Extend wage subsidy rules for furloughed staff

Summary#

These final regulations — Regulations Amending the Income Tax Regulations (COVID-19 — Wage Subsidy for Furloughed Employees) (SOR/2020-207) — keep the same wage-subsidy rules for furloughed employees for the four-week period from August 30, 2020 to September 26, 2020. That means eligible employers can claim the same maximum weekly subsidy of $847 per furloughed employee for that period.

What it does#

• Adds a new rule to the Income Tax Regulations that sets how the subsidy for a furloughed employee is calculated for the qualifying week in period seven.
• Makes the subsidy calculation for period seven the greater of the two methods already used in prior CEWS periods.
• Keeps the maximum weekly subsidy at $847 per furloughed employee for the qualifying period August 30 to September 26, 2020.
• Declares the regulations to have come into force on August 30, 2020.

Who's affected#

• Employers who apply for the Canada Emergency Wage Subsidy (CEWS) and who had employees on temporary paid leave (furloughed) during August 30 to September 26, 2020.
• Employees who were furloughed and paid by their employer in that four-week period — their employer could claim up to $847 per week for them.
• The Canada Revenue Agency (CRA), which administers and enforces the CEWS program.
• Small businesses that choose to apply for the CEWS (they may face some paperwork costs, but can receive the subsidy).

Why it matters#

• It gives employers the same payment rules for furloughed staff for the extra four-week period, so employers who paused work but still paid some wages had a clear, unchanged subsidy to rely on.
• The measure aims to help keep employer-employee ties and avoid pushing people onto Employment Insurance when businesses were partly shut or demand was low.
• The government estimated the CEWS costs at about $83.6 billion, and extending the furloughed-employee treatment for this period was expected to add about $335 million.
• Employers who apply will still need to follow CRA reporting and compliance rules; there may be modest administrative work to claim the subsidy.