In recent news, the Canada Emergency Wage Subsidy has been extended to December 2020. The Government has also however, released some additional criteria that affects the program until December 2020. Businesses previously not eligible to receive CEWS may now qualify to receive a subsidy. The Government has also added an additional Top-Up Subsidy for businesses with severely impacted revenues.

What are the changes?

  • The enhancements to CEWS rules applies from the period starting July 5th, to the period ending November 21st
  • Employers with less than 30% decline of revenue may also now qualify for CEWS starting July 5th
  • Financial support and wage subsidies will now be provided based on a sliding scale dependent on the extent of revenue decline
  • An additional ‘Top-Up’ Subsidy has been announced and it has the potential to provide the highest amount of subsidy per employee per week of $960-$1129
  • Applicants are now allowed to use prior moths revenue as a reference to their revenue decline
  • The new rules also allow employers to receive the subsidy if they have been without remuneration for 14 or more consecutive days
  • Should the new rules provide employers with a lower subsidy, a ‘Safe Harbour’ rule has been put in place that allows employers to receive their previous subsidy amounts for July and August (Period 5 & 6)

Sliding Scale

Due to the enhancements made to CEWS, the subsidy is now dependent on the extent of the employer’s revenue decline. The amount of subsidy then will be reduced gradually until December 2020.

Here is a guide for you:

 Period 5Period 6Period 7Period 8Period 9
Revenue Reduction %% of Eligible Remuneration Subsidized by CEWS
50% or above60%60%50%40%20%
0-49%1.2x revenue decline1.2x revenue decline1.0x revenue decline0.8x revenue decline0.4x revenue decline
Maximum Weekly Subsidy Per Employee
 Up to $677Up too $677Up to $565Up to $452Up to $226
 

Employers with revenue declines up to 49%, the employer will multiply the revenue decline with the factor listed to determine the percentage of employees’ salaries they will receive through CEWS.

Companies with revenue declines of 50% or greater will receive the maximum of 60% of their employees salaries as part of CEWS and may also be eligible for an additional ‘Top-Up’ Subsidy. This maximum percentage of the CEWS subsidy will then be gradually reduced.

Previous rules required the subsidy to be determined against numbers from the same months of the year 2019. In the enhancement, these reference period have also changed.

An employer can now choose between referencing numbers from the same month of prior year 2019 or the average between January and February of 2020.

For Period 5, an employer may choose either method regardless of how their eligibility was determined in the previous CEWS periods. The chosen method, however, must be followed throughout the extension of CEWS until December 2020.

Claim Period2019 Reference Same Year Reference
Period 5 (July 5 – August 1, 2020) July 2020 to July 2019 or June 2020 to June 2019June or July 2020 to the average of January and February 2020
Period 6 (August 2 – August 29, 2020) August 2020 to August 2019 or July 2020 to July 2019July or August 2020 to the average of January and February 2020
Period 7 (August 30 – September 26, 2020) September 2020 to September 2019 or August 2020 to August 2019August or September 2020 to the average of January and February 2020
Period 8 (September 27 – October 24, 2020) October 2020 to October 2019 or September 2020 to September 2019September or October 2020 to the average of January and February 2020
Period 9 (October 25 – November 21, 2020) November 2020 to November 2019 or October 2020 to October 2019October or November 2020 to the average of January and February 2020

Top-Up Subsidy

In the enhancements to CEWS, an additional Top-Up subsidy was also announced. This new subsidy will be available to employers who have experienced a three-month average decline greater than 50%. The Top-Up Subsidy rate is equal to 1.25x the average decline over 50% up to a maximum Top-Up rate of 25%.

