2. What is the executive compensation wage subsidy repayment rule? New: July 2, 2021
The executive compensation wage subsidy repayment rule is a requirement imposed on certain eligible employers (see 28-3) to repay any or all of the wage subsidy they were refunded in respect of active eligible employees (i.e., other than employees on leave with pay - see Q20-03) for claim period 17 and subsequent claim periods if its aggregate compensation for specified executives (see Q28-6) during the 2021 calendar year exceeds its aggregate compensation for specified executives during the 2019 calendar year.
28-3. Which eligible employers are subject to the executive compensation wage subsidy repayment rule? New: July 2, 2021
An eligible employer will be subject to the executive compensation wage subsidy repayment rule if:
- its shares of capital stock are listed or traded on a stock exchange or other public market, or it is controlled by an eligible employer, the shares of capital stock of which are listed or traded on a stock exchange or other public market (referred to as the public parent corporation); and
- it has an executive compensation repayment amount (see Q28-4).
28-4. How is the executive compensation repayment amount calculated? New: July 2, 2021
An eligible employer’s executive compensation repayment amount is the amount determined by the formula A x B, where:
- A is:
- the percentage assigned to the eligible employer under an agreement (see Q28-5); or
- in any other case, 100% and
- the total of all amounts, each of which is a wage subsidy amount of:
- the eligible employer;
- the public parent corporation (see Q28-3),if any; and
- each other eligible employer controlled in the relevant claim period by the eligible employer or the public parent corporation, if any;
- for claim period 17 and subsequent claim periods received in respect of its active eligible employees; and
The amount of executive remuneration is determined with respect to the calendar year. In cases where the fiscal period of an eligible employer does not coincide with the calendar year, a proration of the fiscal periods that overlap the calendar year is required. This is based on the number of days in the fiscal period that fall within the calendar year.
28-5. What is the agreement for the purpose of calculating the executive compensation repayment amount? New: July 2, 2021
The agreement is relevant where there is a group of eligible employers that have wage subsidy amounts for the claim period 17 or any of the subsequent claim periods. For this purpose, the group of eligible employers comprises the eligible employer, the public parent corporation, and each other eligible employer controlled in that claim period by the eligible employer or the public parent corporation to the extent that they have a wage subsidy amount for claim period 17 or any of the subsequent claim periods.
The agreement allows the members of the group to determine how much of the total executive compensation repayment amount will be repaid by each of them. This agreement must be filed in a prescribed form, and must be entered into by each member of the group.
In order to ensure that the total executive compensation repayment amount is assigned, the agreement must assign a percentage (including 0%), in respect of each member of the group and, the total of all percentages assigned under the agreement must be 100%. No member of the group can be assigned a percentage that would create a greater repayment obligation than the total of its wage subsidy amounts for the relevant claim periods. Accordingly, where no agreement is made (for example, where there is only one corporation in the group that received the wage subsidy), the default percentage is 100%.
28-6. What is executive remuneration for the purpose of calculating the executive compensation repayment amount? New: July 2, 2021
Executive remuneration for the purpose of calculating the executive compensation repayment amount is a measure of executive compensation, based upon the amount determined for certain securities law purposes.
Where an eligible employer is required to make disclosures to shareholders under Canadian securities laws, its executive remuneration is the total amount of compensation that is required to be disclosed in its Statement of Executive Compensation for Named Executive Officers (i.e. form 51-102F6), pursuant to the Canadian Securities Administrators’ National Instrument 51-102, Continuous Disclosure Obligations. In general terms, this amount is the total compensation reported by the eligible employer for its Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executives (specified executives).
Where an eligible employer is not subject to the aforementioned disclosure requirement, but is required to make a similar disclosure to shareholders under the laws of another jurisdiction, its executive remuneration is the amount of total compensation reported in that similar disclosure (limited to the five most highly compensated individuals, if the compensation of more than five individuals is required to be reported under that disclosure).
