Ads keep this website free for you. does not research or endorse any product or service appearing in ads on this site.  Before making a major financial decision you  should consult a qualified professional.

CEWS - Canada Emergency Wage Subsidy for Employers
Canadian Tax and
Financial Information

If you use an ad blocker, please consider a small contribution to help keep free for everyone.

Need an accounting, tax or financial advisor? Look in our Directory.  Use above search box to easily find your topic!   Stay Connected with!
What's New
Personal Tax
Sales Taxes
Financial Freedom
Financial Planning
Real Estate
British Columbia
Atlantic Provinces
Federal Budget
Prov/Terr Budgets
Statistics etc.
Site Map
Advertise With Us
Contact Us/About Us
Links & Resources
Federal Budget ->  COVID-19 Financial Relief  ->   Canada Emergency Wage Subsidy (CEWS)

Canada Emergency Wage Subsidy (CEWS) for Employers

Income Tax Act s. 125.7

A December 21, 2021 News Release announced more details for the programs which have replaced CERS and CEWS, effective October 24, 2021 to May 7, 2022:

Tourism and Hospitality Recovery Program (THRP)

Hardest-Hit Business Recovery Program (HHBRP)

See also Canada Recovery Hiring Program, also effective until May 7, 2022.

Canada Emergency Wage Subsidy Topics

CEWS CRA/CPA Webinar and New FAQs from Video Tax News - includes information for employees working from home, and taxation of forgivable portion of CEBA loan.

CEWS Applications / Deadlines / Changing a Claim

CEWS Accounting Treatment

When is CEWS Included in Income?

July 17, 2020 Major Changes to CEWS (CEWS 2.0)

CEWS Extended to October 23, 2021, Period 20 Rate Increased

CEWS Extended to September 25, 2021

CEWS Extended to Summer 2021

CEWS Application Elections

Optional Pre-Crisis Periods for Baseline Remuneration

Baseline Remuneration, Bonuses as Eligible Remuneration

New May 2021: Shareholder/Employees Wages Paid as Credit to Shareholder Loan Account - Not CEWS Eligible

New May 2021: Salary Paid Retroactively to an Employee

CEWS Penalties

CEWS Audits

Extended CEWS Legislation

CEWS 2.0 Resources and Calculators

Additional T4 Reporting for 2020 - to help validate payments under CEWS, CERB and CESB

CEWS Applications / Deadlines

The deadline for filing wage subsidy applications for all periods is changed by Bill C-9 to: on or before the later of

  1. January 31, 2021, and
  2. 180 days after the end of the qualifying period

This means that January 31, 2021 is the deadline for applications for periods 1 to 5.  Period 5 ended August 1, 2020.

See CRA wage and hiring support for business - Periods you can apply for.

Important:  See CEWS Deadline Issues from Video Tax News, and consider reviewing all your claim applications before Jan 31st, as Period 5 elections apply for Periods 6 and later as well.

CEWS Periods and Application Deadlines / Changing a Claim

The deadline for rent subsidy applications is the later of January 31, 2021 and 180 days from the end of the period.  This is also the deadline to change or increase the amount of your claim.  If you need to cancel or reduce a claim, you must call CRA's business enquiries phone number.  See:

Video Tax News Changing or Cancelling a CEWS or CERS Claim - lots of detail provided

Amending a CEWS Claim After the Deadline - Video Tax News - must be done within 30 days after the later of April 21, 2021 and the applicable filing deadline (also applies to CERS).

CRA's Change or cancel a claim you submitted

However, the subsidy is included in income immediately before the end of the period to which it relates.

The deadlines for the extended periods as proposed by the Federal 2021 Budget have been added to the table below, and will be in effect unless revised by legislation.

