CEWS Qualifying Period: June 7–July 4, 2020

Summary#

These final regulations—Regulations Amending the Income Tax Regulations (COVID-19 — June 7 to July 4, 2020 Qualifying Period)—add one more four‑week qualifying period to the Canada Emergency Wage Subsidy (CEWS). The new period runs from June 7, 2020 to July 4, 2020, and the subsidy rate for that period is set at 70%.

What it does#

• Prescribes the qualifying period that begins on June 7, 2020 and ends on July 4, 2020 for the CEWS.
• Sets the “current reference period” for measuring revenue changes for that qualifying period as June 2020.
• Sets the “prior reference period” for measuring revenue changes as:
  • January and February 2020, if the employer met a specific condition or made a particular election; or
  • June 2019 in other cases.
• Establishes the “specified percentage” used in the CEWS calculation for this period as 70%.
• Comes into force (or is deemed to have come into force) on June 7, 2020.

Who's affected#

• Employers who are eligible for the Canada Emergency Wage Subsidy (CEWS).
• Employees of those employers—especially people who might be rehired or kept on payroll because of the subsidy.
• The Canada Revenue Agency (CRA), which administers and processes CEWS claims.
• Small businesses in particular may notice the effect, although the regulation applies to any eligible employer.
• It is unclear from the text whether any other groups beyond CEWS-eligible employers are affected.

Why it matters#

• This change lets eligible employers claim the CEWS for an extra four weeks. That makes it easier for them to continue paying or to rehire workers during that stretch.
• The initial 12‑week CEWS program cost the government about $45 billion; costs for extensions beyond that are still to be determined.
• The amendment is a technical, time‑limited change to the Income Tax Regulations that enables the wage subsidy to operate for the added period.
• The government said it is consulting on possible further changes for the remaining weeks of the CEWS (through August 29, 2020), so rules for later periods could still change.