Canadian Emergency Wage Subsidy – New Changes Announced to Periods 8-10 (Oct-Dec)

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The Federal government has been consistently coming out with subsidy details in a ‘just in time’ format, but this time their latest changes are a little retroactive and some businesses may have already submitted Period 8 claims. If you have already submitted you’ll want to go back and crunch the numbers again and see if you qualify for more with the new change.

What’s the new change you ask? Well first let me remind you that the program has been based on a Base Subsidy and a Top Up Subsidy ever since Period 5. When summed together they confirm the Subsidy rate that you will apply against your eligible payroll. In Period 8 the Base Subsidy remains unchanged at .8 multiplied by your revenue decline to a maximum of 40%. It is the Top Up Portion that is changing.

What has changed about the Top Up Portion? Well firstly let me remind you that this is for those companies that have had a greater than 50% revenue decline. Currently, the top up wage subsidy is determined based on the revenue drop over the preceding three months compared to the same months in the prior year (or comparing the monthly average during those months to the average to Jan/Feb for those using the alternate approach). But now the program is attempting to be more responsive to sudden changes in revenue by instead, harmonizing the top up portion with the base subsidy portion so that both are being calculated based on the change in monthly revenues, year over year, for either the current or previous calendar month (or again for alternate approach would be Jan/Feb average).

All businesses have been impacted differently from the pandemic but some seasonal businesses were able to grow revenues in the summer only to experience shutdowns or traumatic hits to their revenue once the weather chilled and further restrictions were put in place. For these businesses these changes will make a material difference.

How much is the total wage subsidy? The maximum combined subsidy is still 65% and keep in mind there is a maximum per person subsidy that is up to $734 but will be lower if your calculated subsidy rate is deemed to be less than the maximum 65%.

What else should I keep in mind? The choice to calculate the Top up based on the trailing three months or the current month is part of the Safe Harbour Rule covering periods 8-10. This means that the trailing three month calculation will be retired in period 10. This will provide a little more simplicity for periods 11 onwards (hopefully).

What about furloughed employees? For business owners that are paying employees that are on leave (referred to as furlough), the subsidy rate is changing as well to make it more aligned with the benefits provided by EI. Business owners will receive the lesser of remuneration paid during the week, $500 or 55% of pre-crisis remuneration to a maximum of $573.

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