Period 4 Week Period
Ending Date
1 Apr 11/20 Jan 31/21
2 May 9/20 Jan 31/21
3 Jun 6/20 Jan 31/21
4 Jul 4/20 Jan 31/21
5 Aug 1/20 Jan 31/21
6 Aug 29/20 Feb 25/21
7 Sep 26/20 Mar 25/21
8 Oct 24/20 Apr 22/21
9 Nov 21/20 May 20/21
10 Dec 19/20 Jun 17/21
11 Jan 16/21 Jul 15/21
12 Feb 13/21 Aug 12/21
13 Mar 13/21 Sep 9/21
14 Apr 10/21 Oct 7/21
15 May 8/21 Nov 4/21
16 Jun 5/21 Dec 2/21
17 Jul 3/21 Dec 30/21
18 Jul 31/21 Jan 27/22
19 Aug 28/21 Feb 24/22
20 Sep 25/21 Mar 24/22
21 Oct 23/21 Apr 21/22

For claim periods 22 and later, you can only apply for the higher of either the Canada Recovery Hiring Program (CRHP, or the wage portion of:

bulletthe Tourism and Hospitality Recovery Program (THRP), or
bulletthe Hardest-Hit Business Recovery Program (HHBRP)

You will need to calculate your CRHP and THRP or HHBRP amounts (whichever applies) before applying for the wage subsidy in claim periods 22 and later.

CRA Canada Emergency Wage Subsidy (CEWS) including a calculator - updated November 23, 2020 with revised calculations for periods 8+.  Calculators also available from Video Tax News / Punchcard Systems and from Tax Templates Inc.

CRA: Calculate your Canada Emergency Wage Subsidy (CEWS) - includes the calculator - make sure you have the latest version.

See How to Apply: Applications can be done using:

bulletMy Business Account, or
bulletRepresent a Client, or
bullet WebForms application

There is a process available in both My Business Account and Represent a Client to allow CEWS claims applications to be revised.  We haven't viewed the WebForms application, but it probably also allows claim revisions.

CEWS - Contact the CRA - make sure you record the ID number of the agent who takes the call, and document what they say.  If you are unsure of what they've said, ask them to repeat it.

Calls To & From CRA - they may contact you by telephone about your claim.

CEWS Accounting Treatment

The wage subsidy, because it is related to a non-capital item, may be:

bulletnetted with expenses (i.e., used to reduce wages expense),
bulletshown separately as a deduction from aggregated expenses, or
bulletshown as revenue, either separately or under a heading such as "Other income".

For private corporations, see the EY information Understanding ASPE Sections 3800 and 3805, Government Assistance and Investment Tax Credits.

For corporations using International Financial Reporting Standards (IFRS), the accounting treatment is the same as with ASPE.  See Grant Thornton IAS 20 COVID-19: Government grants.

However, the timing of the recognition of the wage subsidy is as legislated by the Income Tax Act, as noted below.

When is CEWS Included in Income?

According to Income Tax Act s. 125.7(3), the wage subsidy is included in income "immediately before the end of the qualifying period to which it relates", not when the subsidy is received.  In other words, it is accounted for on an accrual basis, not a cash basis.  The qualifying periods in 2020 end on April 11, May 9, June 6, July 4, August 1, August 29, September 26, October 24, November 21, and December 19, 2020.  For those employers who have applied for the subsidy as soon as this could be done, this shouldn't cause problems.  

In some cases, the timing of the business year end could complicate things for employers who have delayed applying for the CEWS.  In this case, if the tax return was filed without the inclusion of CEWS income, an amendment will be necessary.

The Canada Emergency Rent Subsidy (CERS) has the same timing for inclusion in income.

Technical Interpretation 2020-0865661I7 CEWS inclusion in income has been issued by Canada Revenue Agency (CRA) - French version is at the top of the document, English version is at the bottom.  It explains the necessity for a tax return amendment if needed regarding timing.

The definition of "qualifying revenue" for CEWS allows the exclusion of funding received from government sources, for its current reference periods and all of its prior reference periods.  This means that the taxable income from CEBA and CECRA will not affect the CEWS calculation.

July 17, 2020 Major Changes to CEWS (CEWS 2.0)

The CEWS was first extended by 12 weeks to August 29, 2020. The 30% revenue threshold continues to apply for period 4, the 4-week period ending July 6.

Eligibility for CEWS was extended to more employers (eligible entities).  Legislation was amended to make the CEWS more flexible, including provisions for seasonal employees, and ensuring that it applies appropriately to corporations formed on the amalgamation of two predecessor corporations.

