There have been some changes to interpretation and calculation rules for the wage subsidy programs.

Buried deep in the CRA gateway for CEWS is a clarification of how it integrates with the 10% TWS program (see a copy of it here).

The way the TWS rules were written, employers eligible for the subsidy are deemed to receive credit for their eligible benefit, even if they do not claim credit for the benefit.

For this reason, the CEWS calculation requires that an applicant reduce the claim for the TWS benefit they are eligible to receive (not the TWS benefit they have claimed).

An eligible employer for the TWS program is:

• An individual (not a trust)

• A Canadian controlled private corporation that had a small business limit allocation in its last tax year ended before March 18, 2020

• A registered charity

• A not-for profit organization

• A partnership where all members are individuals, CCPC’s with small business limit allocations, or registered charities.

Note that for an associated group of corporations, there must have been a small business limit allocated to the employer (not just a company that would have been eligible if there were an allocation).

This will produce an inconsistent tax treatment between groups that split the small business limit across multiple companies, compared to groups that allocated the entire limit to one company.

The TWS is equal to 10% of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee to a maximum of $25,000 total per employer. Accordingly, the TWS benefit for a particular CEWS claim period may not be equal to 10% of the gross remuneration for the CEWS calculation, depending on consistency of payroll amounts and timing of payments.

Employers that have calculated their CEWS benefit without factoring in the 10% TWS benefit (because they were not planning to claim it) will need to redo their calculations.

For employers who may have submitted their first CEWS application with a calculation error, CRA is reportedly developing a method to allow for making an amendment – this is yet to be confirmed.

Please contact us to discuss your specific circumstances.

The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Accordingly, the information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. While we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Again, no one should act upon any information contained herein without seeking appropriate professional advice after a thorough examination of their particular situation.