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Canada Emergency Wage Subsidy (CEWS) for Employers
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Federal Budget ->  COVID-19 Financial Relief  ->   Canada Emergency Wage Subsidy (CEWS)

Canada Emergency Wage Subsidy (CEWS) for Employers

10% Temporary Wage Subsidy (TWS) for Employers

CRA - 10% Temporary Wage Subsidy for Employers

Canada Emergency Wage Subsidy Topics

CEWS Applications / Deadline

When is CEWS Included in Income?

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

CEWS Application Elections

Optional Pre-Crisis Periods for Baseline Remuneration

Baseline Remuneration

CEWS Penalties

CEWS 2.0 Resources

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


CEWS Applications

The deadline for filing wage subsidy applications for all periods has been changed to January 31, 2021 from September 30, 2020.

CRA Canada Emergency Wage Subsidy (CEWS) including a calculator

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

- Applications could be done online starting April 27, using:

     - My Business Account, or

     - Represent a Client, or

     - 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.

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 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.

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.  See below.

CEWS Application Elections

When applying for the subsidy, elections must be made in some cases.  The most common elections are:

 - An 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.

 - An 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 for the prior reference period for periods 1 to 4 (must be consistently used for all 4 periods) for calculating revenue reductions.

 - An 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 the Jan/Feb 2020 for the prior reference period for periods 5 to 9 (must be consistently used for all 5 periods) for calculating revenue reductions.

 - An 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.

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 - Jan 1 to Mar 15, 2020 (75 days) or
- Mar 1 to May 31, 2019 (92 days)
Period 4 - Jan 1 to Mar 15, 2020 (75 days) or
- Mar 1 to May 31, 2019 (92 days), or
- Mar 1 to Jun 30, 2019 (122 days)
Periods 5 and later - Jan 1 to Mar 15, 2020 (75 days) or
- Jul 1 to Dec 31, 2019 (184 days)

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

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.

s. 125.7(2)A, re eligible remuneration paid from March 18 to June 19, 2020, uses earned "in respect of that week". Not so for the definition of 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.


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

CEWS 2.0 Resources

CRA Frequently asked questions Canada emergency wage subsidy (CEWS)

Applications for claim period 5 (July 5 to August 1) will open August 17.  CRA unveiled their new CEWS calculator on August 11th.


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.

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

Canada Emergency Wage Subsidy 2.0 Estimator - free, from Video Tax News, Punchcard Systems and, this tool estimates your % entitlement to the CEWS for various months.

Canada Emergency Wage Subsidy Calculators from Tax Templates Inc, will calculate your subsidy for you, and include technical support. The price is $400 for CEWS claims for a single entity, and starts at $1,000 for preparing CEWS claims for multiple entities.

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.

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

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

Law firm Borden Ladner Gervais (BLG) also has a good 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.

Department of Finance Wage Subsidy Detailed Information

CRA Frequently Asked Questions - Temporary Wage Subsidy for Employers

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)

Revised: August 26, 2020

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