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July 23, 2020

Canada redesigns and extends the Canada Emergency Wage Subsidy (CEWS 2.0)

The Canadian federal government is extending the Canada Emergency Wage Subsidy (the "CEWS") through to November 2020 and proposing major changes that will provide a wage subsidy to any employer who has experienced a revenue decline between July 2020 and November 2020 when compared, generally, to the respective prior month in 2019. Key elements of the redesigned CEWS are:

  • A base subsidy, calculated on a sliding scale that gives more support to businesses with higher rates of revenue decline;
  • A top-up subsidy of up to 25% for employers most affected by the COVID-19 crisis;
  • A safe harbour rule to ensure that an employer with a revenue decline of 30% or more will receive no less for periods 5 and 6 under the redesigned CEWS program than they would have under the initial design; and
  • A separate CEWS rate structure for furloughed employees.

A Tax Alert prepared by Ernst & Young Canada, and attached below, provides additional details.


Full text of Tax Alert