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.