CEWS UPDATE – JULY 2020

Written by Shelley Ricketts on Jul. 27, 2020

On July 17, 2020, the Government of Canada announced proposed changes to the Canada Emergency Wage Subsidy (CEWS) to allow greater access to the program by employers. 

While the proposed changes loosen eligibility requirements, there is added complexity, most significantly on how benefits are calculated for qualifying periods beginning after July 4, 2020. 

The New Qualifying periods in the extension period are as follows:

New Qualifying PeriodCurrent Reference PeriodPrior Reference Period
4June 7 – July 4, 2020June 2020June 2019
5July 5 – August 1, 2020July 2020July 2019
6August 2 – August 29, 2020August 2020August 2019
7August 30 – Sept 26, 2020September 2020September 2019
8September 27 – October 24October 2020October 2019
9October 25 – November 21November 2020November 2019

The revenue test rules remain unchanged for period 4, however for periods 5 through 9 there is a new benefit calculation that includes four new concepts:

  • Base percentage
  • Revenue reduction percentage
  • Top-up percentage
  • Top-up revenue reduction percentage

The new formula for calculating the CEWS benefit available to employers is meant to increase the number of employers who are eligible for CEWS while at the same time reducing the amount of CEWS benefit available to employers that have not experienced very significant (i.e. 50% or greater) reductions in revenue.  

While the calculation changes in period 5 and 6 could have significant impact to employers who have not seen significant revenue reductions (i.e. over 70%), a safe harbour rule applies to ensure that employers have access to a CEWS rate that is at least equal to what they would have been eligible for in periods 1 through 4. 

The CEWS benefits available to employers are also being phased out over the new qualifying periods with more significant reductions in periods 7, 8 and 9.   Employers would receive a maximum weekly CEWS benefit of $847 per employee in period 7, $734 per employee in period 8 and $508 per employee in period 9.  Employers who have not experienced a revenue decrease of at least 50% would be entitled to a maximum benefit of $565, $452 and $226 for those same periods.

While the revenue test changes are the most significant amendments, there are other changes as well that impact the subsidy employers are eligible for, some key ones summarized below:

  • For qualifying periods beginning after July 4, 2020 any employee with eligible remuneration during a qualifying period is deemed to be an eligible employee.  Previously, employees without remuneration for 14 or more consecutive days in a qualifying period were excluded
  • Baseline remuneration will be amended for non-arms length employees to permit an employer to elect to use the period from March 1 – May 31, 2019 to calculate baseline remuneration for the original CEWS qualifying periods.  For period 4, employers also have the option to calculate baseline remuneration from March 1, 2019 – June 30, 2019.  For all other periods, the employer will either use January 1, 2020 to March 15, 2020 or can elect to use the period July 1, 2019 to December 31, 2019 to calculate baseline remuneration.
  • The January/February prior reference period rules clarify that employers may elect to use this separately for the qualifying periods ending on our before July 4, 2020 and the qualifying periods beginning after July 4, 2020. 

While the extension of the CEWS program is welcome news for the business community, the amendments for the CEWS program add considerable complexity and risk for employers.  There are a number of calculations and various factors to consider and significant penalties can apply where an employer receives CEWS but is ultimately found not to be eligible.  We recommend that employers should work with their accounting professional for assistance in determining their eligibility, understanding how to apply and having the appropriate documentation to prepare for a review by the CRA.

If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email with the subject “CEWS Proposal Request” and one of our professionals will be in contact shortly.

Shelley Ricketts

Shelley Ricketts

Cloud Accounting Manager

Shelley joined KWB in January 2011 as a part-time accounting technician subcontractor. Prior to joining KWB, she worked in a similar role with a smaller accounting firm for over twelve years but was looking for a change and KWB delivered the work environment and flexibility that she was looking for.

Along with many years of public accounting experience, Shelley brings an extensive bookkeeping background to KWB and is a Certified QuickBooks ProAdvisor (QBO Advanced Certification, QB Desktop Certification and NAIT Accelerated Accounting Certification), as well as being a Workflow Implementation Specialist (or as Shelley calls it, the Cloud Whisperer), In addition to working on corporate files, she also provides remote and on-site client training and assistance in both Quickbooks and Simply Accounting.

Shelley lives outside of Sherwood Park on an acreage with her husband and two boys, three horses and two dogs. Away from work and the acreage, she enjoys camping trips with the family and afternoon trail rides with friends.

Shelley is the Treasurer for the War Horse Awareness Foundation and has been since the Foundation began.

Shelley’s favourite quotation: “What you do today can improve all your tomorrows” – Ralph Marston.

Shelley's Contact Information

Other Posts by Shelley

May 22 2018
Quickbooks ProAdvisor

There are many benefits that KWB receives as a member of the Quickbooks ProAdvisor program and can pass along to you. Read about what they are, including some potential cost savings for you.

May 15 2018
Remote Support

Would you like to have a KWB staff person work directly on your accounting system at a time that is convenient for you? Or to help you figure out why your accounts aren’t balancing or why your accounting software has crashed? KWB is here to help! Learn more about our remote accounting support.

Nov 19 2019
7 Perks of Having a Data Manager (Bookkeeper )

A good data manager should ensure that: You are compliant with the CRA at all times.  You are focused on your business, not the data.You are capturing and recording all expenses for tax deductions.You have timely and accurate information available to make better decisions.You have efficient processes for capturing data

May 16 2017
Quickbooks Online - Free For Clients of KWB

QuickBooks Online (QBO) is a cloud based version of the traditional QuickBooks desktop accounting software that offers some great features and accessibility not available from the desktop environment. Cloud basically means it resides on and is accessible through the internet. We like it so much that effective July 1, 2017 we are offering it at

Jan 23 2015
Fraud from mobile banking deposits

Technology is constantly evolving and many commercial banks are using the latest technology advances. Some of these include mobile banking, electronic payments and mobile cheque deposits or Mobile Remote Deposit Capture (MRDC). We have all seen the commercials showing us how easy it is to deposit a cheque by taking a picture of it with

Jun 11 2019
Switching to Quickbooks Online (QBO)

Considering making the switch from Desktop (Quickbooks or Sage) or paper to the cloud? (QuickBooks Online (QBO)) If you are currently using the Desktop version of QuickBooks, you need to be aware that QBO is not the same program and doesn’t really look anything like the Desktop product.  Don’t let that scare you off

Nov 9 2017
Jobber

Jobber is a cloud based software solution designed for small and medium sized field service businesses that works with Quickbooks Online (QBO). It has a number of features that are designed to help you run a better business by helping you manage finances, client requests and a busy team. Jobber integrates scheduling, quotes, invoices and

May 21 2020
Eligibility Criteria Expanded for Canada Emergency Business Account – CEBA

The Government of Canada has announced an expansion to the eligibility criteria for the Canada Emergency Business Account (CEBA) to include many owner-operated small businesses. The changes to CEBA will allow more Canadian small businesses to access interest free loans of up to $40,000 to help cover operating costs during a period when

Apr 24 2020
Canada Emergency Commercial Rent Assistance (CECRA)

The Canada Emergency Commercial Rent Assistance Program (CECRA) has been announced to provide rent relief for small businesses struggling to pay their landlords due to financial hardship as a result of COVID-19 for the months of April, May and June 2020.  Who is Eligible? Affected small business tenants who meet the following criteria: