Canada Emergency Wage Subsidy (“CEWS”) v2 – the Saga Continues…..

On July 17, 2017, the Government of Canada announced proposed changes to the CEWS program which were passed into law on July 27, 2020. 

Some of the major changes to the subsidy as a result of CEWS v2 are:

• Extension of the program to November 21, 2020 (9 claim periods) with potential for a 10^th period;
• Elimination of the revenue threshold decline requirements – any revenue decline will qualify;
• New subsidy calculation method for claim periods 5 onward;
• Two subsidy components (base and top up) to potentially provide an 85% subsidy;
• Phased-in wind-down of the subsidy as the claim periods pass;

As a kid, I was infatuated with the original Star Wars trilogy.  This was the ultimate saga.  As for CEWS, well this is one Saga that I hope to not reminisce about 20 years from now. 

I know enough not to talk politics at the best of times.

In saying that, I absolutely commend the current government on the speed in which they were able to deliver the CEWS program.  Normally a piece of legislation of this magnitude would take years to draft and implement.  In this case, CEWS v1 was rolled out in weeks. 

I suppose I shouldn’t be surprised at my primary beef with the CEWS.  At a high level, you have a program that pays a subsidy to eligible employers who meet various scoping criteria. 

Sounds simple enough right?  Well, it’s not.  Just try reading and comprehending the watered-down info that the CRA has put out in terms of the FAQs on the CEWS and you likely will be overwhelmed.  If this all makes sense to you, I challenge you to read the actual legislation.

Making a program like the CEWS fair such that it captures a broad array of businesses and doesn’t punish certain businesses because they don’t fit into box A, B or C or provide extreme generosity to others is very complicated. 

Do you remember the original 10% Temporary Wage Subsidy that was the first subsidy announced in the very early days of the pandemic and which ended a month ago or so?  While this program didn’t provide enough relief to handle the overall objectives behind Canada’s COVID-19 economic response, it was nonetheless remarkably beautiful in its simplicity.  Could a more robust Temporary Wage Subsidy have been developed to beef it up but maintain simplicity?  I have to think so. 

The trouble is two-fold.  Firstly, the horrendously complicated rules making it such that the average honest business owner is unable to navigate the rules themselves and is required to hire professionals.  Secondly is the continued backend work that is coming.  Billions of dollars spent.  Concern from its inception that “characters” will be gaming the system to their advantage thus CRA audits and time/effort/dollars spent in dealing with this.  Buyer beware.

And this is just the beginning!