How to Know If You Apply for CEWS
If you are an employer who has been affected by the pandemic and have not accessed the Government of Canada’s CEWS Benefit, you can learn who is eligible and what requirements you need to apply.
Who Canada Emergency Wage Subsidy
Who can Apply for CEWS?
Type of employer to apply for CEWS
- A corporation or a trust that is not a public institution or a company or a trust that is exempt from tax under Part I of the Income Tax Act (the Act).
- A natural person who isn’t escrow.
- A non-profit organization (other than a public institution).
- A person (other than a public institution) who is exempt from taxation under Part I of the Act, such as:
- An agricultural association, a board of trade, or a chamber of commerce.
- A non-profit organization dedicated to scientific research and development.
- A trade union or a society of workers.
- An organization or society that is charitable or fraternal; and
- A charitable organization;
- A firm whose members are any of the people or companies listed in this schedule.
- A regulated entity, such as certain indigenous companies.
- A school, school board, hospital, health authority, public university, or college are also examples of public. institutions.
- Municipalities and local governments, as well as tax exempt Crown corporations, are examples of organizations cited in paragraphs 149(1)(a) to (d.6) of the Income Tax Act.
Types of criteria to apply CEWS
To be eligible for the CEWS payroll subsidy you must have a CRA payroll account on file as of at least March 15, 2020. There are a couple of different situations with the CRA Account that may be exceptional.
Exceptional Situarion 1: The remittances were made on your behalf by another person or company.
Exceptional Situarion 2: You have purchased all (or almost all) of the assets of another person’s or company’s business.
Negative effect on income
In order to apply for CEWS, you have had to suffer a reduction in income, which is calculated by comparing your eligible income during the crisis with your eligible income from a previous period (baseline income).
- To be eligible for the subsidy in periods 1 to 4, you must demonstrate that your qualifying income decreased by a certain percentage. The subsidy calculation assumes a fixed rate of 75% if you meet the minimum revenue drop. To calculate the % Decrease in Income you must take the income of the current period 1-4 and divide it by the income of the previous period 1-4. Then you must take the number 1 and subtract the result, this will give you the % decrease. In no case it should give 0 or negative values.
- There is no minimum revenue drop needed to qualify for the subsidy for claim periods 5 and later (claims covering July 5, 2020 and later). The amount of subsidy you receive for these periods is solely determined by the rate at which your income has decreased.
Acceptable income to apply for CEWS
Revenue acquired in Canada from the following sources is commonly considered eligible revenue:
- goods for sale
- providing services, and
- use of your resources by others
When calculating your eligible income, you can generally use your standard accounting method. If you normally use the accrual method, you can opt to use the cash method (and vice versa), so you must use the same accounting procedure for all of your claims once you’ve made your decision.
You must check the “cash method” election box when submitting your application if you want to use the cash method.
Special revenue cases
Non-profit associations and registered foundations
Donations are considered eligible income for registered charities, non-profits, and certain prescribed organizations. When determining eligible income, these agencies may choose whether or not to include federal funds, such as grants. Once you’ve made your decision, you must follow the same procedure for each application period.
Affiliated organisations and non-length arm’s trade
Special regulations apply to income related to:
- A few trades that aren’t at arm’s length.
- Organizations that are connected.
Changes in ownership and amalgamations
When two or more employers merge, or when an employer buys all (or nearly all) of the assets used by a person or partnership to run a company in Canada, special regulations apply to determining eligible income.
Finally, if a mistake was made in processing the application, you may request that the application be amended with a new application and the old one fixed.