In any other case, an eligible employer's executive remuneration is the amount that would be required to be reported by that eligible employer, if it were required to make disclosures to shareholders under Canadian securities laws (i.e. using the methodology for preparing form 51-102F6).
28-7. What is the mechanism to repay the executive compensation repayment amount? Updated: September 24, 2021
If an eligible employer has an executive compensation repayment amount, all or a portion of the amount of wage subsidy refunded on a particular date in respect of any of claim period 17 and subsequent claim periods is deemed to be an amount that was refunded to the eligible employer in excess of the amount of wage subsidy which the eligible employer was entitled to for the claim period (referred to as an excess refund). This excess refund is deemed to have become payable to the Receiver General on that particular date. It is calculated as the lesser of:
- The wage subsidy refunded on that particular date; and
- The amount determined by the formula A – B where:
- A is the eligible employer’s executive compensation repayment amount (see Q28-4); and
- B is the total of all excess refunds determined after the particular date.
This formula effectively provides an ordering rule, where later wage subsidy amounts are required to be repaid first, until the total of all excess refunds equal the eligible employer’s executive compensation repayment amount. See Example 28-7A.
XYZ Corporation is an eligible employer whose shares of capital stock are listed on the Toronto Stock Exchange. It does not control—nor is it controlled by—any other public parent corporation.
XYZ Corporation’s fiscal period for Canadian tax and securities law purposes coincides with the calendar year. In 2019, the total amount of compensation that it was required to disclose in its Statement of Executive Compensation for Named Executive Officers (i.e. form 51-102F6) was $4,500,000. In 2021, the total amount of compensation that it was required to disclose in form 51-102F6 was $8,000,000.
During claim periods 17 to 20, for which XYZ Corporation claimed the wage subsidy, it had no eligible employees on leave with pay. Below are the wage subsidy amounts XYZ Corporation was refunded in respect of those claim periods and the dates on which those amounts were refunded. XYZ Corporation did not claim the wage subsidy for claim period 21.
Wage subsidy amounts refunded to XYZ Corporation for claim periods 17 to 20
Claim period Wage subsidy amount Date refunded Period 17 – June 6 to July 3, 2021 $1,250,000 July 8, 2021 Period 18 – July 4 to July 31, 2021 $1,050,000 August 5, 2021 Period 19 – August 1 to August 28, 2021 $950,000 September 2, 2021 Period 20 – August 29 to September 25, 2021 $750,000 September 30, 2021 Total $4,000,000 XYZ Corporation’s executive compensation repayment amount is $3,500,000, which is the lesser of:
- the total of all amounts, each of which is a wage subsidy amount refunded for claim period 17 and subsequent claim periods (i.e. $1,250,000 + $1,050,000 + $950,000 + $750,000 = $4,000,000); and
- the amount by which its 2021 executive remuneration exceeded its 2019 executive remuneration (i.e. $8,000,000 - $4,500,000 = $3,500,000).
Under the executive compensation wage subsidy repayment rule, the wage subsidy amounts refunded to XYZ Corporation will be reduced by its executive compensation repayment amount, with the later wage subsidy amounts refunded being reduced first (see table below).
The following table shows the mechanism to repay the executive compensation repayment amount of $3,500,000.
Claim period Amount of wage subsidy refunded for the claim period (X) Date refunded (the particular date) Executive compensation repayment amount (A) Total of all excess refunds determined after the Particular date (B) (Y) = (A)-(B) Excess refund determined for the particular date: the lesser of (X) and (Y) 20 $750,000 Sept 30, 2021 $3,500,000 $0 $3,500,000 $750,000 19 $950,000 Sept 2, 2021 $3,500,000 $750,000 $2,750,000 $950,000 18 $1,050,000 August 5, 2021 $3,500,000 $1,700,000 $1,800,000 $1,050,000 17 $1,250,000 July 8, 2021 $3,500,000 $2,750,000 $750,000 $750,000 Explanation
First, the entirety of XYZ Corporation’s wage subsidy amount refunded on September 30, 2021 is reduced because the wage subsidy amount refunded on that date (i.e. $750,000) is less than the executive compensation repayment amount that has not yet reduced a wage subsidy amount (i.e. $3,500,000). This excess refund amount of $750,000 is deemed to have become payable to the Receiver General by XYZ Corporation on September 30, 2021.
