Prime Minister Justin Trudeau announced today that the Canada Emergency Wage Subsidy (the “CEWS”) (see our detailed blog post here) will be extended beyond June 6, 2020. The CEWS legislation provides for extensions up to September 30, 2020. Details on the CEWS extension are expected in the following week.
In addition, the Canada Revenue Agency (the “CRA”) has updated its list of frequently asked questions (found here) on the CEWS. The FAQ page provides a summary of the CEWS legislation, examples of its application, and CRA interpretations on some elements of the legislation.
Some notable updates to the FAQ page include:
- Question 6-1: The CRA provides its views on whether investment revenue counts as qualifying revenue, as defined in subsection 125.7(1) of the Income Tax Act (the “Act”). The CRA states that such revenue (e.g. interest or dividends from investments in securities) would be qualifying revenue if it arises in the ordinary business activities of the employer and is not an extraordinary item or revenue earned on account of capital.
- Question 10: The CRA provides an interpretation of the phrase “affiliated group of eligible entities” in paragraph 125.7(4)(b) of the Act. The CRA opines that this phrase is intended to mean that the broadest possible group of affiliated entities must file this election, and that they do not view the legislation as permitting entities to opt out of that group or select a smaller group of affiliated entities within a larger group.
- Questions 17-1 and 17-2: The CRA provides its views on whether various items qualify as eligible remuneration, as defined in subsection 125.7(1) of the Act. The CRA states that tips paid directly from a customer to an employee are not eligible remuneration, while tips controlled by the employer are eligible remuneration. In addition, the CRA clarifies that dividends paid to an individual are not eligible remuneration.