Originally published in November 2020, updated June 2021
When the coronavirus pandemic hit Canada in early 2020, it was nearly impossible to fathom the toll it would take on Canadian businesses. At Source Online Bookkeeping, it has been difficult to see how COVID-19 has impacted our small business community. However, since the introduction of Canada’s Emergency Wage Subsidy program on March 27th, 2020, we’ve had the enormous pleasure of helping many business owners find effective ways to navigate the global pandemic.
We’ve also learned that applying for the Canadian Emergency Wage Subsidy (CEWS) isn’t a straightforward process that has many business owners stumped. We’ve met several clients in recent months that are unsure how to access essential subsidy relief and as such, are at risk of missing out on crucial financial support.
In this article, we’re sharing our expert bookkeeping tips that Canadian small business owners can use to navigate COVID-19 wage subsidy benefits.
What is CEWS?
CEWS stands for the Canadian Emergency Wage Subsidy. It is a federal program released in March of 2020 to help employers retain employees during COVID-19 pandemic restrictions. CEWS essentially pays a portion of the wages an employer pays to their employees. The employees that an employer can make a claim for must meet certain criteria.
As of October 25th, 2020, over 1.4 million applications have been approved, with $45.3 billion being paid to Canadian employers by the federal government.
By mid-May of 2021, Canada’s federal government has paid out over $79 billion dollars in CEWS subsidy to over 3 million applicants.
How Long Will CEWS Be Available?
CEWS was initially intended to be in place until June of 2020. As the coronavirus crisis continues to persist and negatively impact Canada’s economy, CEWS has been extended. As of October 14th, 2020, CEWS is expected to be in effect until June 2021.
May 2021 Update
On April 19, 2021, the Canadian federal government announced a new budget that proposed extending the CEWS program into the late fall of 2021.
Who Qualifies For the Emergency Wage Subsidy?
All eligible employers that have experienced a significant loss of revenue due to COVID-19 during the program’s claim periods, and meet the program’s eligible employer criteria, should apply for wage subsidy relief.
An employer is deemed eligible if they meet one or more of the following criteria:
- Must have had a registered payroll account with the CRA (Canadian Revenue Agency) on or before March 15th, 2020
- Sole proprietorship, such as a small business owner
- A taxable corporation
- A tax-exempt organization, including registered charities and non-profit organizations.
- Certain indigenous government-owned corporations.
- Satisfy the conditions of the Revenue Reduction Test
Demonstrate Revenue Drop
Employers applying for CEWS within claim periods 1 – 4 must demonstrate that a significant drop in eligible revenue occurred during the timeframe of each claim period. This was used for determining eligibility of benefit and benefit amounts from March – June of 2020.
For CEWS applications since July 2020, the minimum revenue drop requirement is not a factor when determining eligibility. All private businesses can apply for CEWS benefits. However, the amount of subsidy a business can receive is determined by the business’s drop in eligible revenue.
What Benefits Can CEWS Provide Qualifying Employers?
CEWS has varying options designed to help Canadian businesses through the COVID19 pandemic. How deeply the company is economically affected by COVID19 determines the amount of CEWS benefit a company may qualify for.
The two main subsidy benefits include base subsidy allotments and top-up.
CEWS base subsidy rate is dependent on the level at which COVID-19 has impacted the business, and the time frame that revenue loss was experienced. The amount a company receives is per employee.
Note: Base subsidy amounts are not the same for every claim period.
Employers that have been hit incredibly hard by the COVID-19 crisis may qualify for additional wage subsidy benefits in addition to the base subsidy amount. To be eligible for top-up benefits, your revenue must have dropped more than 50%.
Note: Top-up subsidy amounts are not the same for every claim period.
The CEWS Wage Subsidy Application Process
To apply for the emergency wage subsidy, first, ensure your company meets the program’s criteria of an eligible employer. We have outlined the requirements for you in the section above.
Next, determine how many of your employees are eligible. Employee eligibility is based on the following criteria:
- Employees must be employed in Canada.
- Employees must be employed by a Canadian employer throughout the claim period.
- Employee benefits coverage may be considered. For a thorough explanation of employee benefit coverages, refer to this link.
Once you’ve determined that your business may be eligible, it’s time to start the application process.
Inform Your Bookkeeping Firm You’d Like to Apply for CEWS
Let your bookkeeping service provider know you’re interested in applying for the CEWS benefit. Ask them if they’re familiar with the program and find out if they’re up-to-date with CEWS recent developments. If your bookkeeping firm already handles payroll duties for your company, they should be able to easily complete most of the application process for you.
If your bookkeeper hasn’t managed the organization’s payroll before, they may need the following information from you before starting the application process.
- Payroll Account number
- Payroll web access code
- Number of employees
- Payroll information
If you don’t employ professional bookkeeping services, you can still complete a CEWS application independently. Just gather the above information and then access the application found on the CRA’s My Business Account online portal.
If you find the application process difficult or daunting, seek the advice of a bookkeeping firm that’s right for you.
Need More Help With Your CEWS Application? Connect with Source Online Bookkeeping
The Source Online team has qualified members dedicated to helping small business owners with their emergency wage subsidy applications. For more information on our bookkeeping services, including CEWS and any BC provincial COVID19 subsidy application inquiries, please browse our website.
We’re happy to answer any questions you may have and help you with your business’ bookkeeping needs.