Second, the entirety of XYZ Corporation’s wage subsidy amount refunded on September 2, 2021 is reduced because the wage subsidy amount refunded on that date (i.e. $950,000) is less than the executive compensation repayment amount that has not yet reduced a wage subsidy amount (i.e. $2,750,000 = $3,500,000 - $750,000). This excess refund amount of $950,000 is deemed to have become payable to the Receiver General by XYZ Corporation on September 2, 2021.
Third, the entirety of XYZ Corporation’s wage subsidy amount refunded on August 5, 2021 is reduced because the wage subsidy amount refunded on that date (i.e. $1,050,000) is less than the executive compensation repayment amount that has not yet reduced a wage subsidy amount (i.e. $1,800,000 = $3,500,000 - $750,000 - $950,000). This excess refund amount of $1,050,000 is deemed to have become payable to the Receiver General by XYZ Corporation on August 5, 2021.
Finally, XYZ Corporation’s wage subsidy amount refunded on July 8, 2021 is reduced by $750,000, which is the lesser of the wage subsidy amount refunded on that date (i.e. $1,250,000) and the executive compensation repayment amount that has not yet reduced a wage subsidy amount (i.e. $750,000 = $3,500,000 - $750,000 - $950,000 - $1,050,000). This excess refund amount of $750,000 is deemed to have become payable to the Receiver General by XYZ Corporation on July 8, 2021.
Accordingly, after the application of the executive compensation wage subsidy repayment rule, XYZ Corporation will have been entitled to a wage subsidy amount of only $500,000 in respect of claim periods 17 to 20, in contrast to the $4,000,000 in wage subsidy amounts that were originally refunded to it for those claim periods.
29. Are there any special payroll withholding or T4 reporting requirements for the wage subsidy? Updated: January 13, 2021
There are no special withholding requirements for the wage subsidy. All amounts paid to an employee as salary, wages, and other remuneration continue to be regular employment income that is subject to regular withholdings such as income tax, Canada Pension Plan contributions, and Employment Insurance premiums. The applicable source deductions must be calculated on the full amount of remuneration paid to employees, including the portion covered by the wage subsidy.
For the tax year 2020, there are special T4 reporting requirements that apply to all employers. For more information, please see New T4 reporting requirements.
30. Will the wage subsidy be automatically applied against outstanding debt? Updated: January 13, 2021
With the exception of any wage subsidy specific debt, wage subsidy payments will not be automatically applied against any outstanding debt you have with the CRA.
However, the legislation gives the CRA the ability to administer the wage subsidy program fairly and reasonably and allows for a common-sense approach to dealing with situations that prevent compliance with our tax laws.
The CRA does have the discretion to reduce the amount of the wage subsidy payment if an applicant owes or are about to owe a debt and the CRA determines there is a risk of not collecting all or part of your tax debt.
31. Will the CRA withhold my wage subsidy because of outstanding returns? Updated: November 23, 2020
No. Wage subsidy payments will not be automatically withheld because of outstanding returns under the Income Tax Act or the Excise Tax Act (as well as certain other tax related laws).
The CRA does have the discretion to withhold the amount of the wage subsidy payment in cases where there is a significant history of not complying with a duty or obligation under our tax laws.
Ensuring compliance
32. How will the CRA Ensure Compliance? Updated: August 11, 2020
The CRA will use a combination of automated queries, validation within its data, follow-up phone calls to verify certain elements of the claim upon pre-payment review, and more comprehensive post-payment audits.
