COVID-19 Tax Update: CEWS FAQs Updated
On August 11, 2020, the Canada Revenue Agency updated its frequently asked questions page (available here) for the Canada Emergency Wage Subsidy (the “CEWS”). This update follows significant amendments to the CEWS legislation enacted on July 27, 2020. Read our detailed blog post analyzing those amendments here.
Some of the notable updates to the FAQ page include:
- clarifying that a non-resident corporation whose income is not taxable in Canada by virtue of a tax treaty can still qualify as an eligible employer (question 3-02);
- explaining the revenue reduction test, deeming rules, and safe harbor rules for qualifying periods beginning on July 5, 2020 or later (questions 5-01 to 5-04);
- opining that revenue earned by an eligible employer from the manufacture of essential products during the COVID-19 pandemic, outside of its normal business operations, will be qualifying revenue, even if the employer does not earn a profit from such activities (question 6-2.1);
- describing the rules for calculating qualifying revenue where an eligible employer acquired assets from a third party (question 8-3);
- confirming that non-cash taxable employee benefits and non-taxable employee benefits do not qualify as eligible remuneration (questions 17-01 and 17-02); and
- outlining the process for disputing a denied CEWS claim (question 36).
In addition, the CRA released a new calculator (available here) to assist employers in calculating their CEWS entitlement under the new rules. Applications for the qualifying period from July 5 to August 1, 2020 will open on August 17, 2020.