75% Canada Emergency Wage Subsidy Update

On April 11, 2020, legislation (Bill C-14) was tabled to enact the 75% Canada Emergency Wage Subsidy.  The subsidy is available to eligible employers based on their eligible remuneration paid during certain 4-week periods.  Eligibility is based on sufficient declines in qualifying revenue.  The following are some of the key points, clarifications, and confirmations from today’s releases and legislation.

Eligible Remuneration

This includes wages, salaries or other remuneration.  Also, fees, commissions, or other amounts for services paid to “eligible employees” are included.  However, the subsidy is limited to the employee’s baseline remuneration (see below). 

Baseline Remuneration

Baseline remuneration means the average weekly eligible remuneration paid to the eligible employee by the eligible entity during the period that begins on January 1, 2020 and ends on March 15, 2020, excluding any period of seven or more consecutive days for which the employee was not remunerated. 

Remuneration Non-arm’s Length Employees 

For these individuals, no more than 75% of baseline remuneration can be available as a subsidy.  In other words, if no remuneration was paid in January through March 15, 2020 to the individuals, no subsidy would be available.

Qualifying Revenue

This is the standard used to measure whether a sufficient decrease has occurred (15% for March, 30% for April).  It means the inflow of cash, receivables or other consideration arising in the course of the ordinary activities of the eligible entity.  It excludes extraordinary itemsand amounts derived from persons or partnerships not dealing at arm’s length with the employer.

  • Corporate Groups – Special rules for the computation of revenue take into account issues related to corporate groups. Affiliated groups would be able to compute revenue on a consolidated basis at their discretion. Certain entities receiving substantially all of their revenue from non-arm’s length sources will be permitted to determine their decline in revenue based on the decline in the non-arm’s length parties’ revenues. See Subsection 125.7(4).
  • Cash vs. Accrual – As previously announced, employers may choose to computer their revenue on the accrual or cash basis.  The legislation clarifies that “cash basis” will be computed as defined in Subsection 28(1), the provision commonly used for farming and fishing income.
  • Business with Cyclical Revenues – Minister Morneau verbally stated that as of now, he is satisfied with the current solution.

Future Eligibility

Once an employer meets the criteria in respect of a revenue decline, they would automatically meet the revenue decline criteria for the next period of the program.  For example, an employer with a revenue drop of more than 15% in March would qualify for the first and second periods of the program, covering remuneration paid between March 15 and May 9. 

Qualifying Period

While government announcements indicate that the program is only available for 3 months (to June 6, 2020), the legislation allows flexibility for it to be extended to the end of September, 2020.


Employer’s premiums for employees that are on leave (not working) with pay are fully (100%) included in the subsidy.

Interaction with the 10% Wage Subsidy

Amounts enjoyed under the 10% subsidy will reduce the amounts eligible under the 75% subsidy.

Interaction with Work-sharing EI Benefit

The 75% subsidy is reduced for EI amounts received by the employees under the Work-sharing benefit.

Interaction with CERB and 75% Wage Subsidy

No subsidy is available for an individual who is without remuneration by the eligible entity in respect of 14 or more consecutive days in the qualifying period.  The Department of Finance backgrounder (updated April 11, 2020) noted that the Government will consider implementing an approach to limit duplication.  This could include a process to allow individuals rehired by their employer during the same eligibility period to cancel their CERB claim and repay that amount.  This would have to implemented in the future.


  • Multiple Employers in a Group – The maximum subsidy that may be claimed in respect of an individual that is employed by multiple non-arm’s length employers, is limited to a claim that would be made as if they had one employer.
  • Manipulation of Remuneration or Revenue – There are anti-avoidance rules that prevent artificial increases in remuneration eligible for the subsidy.  In addition, several rules have been proposed to target revenue manipulation that would entitle employers to the subsidy.


Minister Morneau reiterated his belief that the vast majority of Canadian businesses are honest, and will properly use the subsidy to enable them to maintain their workforce through the COVID-19 crisis.  He also reiterated that severe penalties will apply to the few who may seek to abuse the program.   This includes a new 25% penalty for employers manipulating their revenues, as well as existing penalty of 50% of an excessive claim for false statements or gross negligence, or as much as a 200% fine and five years’ imprisonment for fraud/tax evasion.

Information to Be Communicated

The Minister may communicate or otherwise make available to the public, in any manner that the Minister considers appropriate, the name of any person or partnership that makes an application under the 75% wage subsidy.

Payment Timing

Minister Morneau verbally stated that he expects money under the subsidy will be available within 2-4 weeks.

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