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Considering the magnitude of the health crisis and its innumerable repercussions on all business activities in Canada, the federal government decided in July to substantially extend the Canada Emergency Wage Subsidy (CEWS), one of the most important measures put in place to support businesses.

Emilie Beaudoin
B.A.A., M. Fisc., Fin. Pl.

Tax Specialist

Overview of the latest developments

To help you fully understand the impact of this announcement, we will examine the additions and changes now in effect as well as their terms and conditions for employers and their employees. This will give you an overview of the situation and enable you to react to ensure the continuity of your business activities.

Latest developments

On July 17, 2020, the federal government announced the extension of the CEWS until December 19, 2020. The main changes concern the extension of eligibility to employers whose drop in income was less than 30% and the replacement of the subsidy in place by a new subsidy with two components: a “base” subsidy and a “top-up” subsidy. Under this enhanced approach, the maximum combined subsidy could be up to 85% of eligible remuneration, for a maximum weekly benefit of $960.

Income thresholds and subsidy rates

How does this new two-pronged subsidy work?

  • The base wage subsidy is established on a sliding scale according to the drop in the employer’s revenue, including employers whose revenue drop is less than 30%. See the table of rates
  • The top-up subsidy concerns only employers who have experienced an average revenue drop of more than 50% over a three-month period. These employers are eligible for a top-up subsidy calculated at a rate of between 6.25% and 25.00%. See the table of rates

These two subsidies came into force on July 5 and are calculated on a maximum weekly benefit of $1,129 per employee.

Ready, set, calculate!

In addition, beginning with the July reference period, you can now, as an employer, choose to calculate your revenue drop for the purposes of the subsidies using one of two different approaches: the general approach or the alternative approach. Note, however, that once you choose a method, you will have to use it for all subsequent subsidy periods.

Consult the calculation tables for the authorized methods.

Base subsidy Top-up subsidy

Which employees are eligible for the subsidies?

The eligibility criteria have been expanded: now, employees who have received no remuneration for 14 consecutive days or more in a given period since July 5 will also be eligible for the wage subsidy. These employees were previously ineligible for the subsidy. However, employees on temporary layoff are still not eligible.

Alexandre Hunault
LL.M. Fisc., F.Pl.

Tax Specialist


To explain things more concretely, consider the following fictitious case which will give an idea of the impact of the changes.

Clinique dentaire Québec inc. closed its doors from March 15 to May 31, 2020 due to the COVID-19 pandemic. It could then only respond to some of its clients’ emergency needs. Its revenues therefore dropped substantially from those generated in 2019.

Clinique dentaire Québec inc.
Summary table of revenue earned

  • The average revenue earned in January and February 2020 is $110,000/month.
  • The dentist who owns the clinic applied for the CEWS for periods 4 and 5 during the gradual recovery of his clinic in June 2020.
  • He is now wondering if he is eligible for the modified CEWS for fall 2020, knowing that his clinic has gradually resumed its activities.
1. Eligibility for the base subsidy

To calculate the base subsidy, it is first necessary to determine the applicable subsidy rate and, therefore, the percentage drop in revenue. This is where the choice between the general approach and the alternative approach is made.

Use the method that shows the greatest revenue drop.

  • In the current situation, the owner dentist should opt for the general approach, considering that this approach shows a drop of 65% for the month of June.
  • The subsidy calculation table then enables you to determine what the base subsidy rate will be for a revenue drop of 65% during period 5. This rate is 60%.
  • Since the maximum benefit is $1,129 per employee per week, the employer can expect to receive a wage subsidy of $677 ($1,129 X 60%) per week during the period concerned.
2. Eligibility for the top-up subsidy

If the revenue drop is greater than 50%, the top-up subsidy can be claimed, which is 1.25 times the amount of revenue drop exceeding 50%.

Your calculation method should be the same as the one you chose to calculate the base subsidy. In this case, it is the general approach.

  • The maximum subsidy rate is 25% for employers who have suffered a revenue drop of more than 70%. According to the calculations, the employer of Clinique dentaire Québec inc. can therefore receive a top-up wage subsidy of $282 in addition to the base wage subsidy of $677, i.e. a maximum benefit of $960 per employee.

As you can see, the new government measures can be advantageous for you during the resumption of your activities and help you restore your business to financial health faster.

If you have questions about the new subsidies and their relevance in your situation, speak to your advisor. We’re a strong team and we’re ready to share our expertise and our financial intelligence to help you get back on your feet and ensure the sustainability of your professional activities. Let’s talk!

Émilie Beaudoin, B.A.A., M. Fisc., Fin. Pl.
Tax Specialist

Alexandre Hunault, LL.M. Fisc.
Tax Specialist

The information contained herein has been obtained from sources deemed reliable, but we do not guarantee the accuracy of this information, and it may be incomplete. The opinions expressed are based upon our analysis and interpretation of this information and are not to be construed as a recommendation. For any questions, don’t hesitate to contact your wealth management advisor or your tax specialist, accountant or legal advisor.


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