Skip To Content

COVID-19 Business Wage Loss Subsidies

Author(s): Dov Begun, Colena Der

Mar 24, 2020

Last updated: April 2, 2020

For further information on the changes below or other tax matters, please contact one of the authors above or any member of our National Tax Group.

On March 27, 2020, the federal government announced the Canada Emergency Wage Subsidy. This program is intended to assist businesses to keep and return workers to their payroll by providing a 75% wage subsidy to eligible employers for up to 12 weeks retroactive to March 15, 2020.

Additional details on the scope and eligibility criteria were provided by the Minister of Finance, Bill Morneau, on April 1, 2020.

The Canada Emergency Wage Subsidiary is a supplement to, and not a replacement of, the 10% Temporary Wage Subsidy that was announced on March 18, 2020. The Temporary Wage Subsidy is discussed in the second part of this article.  

Canada Emergency Wage Subsidy

The Canada Emergency Wage Subsidy will provide a 75% wage subsidy for eligible  employers. The subsidy is up to $847 per week per employee and there is no limit on the aggregate amount of the subsidy that may be claimed by an eligible employer.

The program will take effect retroactively and will be in place for 12 weeks from March 15 to June 6, 2020.

Eligible Employers

Employers who have suffered a drop in gross revenues of at least 30% in March, April or May will be eligible for the subsidy.

Eligible employers will include individuals, taxable corporations, and partnerships consisting of eligible employers, as well as non‑profit organizations and registered charities. Public bodies (including municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals) will not be eligible for the subsidy.

The Canada Emergency Wage Subsidy will be available to a larger group of corporate employers than the previously announced Temporary Wage Loss Subsidy. Based on the details provided, public listed corporations and Canadian subsidiaries of multinational corporations will be eligible for the subsidy provided they meet the decrease in revenue criterion.

Subsidy Amount

The subsidy for an eligible employer will be calculated per employee as the greater of:

  • 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
  • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less.

The result is that  for existing employees, employers may be eligible for a subsidy of up to 75% of pre-crisis wages or salaries of these employees even if these employees were paid less during the period of the program. For example, assuming that an existing employee earned a salary of $1,000 per week prior to the covid-19 crisis, the employer would be entitled to a subsidy of $750 per week even if the employer pays the employee less  than $1,000 per week during the program period. The government will provide further guidance on how to determine an employee’s pre-crisis renumeration. Employers are encouraged to use their “best efforts” to pay to existing employees 100% of their pre-crisis wages in order to access the 75% subsidy on the pre-crisis wages. No specific guidance, however, has been given as to what would be considered “best efforts” or  the consequences for the failure to do so.

For new employees hired during the term of this program, employers will be eligible for a subsidy of up to 75% of salaries and wages actually paid to new employees.

For employees who are non-arm’s length to their employer (for example, individuals operating through professional corporations), the subsidy amount will be limited to the eligible remuneration actually paid during the program term, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration.

Eligible remuneration may include salary, wages and other remuneration. Renumeration in the form of severance pay, stock option benefits and the personal use of a corporate vehicle are expressly stated not to be eligible for the subsidy.

The amount of the subsidy must be reported by the eligible employer as income in the year it is received.

30% Revenue Decrease

The 30% revenue decrease will be measured monthly during the term of the program and compared against the revenues from the corresponding month in 2019. For eligible employers established after February 2019, eligibility would be determined by comparing monthly revenues to a reasonable benchmark.

An employer’s revenue for this purpose will be its revenue from its business carried on in Canada and earned from arm’s-length sources. Revenue would be calculated using the employer’s normal accounting method and would exclude revenues from extraordinary items and amounts on account of capital. The government acknowledged that this revenue criteria may not be appropriate for all business sectors and specifically noted non-profit organizations and registered charities. Minister Morneau further acknowledged the potential difficulty of applying this criterion to start-up businesses and businesses in the technology sector and that these businesses may be inappropriately excluded from the relief program. The Minister noted that the government is still finalizing the eligibility criteria.  


The 75% subsidy will take  the form of a refund. Eligible employers will be able to access the Canada Emergency Wage Subsidy by applying through a Canada Revenue Agency online portal. At the time of application, employers will have to attest to the decrease in revenues to qualify for the subsidy and will be required to keep records demonstrating the reduction in revenues and the remuneration paid to employees. The government will be providing more details at a later date on how to apply for the subsidy. Eligible employers will also be required to re-apply for the subsidy for each month in which they experience the revenue decrease.

If an employer is subsequently determined to not be eligible for the Canada Emergency Wage Subsidy, the employer will be required to repay any amounts paid under the program and penalties may apply in cases of fraudulent claims. In addition, the government announced that anti‑abuse rules will be proposed to ensure that the subsidy is not inappropriately obtained and  is also considering proposing new offences to address organizations who provide false or misleading information to access the subsidy or who misuse any funds obtained.

Temporary Wage Subsidy

The Temporary Wage Subsidy will be an amount equal to 10% of the total remuneration paid during the period between March 18, 2020 and June 20, 2020 up to a maximum of $1,375 per employee and $25,000 per employer.

The subsidy will apply to:

  • individuals (other than trusts);
  • corporate employers that are Canadian controlled private corporations (“CCPCs”) and have taxable capital employed in Canada for the preceding taxation year (calculated on an associated basis) that is less than $15 million;
  • registered charities;
  • non-profit organizations; and
  • partnerships whose members include individuals (excluding trusts), eligible CCPCs or registered charities.

While the Temporary Wage Relief program is referred to as a subsidy, the relief takes the form of a reduction in the amount of federal, provincial or territorial income tax that would otherwise be required to be remitted to the CRA. The subsidy cannot be used to reduce the remittance of Canada Pension Plan contributions or Employment Insurance premiums. It also cannot be used to reduce the amount of remittances made to Revenu Quebec.

Eligible employers can start reducing remittances of income tax in the first remittance period that includes remuneration paid between March 18, 2020 and June 20, 2020. The subsidy is only relevant for purposes of determining the required remittances to the CRA and does not impact the employees. Additionally, eligible employers must continue deducting income tax, CPP contributions and EI premiums (as required under the applicable legislation) from salary, wages, bonus and other remuneration paid to employees. The amount of the subsidy will be required to be reported by the eligible employer as income in the year it is received.

Eligible employers that are claiming the subsidy are required to keep supporting records, which include (i) the total remuneration paid between March 18, 2020 and June 20, 2020, (ii) the amount of federal, provincial and territorial income tax that was deduced from that remuneration, and (iii) the number of employees paid in the period.

No Duplication of Benefits under Subsidy Programs

The government noted that organizations that do not qualify for the Canada Emergency Wage Subsidy may continue to qualify for the Temporary Wage Subsidy. The benefits received under the Temporary Wage Subsidy will reduce the organization’s entitlements under the Canada Emergency Wage Subsidy.

Additional Information

Additional information on the Federal Government’s wage subsidy measures can be found on the CRA and Department of Finance websites at the following links:

Frequently Asked Questions – Temporary Wage Subsidy for Employers

Canada Emergency Wage Subsidy – Press Release

Canada Emergency Wage Subsidy – Backgrounder

Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses

Stay informed of this topic and related matters with timely updates from our legal team.

Subscribe now