HAS YOUR REVENUE DECREASED? – CEWS 2.0

If so, you probably qualify for the wage subsidy under CEWS 2.0. 

Under CEWS 2.0, claims that cover July 5, 2020 and onwards (periods 5 through 9) do not require a minimum revenue drop to qualify for the wage subsidy. The rate your revenue has dropped is only used to calculate how much subsidy you receive. 

The periods for CEWS 2.0 are as follows: 

1. Period 5 (July 5 to August 1, 2020)  
2. Period 6 (August 2 to August 29, 2020)  
3. Period 7 (August 30 to September 26, 2020)  
4. Period 8 (September 27 to October 24, 2020) 
5. Period 9 (October 25 to November 21, 2020) 

CRA outlines the new calculation here, and has created an online calculator for CEWS 2.0. Applications for period 5 (July 5, 2020 – August 1, 2020) will be available starting Monday, August 17, 2020. 

Below, HGA will outline the steps to complete your own calculation of CEWS 2.0. Alternatively, HGA can be engaged to complete the application for you. Contact Natalie Pon at npon@hgacpa.com for more details. 

What will you need to do? 

1. Determine the baseline revenue comparison option to use. Your determination must be consistent for all periods under CEWS 2.0 (ie. periods 5 through 9).You can choose either the previous month in 2019 (ie. July 2020 vs July 2019) or the average of January and February 2020.
2. Next, you will choose between using CRA’s online calculator, or downloading the spreadsheet created by CRA. HGA recommends using the spreadsheet, in order to save a copy of your calculations.
3. Next, you will need to enter in eligible revenue for the months listed on the spreadsheet, based on your previous selections. This will determine your overall CEWS rate, which will be the base CEWS 2.0 rate plus the top-up rate based on your revenue decrease. HGA described the rate structure of CEWS 2.0 here.This will calculate the percentage revenue drop between the two periods, and the average revenue drop for the previous free months.
4. The next step is to calculate employee wages for all eligible employees. This section is consistent with CEWS 1.0, as outlined here. This will require determining if an employee is at arm’s length from the Company, calculating the baseline pre-crisis average weekly pay, and entering in the weekly pay for the employee. Use either tab “Step 2a) Weekly (52)” or “Step 2b) Biweekly (26)”, consistent with CEWS periods 1 through 4.
5. On tab “Step 3) Amounts to use”, these numbers will be carried forward to the CRA website, to be used on the CEWS online calculator. The remaining steps on the calculator are very similar to CEWS 1.0.
6. After the above steps are completed, you can apply for CEWS 2.0 in the same methods as CEWS 1.0. Applications for period 5 (July 5, 2020 – August 1, 2020) will be available starting Monday, August 17, 2020. HGA highly recommends signing up for direct deposit, as there have been significant delays with receiving cheques in the mail by Canada Post.