As a result of the review or audit, the CRA may at any time determine that any or no amount of a wage subsidy claim is an overpayment and send a Notice of Determination to the claimant. In the case of an audit, the wage subsidy claimant would be required to repay amounts previously paid as well as applicable interest. In regard to cases of serious non-compliance, significant penalties may be applicable.
33. What books and records do I need to support my claim? Updated: November 23, 2020
The CRA expects that you will maintain adequate books and records to ensure that your claim is accurate and complete, and clearly supports your eligibility for the wage subsidy for a claim period.
Books and records includes ledgers, journals, financial statements, contracts, elections, calculations or other working papers, payroll records, sales invoices and any other relevant document. For additional information about adequate records and recordkeeping, please see What are records and who has to keep them?
To support the claim in your wage subsidy application that your revenue for a current reference period has declined sufficiently from the relevant prior reference period, adequate calculations should generally be prepared and maintained through working papers. In situations where a small employer does not maintain detailed monthly records, the CRA will be reasonable; however, any assumptions made in any calculation should be included in the documentation and available for review if requested.
In addition to showing the calculation of the wage subsidy claimed for each eligible employee, the documentation maintained must also include an analysis of the nature of the remuneration. Dividends and other ineligible remuneration should be recognized and then clearly indicated as having been removed from the calculation. Supporting documentation should be retained.
Where an eligible employer elects to use a baseline remuneration period other than the period that begins on January 1, 2020, and ends on March 15, 2020, in respect of an employee for a qualifying period, the employer must keep a list of the names of such employees for each claim period for which it elects.
A signed attestation, and record of any elections (see Q12-2), made for the purposes of determining your qualifying revenue, must also be maintained and made available to the CRA upon request. If the election is made by an authorized representative on behalf of all members of an affiliated group that are not making a wage subsidy claim (see Q10-3), the list referred in that question must also be maintained and made available to the CRA upon request.
34. Are there penalties for non-compliance? Updated: September 24, 2021
Yes. Due to a specific anti-avoidance rule, an employer will not be eligible to claim the wage subsidy for a claim period if the employer (or a person or partnership that does not deal at arm's-length with that employer) participates in a plan that has the effect of reducing the employer's qualifying revenues for the current reference period, one of the main purposes of which is to cause the employer to qualify for the subsidy or in respect of claim periods 5 to 21, to increase the amount of wage subsidy in any of those claim periods. Where this anti-avoidance rule applies, the employer will be liable to a penalty equal to 25% of the amount of wage subsidy that is claimed in its application, and will have to pay back any wage subsidy that it received. If an employer knowingly, or under circumstances amounting to gross negligence, generally makes, or is involved in the making of a false statement or omission in its wage subsidy application for a claim period, the employer is liable to a penalty (commonly referred to as the “gross negligence penalty”) of up to 50% of the difference between the amount of wage subsidy that it claimed in its application and the amount of wage subsidy to which it is actually entitled.
Penalties may apply in cases of fraudulent claims. The penalties may include fines or even imprisonment.
Finally, if a person (such as an accountant or tax preparer) files or prepares the wage subsidy application on behalf of the employer, they could be subject to a third-party penalty under the Act, if they know, or would reasonably be expected to know, that the application contains false statements, including an omission of information. Third-party penalties are explained in detail in the CRA's Information Circular IC01-1, Third-Party Civil Penalties.
35. Will the CRA publish a list of employers that have applied for the wage subsidy? Updated: January 15, 2021
The Act authorizes the CRA to publish the name of any eligible employer that makes an application for the wage subsidy. A registry of wage subsidy recipients is now available. The registry provides lists that display the legal name and operating/trade name of corporations who have received or will soon receive the wage subsidy. The registry is updated daily as applications are received, cancelled, or withdrawn.
