COVID-19 Tax Update: Department of Finance Releases Guidance on the Canada Emergency Wage Subsidy

UPDATE:  Legislation implementing the CEWS was enacted into law on April 11, 2020. See our Tax Alert on that update here

UPDATE:  Changes to the CEWS were announced on April 8, 2020. See our Tax Alert on those changes here

As part of the federal government’s COVID-19 Economic Response Plan, the Canada Emergency Wage Subsidy (CEWS) proposes to provide a 75 per cent wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020. The CEWS would be available to eligible employers (other than public bodies) that see a reduction of 30 per cent or more in their revenue during the eligible period.

The Department of Finance’s guidance on the CEWS provides preliminary details on the eligibility, amount and computation of the subsidy; however, several aspects require further clarification (such as calculating the reduction of revenues for newly established businesses).

For tax purposes, the wage subsidy would be “government assistance” and typically included in the taxable income of the employer.

Prepared by: Julia Ji

Julia Ji is an associate practising in the firm’s Toronto office. Julia’s practice includes corporate tax advisory, tax planning, business structuring and tax litigation. Prior to joining Thorsteinssons, Julia was a certified digital project manager specializing in enterprise information architecture… more »