CEWS is extended to the period ending December 19, 2020, and has become a LOT more complicated.  Bill C-20, An Act respecting further COVID-19 measures received Royal Assent July 27, 2020.  The initial legislation was Bill C-14, COVID-19 Emergency Response Act, No. 2, which received Royal Assent April 11, 2020.

The percentage subsidy will depend on the percentage revenue reduction, so any reduction will make the employer eligible for a subsidy, for the periods beginning July 5 (periods 5 to 9).

For the periods from July 5 to August 29th:

 - if the revenue reduction is 50% and over, the subsidy will be 60%.

 - for revenue reduction of 0% to 49%, the subsidy = 1.2 x revenue reduction.  For example, 30% revenue reduction = 36% subsidy.

- if the employer qualified for a 75% subsidy in period 4, they also qualify for a 75% subsidy in periods 5 and 6 (July 5 to August 29).  This is the "safe harbour" rule.  Generally, if there is a greater decrease of revenue in the preceding period, that can be deemed to be the decrease in the current period.

Revenue reduction can be calculated based on either:

 - the same month in the prior year, or

 - the average of January/February 2020 revenue.

Employers can choose different pre-crisis pay (baseline remuneration) periods in order to maximize the CEWS claim.  This is retroactive to periods 1 to 4, so these claims can be revised.

CEWS Extended to October 23, 2021, Period 20 Rate Increased

A July 30, 2021 news release announced the extension of the Canada Emergency Wage Subsidy, and the Canada Emergency Rent Subsidy and Lockdown Support until October 23, 2021.  The rate of support that employers and organizations could receive between August 29th and September 25th is being increased.

The maximum rate for the wage subsidy and the rent subsidy will be set at 40% for August 29th to September 25th, instead of being reduced to 20% as previously announced. The maximum rate for period 21, September 26th to October 23rd, will be 20%.

For details of the CEWS base and top-up rate structure for periods 19 to 21, as well as information on the revenue decline calculation and wage subsidy support for furloughed employees, see Extending Business Support Measures Through the Pandemic.

CEWS Extended to September 25, 2021

Proposed by the Federal 2021 Budget: to extend the Canada Emergency Wage Subsidy until September 25, 2021, with additional qualifying periods to be added until November 20, 2021, should the economic and public health situation warrant it, with subsidy rates to be gradually phased out starting on July 4, 2021.

CEWS Extended to Summer 2021

The September 23, 2020 Throne Speech announced that CEWS would be extended through to summer 2021, with an October 9, 2020 press release.

More details on the extension:

December 18, 2020 News Release: CEWS maximum increased to 75%, weekly amount for furloughed employees to $595, for periods beginning December 20, 2020 until March 13, 2021.

A March 3, 2021 news release announced that the current structure of the subsidy would continue until June 5, 2021.  This consists of:

bulletmaximum base wage subsidy for active employees remains at 40%
bulletmaximum top-up wage subsidy rate for employers most adversely affected by the pandemic remains at 35%, thus the maximum remains at 75%
bulletweekly wage subsidy for a furloughed employee will remain the same and continue to be the lesser of:
bulletthe amount of eligible remuneration paid in respect of the week; and
bulletthe greater of:
bullet$500; and
bullet55% of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595

Pre-pandemic 2019 reference months can still be used for these periods.

Video Tax News re 2020 Fall Economic Statement - CEWS re periods 11 to 13 (December 20, 2020 to March 13, 2021)

December 2020 Life in the Tax Lane

Video Tax News - re Nov 23rd CRA CEWS FAQ Update, with important information for Owner-Managers.

Video Tax News - CEWS periods 8, 9 and 10

October 14, 2020 Dept. of Finance Backgrounder

CEWS Application Elections

When applying for the subsidy, elections must be made in some cases.

Even if no elections are made, form RC661 Attestation for owner/managers and/or senior employees (comptroller/VP Finance/CFO) of an eligible employer applying for the Canada Emergency Wage Subsidy must be completed and retained on file for each and every CEWS period for which a claim is made.

