Following the conduct of extensive public consultations, the Government has put in place a number of changes to the CEWS program.
The Government has extended the CEWS to November 21, with the intent to provide support until December 19th.
The revised wage subsidy will be comprised of two parts and will apply differently to active and furloughed employees.
For active employees, a base subsidy will be provided that will remove the requirement that an employer must have experienced a 30% drop in revenues in order to qualify for the wage subsidy.
Instead, the maximum base subsidy will apply where the employer has had a 50% drop in revenues, with the subsidy rate being phased out on a straight-line basis for lower revenue declines. The maximum base subsidy rates will be 60% in periods 5 and 6 (i.e., July and August), 50% in period 7 (i.e., September), 40% in period 8 (i.e., October) and 20% in period 9 (i.e., November).
The removal of the 30% threshold will mean that all eligible employers with a revenue decline will now qualify for CEWS support.
A top-up subsidy for active employees will also be provided for employers that have been hardest hit, based on their revenue decline over the prior three-month period. The maximum top-up subsidy rate of 25% will be available where the employer’s revenue drop in those three preceding months is 70% or more and the top-up subsidy will be gradually reduced for revenue declines between 70% and 50%. The top-up ensures that the hardest-hit employers continue to receive high levels of support, even as they are recovering.
In addition, transitional rules will be provided in periods 5 and 6 (i.e., July and August) so that an employer will get the better of the subsidy under the new rules for that period and what they will have gotten if the original rules for CEWS were continued (i.e., the same rules that applied from March to June). The employers can decide if the old rules or new rules are more beneficial (in July and August).
For furloughed employees, the 75% subsidy rate and other rules from periods 1 to 4 (i.e., March to June) are continued into periods 5 and 6 (i.e., July and August), except that the requirement for a 30% decline in revenues is removed. Instead, employers will qualify for a subsidy for furloughed employers if they will qualify for either the base subsidy or the top-up subsidy for their active employees.
Starting on August 30, it is intended that the subsidy for furloughed employees will be aligned with other income support programs – specifically the Canada Emergency Response Benefit and / or Employment Insurance.
More details about the redesigned CEWS are currently available on the Department of Finance’ website. In addition, the Canada Revenue Agency will publish information online to help employers understand how they may benefit from these changes.