36. What is the recourse process when the CRA denies part or all of the wage subsidy amount claimed by an employer? Updated: October 6, 2020
Appropriate recourse is important to the CRA and to taxpayers. If an employer disagrees with the decision made by the CRA in regard to a wage subsidy claim, the suggested recourse procedures to be followed by an employer differ depending on when the employer is informed of that decision.
- For full or partial claim denials received before September 21, 2020
- If an employer disagrees with the decision made by the CRA in regard to the wage subsidy claim, the employer may request a second level review of the claim application. The request for a second level review must include all supporting documents (see Q33), and be submitted within 30 days of the date of the letter that communicated CRA’s original decision. The second level review is conducted by someone other than the original decision-maker.
- Employers should submit their request online by logging into My Business Account and selecting “Register a formal dispute”.
- While the CRA’s Appeals Branch (“Appeals”) portal is being used to expedite receipt and processing of all second level review requests, the review itself will not be undertaken by Appeals. The results of the second level review will be communicated in writing, after which a Notice of Determination or Notice of Assessment will be issued for the claim period. If the employer disagrees with the second level review decision, formal recourse rights (Notice of Objection, and appeal to the Tax Court of Canada) will be available through Appeals once the Notice of Determination or Notice of Assessment is issued. A Notice of Objection must be filed within 90 days from the date of the Notice of Determination or Notice of Assessment.
- For full or partial claim denials received on or after September 21, 2020
- Going forward, a Notice of Determination or Notice of Assessment will be issued to inform an employer when a claim is fully or partially denied.
- If an employer disagrees with the Notice of Determination or Notice of Assessment, the employer can file a Notice of Objection within 90 days from the date of its issuance.
In either case, the employer should submit their recourse request online by logging into My Business Account and selecting “Register a formal dispute”.
Footnotes
Footnote 1If the eligible employer meets the 15% required reduction in revenue for the first claim period - March 15 to April 11, 2020, it will be deemed to have met the 30% required reduction in revenue for the second claim period - April 12 to May 9, 2020 (see Table 2).
For the required reduction in revenue to qualify to claim the wage subsidy under the general and alternative approach see Table 1
We use the term "Indian" because it has a legal meaning in the Indian Act.
Rules for claim period 4 will be the same as those for claim period 3.
Eligible employer can elect either of the two periods.
Maximum top-up subsidy of 25% for claim periods 5 to 10, 35% for claim periods 11 to 17, 25% for claim period 18, 15% for claim periods 19 and 20, and 10% for claim period 21, is available when the top-up revenue reduction percentage (see Q20-3) for the claim period is 70% or more.
In addition, for claim periods 5 to 7, the top-up wage subsidy is based on the three month revenue reduction test and for claim periods 8 to 10, the top-up wage subsidy is based on the greater of the three month revenue reduction test and the one month revenue reduction test. However, for claim periods 11 onwards the top-up wage subsidy is based on the one month revenue reduction test (see Footnote 10).
Assumed an RR of 20% for illustrative purposes only.
The calculation would equal the average monthly revenue over the 3 months of the reference period divided by the average revenue for the months of January and February 2020, expressed as a percentage.
For claim periods 5 to 21, if the eligible employee was on a leave that was for maternity, paternity, parental, or adoption reasons, or if the employee is on leave due to illness, injury, quarantine to provide compassionate care or support for family members, or to provide care or support for critically ill children or critically ill adult family members, throughout the period that begins on July 1, 2019 and ends on March 15, 2020, then the eligible employer can elect that the baseline remuneration period is the 90 day period immediately before the date on which they commenced their leave.
For claim periods 11 to 21, the RR for the top-up is the same as for the base wage (one month revenue reduction test). Therefore, if the eligible employer has a RR of 50% or less, they would have no top-up portion and their total subsidy would only be based on the base portion.
For claim periods 18 and 19, an eligible employer may still be eligible for the wage subsidy for employees on leave with pay, provided it has a revenue reduction of greater than 0%.
- the least of
- the least of