The most common elections are:

bulletAn election under paragraph 125.7(4)(e) of the Income Tax Act (cash method or accrual method). Tick this box if you are choosing to calculate revenues using a method that is not your usual method of accounting.  If you are using your usual method of accounting, no election is required.  The same method must be used for all periods.
bulletAn election under clause (b)(ii)(A) of the definition "prior reference period" in subsection 125.7(1) of the Income Tax Act (prior reference period for claim periods 1 to 4). Tick this box if you’re using the Jan/Feb 2020 average revenue for the prior reference period for periods 1 to 4 (must be consistently used for all 4 periods) for calculating revenue reductions.
bulletAn election under clause (b)(ii)(B) of the definition "prior reference period" in subsection 125.7(1) of the Income Tax Act (prior reference period for claim period 5 onward). Tick this box if you’re using Jan/Feb 2020 for the prior reference period for periods 5 and later (must be consistently used for all periods 5 and later) for calculating revenue reductions.
bulletAn election under subparagraph (b) of the definition "baseline remuneration" in subsection 125.7(1) of the Income Tax Act in respect of one or more eligible employees (election in respect of eligible employee’s baseline remuneration). Tick this box if you're using one of the optional periods for baseline remuneration instead of Jan 1 to Mar 15/20 (see table below), for any or all employees. Choose the period that has the highest weekly average for that employee to get the highest potential subsidy.  You can choose different periods for different employees.

Tax Tip:  Make sure form RC661 is completed and retained for every CEWS period!

Optional Pre-Crisis Periods for Baseline Remuneration

The government amended the CEWS to allow employers to choose optional periods when calculating each employee's baseline remuneration.

Claim Period Pre-crisis pay period options (# of days in period)
Periods 1 to 3
bulletJan 1 to Mar 15, 2020 (75 days) or
bulletMar 1 to May 31, 2019 (92 days)
Period 4
bullet Jan 1 to Mar 15, 2020 (75 days) or
bullet Mar 1 to May 31, 2019 (92 days) or
bullet Mar 1 to Jun 30, 2019 (122 days)
Periods 5 to 13
bullet Jan 1 to Mar 15, 2020 (75 days) or
bullet Jul 1 to Dec 31, 2019 (184 days) or
bulletif the employee was on certain kinds of long-term leave from Jul 1, 2019 to Mar 15, 2020, the 90-day period ending before the leave started.
Periods 14 to 16
bulletJan 1 to Mar 15, 2020 (75 days) or
bulletMar 1 to Jun 30, 2019 (122 days) or
bulletJul 1 to Dec 31, 2019 (184 days) or
bulletif the employee was on certain kinds of long-term leave from Jul 1, 2019 to Mar 15, 2020, the 90-day period ending before the leave started.

Baseline remuneration is the average weekly eligible remuneration PAID in those periods, excluding any period of 7 or more consecutive days for which the employee was not paid.

See CRA's document Pre-crisis pay (baseline remuneration) (pdf).

Baseline Remuneration, Bonuses as Eligible Remuneration

The legislation says baseline remuneration "means the average weekly eligible remuneration paid to the eligible employee by the eligible entity during the period that begins on January 1, 2020 and ends on March 15, 2020, ...".

The key word is "paid". Example: part-time employee paid by the hour, on the 1st of the month for hours worked in the previous month. This employee would have been paid 3x from Jan 1 to Mar 15. In this case, the pay is for Dec 1 to Feb 29, so one would assume that the only way to calculate the average would be to divide by 13 weeks, the period during which it was earned, but this doesn't seem to be the case.  CRA seems to indicate, but doesn't clearly state, that the average is calculated by the number of days in the period, x 7 days to get the weekly average.  It would be helpful to have this confirmed by CRA, or defined in the legislation.

Update October 6, 2020:  CRA updated their website to clarify how baseline revenue is calculated, and it is calculated as in the previous paragraph.  See:

Video Tax News article CEWS - Baseline Revenue Clarified

CRA FAQ 18-2 How is average weekly eligible remuneration amount calculated for the purposes of determining baseline remuneration?