Here is a table for your reference:

Three Month Average Revenue DeclineTop-Up Calculation
70% and above1.25 x (70%-50%) = 25% top-up
65%1.25 x (65%-50%) = 18.75% top-up
60%1.25 x (60%-50%) = 12.5% top-up
55%1.25 x (55%-50%) = 6.25% top-up
50% and below0% top-up

This Top-Up subsidy uses a three-month average to determine the revenue decline for an eligible employer. Since it is different from those of the CEWS subsidy, here are the following reference periods:

Claim Period2019 Reference Same Year Reference
Period 5 (July 5 – August 1, 2020) April, May, June 2020 to April, May June 2019Average of April, May, June 2020 to January and February 2020
Period 6 (August 2 – August 29, 2020) May, June, July 2020 to May, June, July 2020Average of May, June, July 2020 to January and February 2020
Period 7 (August 30 – September 26, 2020) June, July, August 2020 to June July, August 2019Average of June, July, August 2020 to January and February 2020
Period 8 (September 27 – October 24, 2020) July, August, September 2020 to July, August, September 2019Average of July, August, September 2020 to January and February 2020
Period 9 (October 25 – November 21, 2020) August, September, October 2020 to August, September, October 2019Average of August, September, October 2020 to January and February 2020

CEWS Employee Eligibility Changes

  • Employees without remuneration for 14 or more consecutive days in a period are eligible for CEWS from July 5, 2020 onwards
  • These changes do not apply to employees who have been furloughed for July and August
  • The subsidy however will be adjusted for furloughed employees in September 2020
  • The remuneration for arm’s length employees is based solely on remuneration paid for the eligibility period and reference to the ‘pre-crisis’ remuneration has been removed
  • For non-arm’s length employees, the calculation for ‘pre-crisis’ remuneration has been increased to include March 1, 2019 to May 31, 2019 or from March 1, 2019 to June 30, 2019
  • For the upcoming periods, average weekly remuneration from January 1, 2020 to March 15, 2020 or from July 1, 2019 to December 31, 2019 can be used as ‘pre-crisis’ remuneration
  • It is only applicable however for non-arm’s length employees employed before March 16, 2020

More Information:

  • There is no appeal process for the subsidy amount to the Tax Court of Canada
  • Registered and eligible public institutions such as charities and non-profit organizations can choose to exclude government sourced revenue and not in revenue reduction calculations
  • Eligible employers applying for subsidies that use a cash method of accounting may use accrual-based accounting
  • Amalgamated corporations may use combined revenues to calculate their benchmark revenues
  • Specific tax-exempt trusts may qualify for the subsidies as well

Please click here for more information regarding the new CEWS guidelines from CRA.

Federal COVID-19 Support: Programs to Come

Program Name
Description
Contact Details
Canada’s Emergency Processing FundA $77.5M fund to help producers access more PPE; adapt to health protocols; automate or modernize their facilities, processes and operations; and respond to emerging pressure of COVID-19More details to be released
Website:https://pm.gc.ca/en/news/news-releases/2020/05/05/supporting-canadas-farmers-food-businesses-and-food-supply
Surplus Food Purchase ProgramAn initial $50M fund designed to help businesses redistribute existing and unsold inventory to local food organizations.More details to be released
Website:https://pm.gc.ca/en/news/news-releases/2020/05/05/supporting-canadas-farmers-food-businesses-and-food-supply


Notes:
These programs have been announced, but further details have not been released yet. It is recommended to keep an eye out for more details regarding these programs, as they may be valuable during the recovery phase.

Other Federal Programs

Program Name
Description
Potential Funds
(% & max)
TimelineContact Details
Youth Employment and Skills ProgramWage subsidy for employers that hire youth in agricultural jobs. Additional funding can be provided for travel and accommodation costs if relocation is required.Up to 50%, to a max of $14,000Ongoing.

Work terms must completed by Mar 31, 2021

Tel: 1-866-452-5558
Email: aafc.yesp-pecj.aac@canada.ca
Website: http://www.agr.gc.ca/eng/agricultural-programs-and-services/youth-employment-and-skills-program/?id=1557778999519
Agri-AssuranceSupports the implementation of third-party assurance certification projects that address market and regulatory requirements.

To be eligible, businesses must have less than 250 employees and annual revenues less than $50M.

