August 03,2020 Posted by:


August 3, 2020

Extension of the Canada Emergency Wage Subsidy (CEWS) to December 19, 2020


On July 27, 2020 the government extended the CEWS program allowing eligible employers to obtain a subsidy on the wages paid until December 19, 2020 (period 5 – commencing on July 5-August 1, until November 21, 2020). The main changes to the program were implemented to qualify a larger number of employers (mainly for those that do not meet the previous 30% revenue drop test).

Overview of the New Extended CEWS

  • The amount of the subsidy is divided in 2 parts: 
    • a base subsidy for employers that are experiencing any decline in revenue (to a maximum subsidy rate of 60% when the revenue drop is at least 50% for a maximum weekly benefit of $677 per employee, for periods 5 and 6, and reduced monthly until period 9 to a rate of 20%; a lower subsidy rate is used when the revenue drop is less than 50% while it is based on the scale of revenue decline)
    • a top-up subsidy of up to 25% for employers that have been most adversely affected (ie. revenue drop of at least 50% or more when comparing revenues in the previous 3 months to the same months in the prior year). Calculated additional weekly benefit of up to $282 per employee for a total maximum subsidy of $959.
  • Safe harbour rule for Periods 5 and 6 to ensure the entitled CEWS rate is not lower than the rate that calculated under the previous CEWS rules. For these periods, employers will need to calculate their CEWS using the former and new programs to determine which is most advantageous. 
  • Some of the changes are retroactive. Accordingly, employers may be eligible for the CEWS retroactively to March 15, 2020 or may be eligible for a higher CEWS for periods for which they have already submitted a claim.
  • Since July 5, 2020 (Period 5), employees who are unpaid for 14 consecutive days are no longer excluded from the CEWS. 
  • Additional provisions for furloughed employees and business transfers.


Calculation of Revenues

  • Choice of method of calculation of revenues (either comparing with  sales in 2019 for that month, or using the alternative approach – average of January 2020 and February 2020) that was made initially at the time of application (periods 1 to 4) can be changed for period 5, however would be required to continue with same method for the remaining duration of the program.
  • With respect to the Top-up subsidy, will have a choice to use the 3 month average of the previous year or the average of January 2020 and February 2020, if the employer used that option as the previous reference period for purposes of the base CEWS. 


Subsidy with respect to non-arm’s length employees

  • The subsidy with respect to non-arm’s length employees would only be available if they were employed prior to March 15, 2020


Subsidy with respect to employees

  • There is no reference to be made to the pre-crisis remuneration and therefore the subsidy will be based on the actual salary paid for the eligibility period.


To illustrate the application of the new program, see an example below for a claim in Period 5 (July 5 to August 1, 2020):

An employer experienced a drop in revenue in the month of July 2020 compared to July 2019 of 20%. Furthermore, the revenues of the 3 previous months (April, May and June 2020) compared to the same months in 2019 suffered a decline of 60%. 

  • Base subsidy rate: Because the revenue drop of July 2020 vs 2019 is lower than 50%, a formula of 1.2×20% is used and results in a base subsidy rate of 24%.
  • Top-up subsidy rate: Because the revenue drop of the 3 months prior is greater than 50%, a top-up rate is calculated based on the formula of 1.25x(60%-50%) resulting in a top-up subsidy rate of 12.5%.

The safe harbour rule would not apply in this example because the new program subsidy rate of 36.5% is greater than the previous program rate of 0% (it is 0% because it was not eligible since it did not experience a revenue drop of 30% or more). 


For the maximum CEWS weekly subsidy per employee, reference periods and rate structure, click here: Tables

For more details on the program, click here:


Should you have any questions regarding this program or any other tax or business issues, please do not hesitate to communicate with us,



Christos Govas, CPA, CA