Note that if an employer qualifies for the CEWS for one claim period based on the % revenue reduction, it automatically qualifies for the following claim period, as per s. 125.7(9) of the Income Tax Act.

Are bonuses included as eligible remuneration?  According to the legislation, yes, because eligible remuneration includes amounts described in s. 153(1)(a), which includes bonuses.  There is no other wording in Bill C-14 or Bill C-20 which excludes bonuses, and the response to this question in the August 21, 2020 CRA CEWS teleconference was that generally, bonuses can qualify as eligible remuneration if they are paid.  However, one must then determine which portion was "earned" in the claim period.  If the bonus relates to an entire year, then 1/52nd of the bonus would apply to each week.

CRA FAQ 17-5 Are bonuses paid to an eligible employee included in eligible remuneration for purposes of computing the wage subsidy?

New: Shareholder/Employees Wages Paid as Credit to Shareholder Loan Account - Not CEWS Eligible

In Technical Interpretation 2020-0865791I7 CEWS - eligible remuneration CRA concludes the following, delivering another blow to small business owners, especially those who have suffered lack of cashflow due to the COVID pandemic:

bulletWhere salary and wages are only reflected by journal entry as an expense by the employer with a corresponding credit to a shareholder loan account, such salary and wages are not considered eligible remuneration paid to an eligible employee for purposes of subsection 125.7(2).
bulletWhere salary and wages are paid to an eligible employee and returned to the eligible employer with a corresponding increase or credit to a due to shareholder loan account or other shareholder loan account, we consider such salary or wages would not be eligible remuneration for purposes of the CEWS pursuant to paragraph (c) of the definition of that term in subsection 125.7(1).  Similarly, salary and wages paid but returned to the corporation by the shareholder/employee as a capital contribution or as an amount reloaned to the corporation would not be considered eligible remuneration for purposes of the CEWS.

Joseph Devaney CPA, CA from Video Tax News asks the question:  What about the source deductions paid to CRA?  Since these funds didn't go back to the corporation, they should still be eligible remuneration.

Definition of Eligible Remuneration - on CRA website.

New: Salary Paid Retroactively to an Employee

Also in TI 2020-0865791I7, CRA concludes:

bulletsalary and wages paid to an employee retroactively in respect of a week in qualifying periods 1 to 4 can generally be considered eligible remuneration paid in respect of those weeks for purposes of the CEWS to the extent that the eligible remuneration reflects the actual amount paid in respect of the particular claim period.  Questions 17-5 and 26-1 of the FAQ on the CEWS, available on CRA's Website, address similar matters.

Of course, this only applies if the salary and wages were actually paid, not credited to a shareholder loan account.


Penalties may apply in cases of fraudulent claims, including fines or even imprisonment.

CEWS Audits

See Video Tax News October Life in the Tax Lane video for more information, an example of the audit letter, and advice on what to do first if you get one of these 9-page letters which require a response within 10 days.

In the October 26, 2020 CPA Canada - CRA webinar on CEWS and more, the CEWS audit letters were addressed by CRA.  The letters were a template meant to indicate all the documents that "could" be required, not that necessarily "would" be required.  If you receive a ltter that you think is too exhaustive, or that you have questions about, call the auditor.  Their intent is not to create undue burden.

See the July 2021 Life in the Tax Lane video by Video Tax News regarding CEWS audits, which also links to CEWS Audits Paper & Chart from Blachford Tax Law, for how to prepare for CEWS audits and how to dispute incorrect results.

Extended CEWS Legislation

Bill C-9, An Act to amend the Income Tax Act (Canada Emergency Rent Subsidy and Canada Emergency Wage Subsidy) was tabled on November 2, 2020 and received Royal Assent on November 19, 2020, providing the legislation for CERS, and changes to CEWS.

For a good summary of the legislation see the Video Tax News Summary, and see Resources and Calculators below for their calculator, updated for CEWS periods 8 to 10.

Moodys Tax provides a descriptive update for CEWS 2.0 as well as a very helpful CEWS FlowChart, updated for the Bill C-9 legislation.