Up to 50% to a max of $50,000Ongoing until Sept 30, 2022Farm Credit Canada
Tel: 1-877-246-4682
Email:aafc.assurance.aac@canada.ca
Website:http://www.agr.gc.ca/eng/agricultural-programs-and-services/agriassurance-small-and-medium-sized-enterprise-component/?id=1517865477303
Agri-InnovateRepayable contributions for efforts in the commercialization, adoption, or demonstration of innovation that increase agri-sector competitiveness and sustainability.Up to 50%, to a max of $10MOngoing

Projects must be completed by Mar 31, 2023.

Tel: 1-877-246-4682
Email: aafc.cap-aip.pca-pai.aac@canada.ca
Website:http://www.agr.gc.ca/eng/agricultural-programs-and-services/agriinnovate-program/?id=1515682916298

Notes:These are some other Federal programs, not directly related to the COVID-19 crisis, but may be valuable in accessing financial support if applicable.

Ontario-Specific Programs

Program Name
Description
Potential Funds
(% & max)

Timeline
Contact Details
Agri-food Workplace Protection ProgramFor modifications within an operation to implement social distancing measures (e.g. physical barriers) and improve health and safety in response to COVID-19. Includes temporary/permanent modifications, PPE, cleaning/disinfection, medical equipment/services.75%, up to a max of $20,000Ongoing, as long as funding is available

Projects must be completed by Nov 30, 2020

Tel: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Website:
http://www.omafra.gov.on.ca/
english/cap/meatplants.htm
Addressing Labour Supply and TrainingFocuses on efforts to help build a strong labour force for agri-food and agri-product sectors through the implementation of new, enhanced or expanded approaches to attract, train and retain labour.Up to 90%Ongoing

Projects must be completed by Sept 30, 2022

Tel: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Website:
http://www.omafra.gov.on.ca/
english/cap/
/labour_supply_training.htm
Agri-food Open for E-BusinessStream 1focuses on efforts to establish an online e-business and marketing presence to retain/expand sales.

Stream 2 focuses on efforts to develop and implement high-impact online e-business opportunities on a larger scale.

Stream 1: Up to $5,000
Stream 2: Up to 90%, to a max of $75,000
Currently closed, may reopen if funding remains

Projects must be completed by Nov 30, 2020 (Stream 1), or Sept 30, 2022 (Stream 2)

Tel: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Website:
http://www.omafra.gov.on.ca/
english/cap/ebusiness.htm


Notes:
These programs are specific to Ontario. The E-Business program is currently not accepting new applications, however, if interested, it would be good to keep in mind as they may reopen intake. The Agri-food Workplace Protection Program may be particularly valuable currently as the province slowly reopens.

Program Name
Description
Potential Funds
(% & max)

Timeline
Contact Details
Market Access InitiativeHelps businesses that are directly involved or support production, processing and/or sales of agri-food and agri-products and have been impacted by trade restrictions. There are streams that focus on accessing new, emerging markets; and sector diversification in domestic or export marketsUp to 75%, to a max of $20,000-$30,000OngoingTel: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Website: http://www.omafra.gov.on.ca/
cap/market_access.htm
Place to Grow: Funding for SectorsSupports collaborative efforts to address challenges within the sector relating to priority areas of Economic Development, Environmental Stewardship, and Protection and Assurance.Up to 50%. Max of $100,000 on eligible capital costsOngoing

Projects must be completed by Sept 30, 2022

Tel: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Website: http://www.omafra.gov.on.ca
/english/cap/sectors.htm
Place to Grow: Strategic SolutionsHopes to accelerate the creation and adoption of innovative solutions to sector challenges, and improve sector competitiveness and sustainability relating to Economic Development, Protection and Assurance, Environmental Stewardship, and Research and Innovation. This program is meant for larger projects, with a suggested minimum government contribution of $250,000Up to 75%, up to $1M. Max of $500,000 on eligible capital costsOngoing

Projects must be completed by Dec 1, 2022

Tel: 1-877-424-1300
E-mail: ag.info.omafra@ontario.ca
Website: http://www.omafra.gov.on.ca/
english/cap/strat-solutions.htm


Notes:
These programs are specific to Ontario. The E-Business program is currently not accepting new applications, however, if interested, it would be good to keep in mind as they may reopen intake. The Agri-food Workplace Protection Program may be particularly valuable currently as the province slowly reopens.