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2. State Aid

Supporting businesses:

  • In order to receive the CEWS, eligible employers must show a reduction of revenues in a particular qualifying period. The required reduction in revenue has been set at 15% for March 2020 and at 30% for April and May of 2020.
  • The required reduction in revenue for each qualifying period can be calculated in one of two ways:
    • 2020 reference period against the same month in 2019; or
    • Reference period against the average of January and February of 2020.

Currently, the three Qualifying Periods are as set out below.  Additional information about the CEWS extension to August 29, 2020 is expected to be announced soon.

Qualifying Period Current Reference Period Prior Reference Period*
March 15 to April 11 March 2020 March 2019
April 12 to May 9 April 2020 April 2019
May 10 to June 6 May 2020 May 2019

*may use an average of January and February 2020 revenue instead.

An eligible employee is someone who is Employed in Canada; Employed by the eligible entity in a qualifying period; and has not been without remuneration by the eligible entity in 14 or more consecutive days in the qualifying period.

  • Temporary Wage Subsidy - The Temporary 10% Wage Subsidy is a three-month measure that allows eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency.
    • Eligible employers include:
      • individual (excluding trusts),
      • partnership*,
      • non-profit organization,
      • registered charity, or
      • Canadian-controlled private corporation (including a cooperative corporation)**; have an existing business number and payroll program account with the CRA on March 18, 2020; and pay salary, wages, bonuses, or other remuneration to an eligible employee***.
      • *Partnerships are only eligible for the subsidy if their members consist exclusively of individuals (excluding trusts), registered charities, other partnerships eligible for the subsidy, or eligible Canadian-controlled private corporations (CCPCs).
      • **CCPCs are only eligible for the subsidy if they would have had a business limit for their last taxation year that ended before March 18, 2020, greater than nil (determined without reference to the passive income business limit reduction). For more information on whether your CCPC would have a business limit, see Small Business Deductionin the T2 Corporation Income Tax Guide.
      • For more information on whether your corporation is a CCPC, see Type of Corporation.
      • ***An eligible employee is an individual who is employed in Canada.
  • Extension of the Work-Sharing Program (WS) – The Government of Canada extended the maximum duration of the Work-Sharing programfrom 38 weeks to 76 weeks for employers affected by COVID-19. This measure will provide income support to employees eligible for Employment Insurance who agree to reduce their normal working hours because of developments beyond the control of their employers.
      • Eligible employers for WS:
        • be a year-round business in Canada for at least 1 year
        • be a private business or a publicly held company, or
        • have at least 2 employees in the WS unit
        • Eligibility was also extended to:
        • Government Business Enterprises (GBEs), also referred to as public corporations, and
        • not-for-profit employers experiencing a shortage of work due to a reduction of business activity and/or a reduction in revenue levels due to COVID-19
      • Eligible employees for WS:
        • year-round, permanent, full-time or part-time employees needed to carry out the day-to-day functions of the business ("core staff")
        • be eligible to receive EI benefits, and
        • agree to reduce their normal working hours by the same percentage and to share the available work
        • Eligibility was also extended to:
          • employees considered essential to the recovery and viability of the business can now be eligible to participate in Work-Sharing (such as technical employees engaged in product development, outside sales agents, marketing agents, etc.)

The CERB provides income support benefits for workers who suffer income loss due to COVID-19. This benefit combines the two previously announced emergency benefits (the Emergency Care Benefit and the Emergency Support Benefit) into one overarching income support benefit. The CERB is separate and distinct from the EI program. Therefore, an individual, if eligible, may be able to receive both the CERB and EI benefits in succession. Note an individual cannot receive both the CERB and EI benefits for the same period.

The CERB is a taxable benefit of $2,000 a month for up to 4 months (i.e. 16 weeks) available between March 15, 2020 and October 3, 2020. Although taxable, the tax will not be deducted when provided. Instead, individuals must report the eceipt of the CERB when filing income tax for the 2020 year.

The CERB is available to both employees and self-employed workers who have stopped working for reasons related to COVID-19, regardless of whether they are eligible for EI. Examples of COVID-19 related reasons for work stoppage include, but is not limited to:

    • Laid off from a job;
    • Quarantined or sick due to COVID-19;
    • Away from work to take care of others who are in quarantine and/or sick due to COVID-19; and/or
    • Away from work to take care of children or other dependents whose care facility is closed due to COVID-19.

An individual who has voluntarily quit his or her employment is not eligible for the CERB. On April 15, 2020 the Federal Government expanded the eligibility requirements for the CERB. Now, individuals who are eligible for EI regular or sickness benefits are eligible for the CERB as well as individuals who received EI regular benefits between December 29, 2019 and October 3, 2020 and have exhausted all of their available entitlement or exceeded the period in which they could collect benefits. This means an individual who was out of work prior to the COVID-19 pandemic and is unable to find a job as a result may be eligible to receive the CERB.

An individual is eligible for the CERB if he or she:

    • Is 15 years of age or older;
    • Resides in Canada and has a valid Social Insurance Number;
    • During the four week benefit period:
      • Has stopped or will stop working due to reasons related to COVID-19, or;
      • Are eligible for EI regular or sickness benefits, or;
      • Have exhausted their EI regular benefits between December 29, 2019 and October 3, 2020
      • Has not earned more than $1,000 in employment and/or self-employment income for 14 or more consecutive days.
    • Did not apply for, nor receive, CERB or EI benefits from Service Canada for the same eligibility period;
    • Has earned a minimum of $5,000 income in the last 12 months or in 2019 from one or more of the following sources:
      • employment income;
      • self-employment income; and
      • provincial or federal benefits related to maternity or paternity leave.

The $5,000 does not need to be earned in Canada but the individual must at least reside in Canada. The federal government has encouraged provinces to allow individuals to receive other support payments at the same time as the CERB.

An individual does not need to have been laid off to receive the CERB. Employees who still have their employment but have been asked not to come into work are entitled to the CERB as long as they have not been paid.

* Note that the details of the above criteria are subject to change as the federal government implements new measures to continue to assist workers affected by COVID-19.

Any questions

Ask our member firm Filion Wakely Thorup Angeletti in Canada