CEWS Resources and Calculators

CRA Frequently asked questions Canada emergency wage subsidy (CEWS)

CEWS Calculators

CRA CEWS Calculator - very detailed, and both online and spreadsheet versions are provided.  You can choose the online calculator if you have a small number of employees, or the spreadsheet if you have a large number of employees.

CEWS Estimator  free, from Video Tax News, Punchcard Systems and, for periods up to March 13, 2021, including the latest changes - very useful tool to calculate the subsidy, and to forecast future subsidies based on different scenarios:

 - What if I hire more people?

 - what if I expand my business?

 - Should I use the alternative reference period?

Video Tax News - CEWS - Application Tools Released - very helpful summary of updates, with links to CRA calculator and Frequently Asked Questions.

Canada Emergency Wage Subsidy & Canada Emergency Rent Subsidy Calculators (worksheets) from Tax Templates Inc, will calculate your subsidies for you, and include technical support. The price is $400 for CEWS/CERS claims for a single entity, and starts at $1,000 (sole proprietor) for preparing CEWS/CERS claims for multiple entities.  The worksheet for multiple entities is included with the Tax Templates Inc. Tax Accounting package annual licence.

Other Resources

CPA Canada and the Canadian Tax Foundation have formed a working group to review the CEWS, and are in communication with CRA to work out solutions to some of the problems.  They are providing updates on this on their Federal government COVID-19 tax updates page.  Note that non-CPA-members can sign up for emailed updates.

CPA Canada - CRA webinar on CEWS and more October 26, 2020 - the first 28 minutes of the webinar discusses CEWS audit letters and some technical issues.  Includes the fact that an off-calendar month (floating month end) cannot be used for current or prior reference periods.

Information Updated for Latest Bill C-9 Legislation:

Moodys Tax Updates to CEWS 2.0 and an Updated CEWS FlowChart, updated for the Bill C-9 legislation.

Gowling WLG: Navigating the Changes to the CEWS - With Flowchart

Baker Tilly - Federal Recovery Measures Guide, current as of Nov 11, 2020.

Video Tax News - CEWS periods 8, 9 and 10 - see their CEWS Estimator above.

Department of Finance: Backgrounder - Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support - Nov 5, 2020.

Information Prior to Bill C-9 Changes:

Video Tax News CEWS Update information, which includes a video discussion.

Law firm Borden Ladner Gervais (BLG) summary of the CEWS changes

Moodys Tax Explains Canada Emergency Wage Subsidy (CEWS) v. 2.0

Baker Tilly - Canada Emergency Wage Subsidy (CEWS 2.0)

Department of Finance Press Release and draft legislation.

May 25, 2020 Consultation on the CEWS to help inform potential changes - closed June 5, 2020.  Participate by completing a short survey, or provide more detailed feedback by email.

May 15, 2020 Government extends the Canada Emergency Wage Subsidy - blog including an excellent flowchart.

April 11, 2020 Additional Details on the Canada Emergency Wage Subsidy (CEWS) from the Department of Finance and Backgrounder.

Video Tax News Temporary Wage Subsidy Update April 1, 2020, with links to subsequent updates.

Achen Henderson CPAs 75% Canadian Emergency Wage Subsidy

Wage Subsidy for Employers - Free Excel worksheets to help Canadian businesses and their advisers calculate the 10% and 75% subsidies, provided by Tax Templates Inc.

Moodys Tax Blog: Bill C-14 - The 75% Canada Emergency Wage Subsidy (CEWS)

Moodys Tax April 13, 2020 Facebook Live Video re CEWS, with questions from viewers - close to 3 hours long

Baker Tilly Updates to the Canada Emergency Wage Subsidy (CEWS)

10% Temporary Wage Subsidy (TWS) for Employers

CRA - 10% Temporary Wage Subsidy for Employers

Revised: April 05, 2022


Copyright © 2002 Boat Harbour Investments Ltd. All Rights Reserved.  See Reproduction of information from

Facebook  | Twitter  |  See What’s New, stay connected with by RSS or Email
The information on this site is not intended to be a substitute for professional advice.  Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage. 
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site.