April 7, 2020

Informational Circular for Businesses and Employers – Government Programs to combat challenges during the COVID 19 crisis

Updated as of October 19, 2020.

In response to the economic hardships caused by the outbreak of COVID-19, the government of Canada passed legislation that establishes two wage subsidy programs that are aimed at assisting eligible employers, as well as certain measures to alleviate the pressures that businesses and employers are experiencing. Some of those measures were highlighted in an article prepared by Louis Sokolov and Tassia Poynter of our firm as of March 19, 2020. An updated summary of the subsidies and the measures released to date is set out below.

Sotos LLP will continue to monitor government announcements and we will update and circulate this Informational Circular as warranted.

  1. The Canada Emergency Wage Subsidy

The Canada Emergency Wage Subsidy (the “CEWS”) offers, on a monthly basis, up to a 75 percent wage subsidy to eligible employers for up to 12 weeks.  The subsidy is intended to help eligible employers re-hire workers, prevent further job losses and ease back into normal operations.[1]

Eligible employers include individuals, trusts, taxable corporations and partnerships (consisting of 50% or more eligible employers), as well as non-profit organizations, registered charities and certain indigenous government-owned corporations. Further, to be eligible, employers must have had a Canada Revenue Agency (“CRA”) payroll account on March 15, 2020 and have experienced a revenue drop. The amount of subsidy per employee is based on the size of the employer’s revenue drop.

For the purposes of the CEWS, an employer’s revenue is its revenue from business carried on in Canada earned from arm’s-length sources.  Employers may calculate their revenues under either the accrual method or the cash method, but not a combination of both, and must use the same accounting method for all claims.

Certain changes have been made to the program, effective as of claim period 5 (July 5 to November 21, 2020).  These changes include:

  • There is no longer any minimum revenue drop required to qualify for the subsidy.  The rate that an employer’s revenue has dropped is only used to calculate how much subsidy they will receive for each period.  The federal government’s CEWS webpage provides an online calculator to establish the employer’s revenue drop for periods 5 and later while also calculating the amount of subsidy.
  • Subsidy rates vary, depending on how much the employer’s revenue has dropped.  Employers whose revenue dropped less than 30% can still qualify and also keep getting the subsidy as their employees return to work and their revenue improves.
  • Employees who were unpaid for 14 or more days can now be included in the calculation.
  • There is increased flexibility in how employers calculate their revenue drop.  Employers can use the current period’s revenue drop, or the previous period – whichever works most in their favour.
  • Even if the employer’s revenue has not dropped for the claim period, they can still qualify if their average revenue over the previous three months dropped more than 50%.

The maximum base subsidy rate is 60% in claim periods 5 and 6, and it will continue to decline in claim period 7 and gradually reduce to 20% in period 9.

Eligible remuneration can include salary, wages and other remuneration such as taxable benefits.  It does not include severance pay, or other items such as stock options.  There is no overall limit to the amount eligible employer can claim.

For claim periods 1 to 4 employers must demonstrate that their eligible revenue dropped by a minimum amount in order qualify for the subsidy, in which case the subsidy calculation uses a fixed rate of 75%.  An employer’s revenue drop for a claim period is calculated by comparing the employer’s eligible revenue for the claim period month to the eligible revenue from a corresponding previous period. The following chart illustrates the claim periods and corresponding revenue drops:

Claim Period Dates Baseline Revenue Claim Period Revenue Required Drop
1 March 15 to April 11, 2020 March 2019
average of January and February 2020
March 2020 15%
2 April 12 to May 9, 2020 April 2019
average of January and February 2020
April 2020 30%
3 May 10 to June 6, 2020 May 2019
average of January and February 2020
May 2020 30%
4 June 7 to July 4, 2020 June 2019
average of January and February 2020
June 2020 30%
5 July 5 to August 1, 2020 General prior reference period (current or previous) *

July 2020 over July 2019


June 2020 over June 2019

Alternative prior reference period (current or previous)

July 2020 over average of January and February 2020


June 2020 over average of January and February 2020

July 2020 No minimum
6 August 2 to August 29, 2020 General prior reference period (current or previous)


August 2020 over August 2019


July 2020 over July 2019


Alternative prior reference period (current or previous)

August 2020 over average of January and February 2020


July 2020 over average of January and February 2020

August 2020 No minimum
7 August 30 to September 26, 2020 General prior reference period (current or previous)

September 2020 over September 2019


August 2020 over August 2019


Alternative prior reference period (current or previous)

September 2020 over average of January and February 2020


August 2020 over average of January and February 2020

September 2020 No minimum
8 September 27 to October 24, 2020 General prior reference period (current or previous)

October 2020 over October 2019


September 2020 over September 2019


Alternative prior reference period (current or previous)

October 2020 over average of January and February 2020


September 2020 over average of January and February 2020

October 2020 No minimum
9 October 25 to November 21, 2020 General prior reference period (current or previous)

November 2020 over November 2019


October 2020 over October 2019


Alternative prior reference period (current or previous)

November 2020 over average of January and February 2020


October 2020 over average of January and February 2020

November 2020 No minimum


* For claim periods 5 and later, applicants will calculate 2 revenue drops and use the higher result in their base rate calculation.  The baseline revenue is determined by the prior reference period that they choose – either General prior reference period (the eligible revenue earned in the corresponding month(s) in 2019), or Alternative prior reference period (the average of the eligible revenue earned in January and February, 2020).


If employers were hit especially hard by the COVID-19 crisis, they can qualify for an additional top-up subsidy, based on their average drop for the previous 3 months, as follows:

(1) If the employer’s revenue has dropped by 70% or more over a three month span, they can qualify for the maximum 25% top-up.

(2) If the employer’s revenue has dropped by 50-69% over a three month span, they can qualify for a top-up that is 1.25 times their revenue drop percentage minus 50%.

Employers with a revenue drop below 49% do not qualify for the top-up.

Please note that for claim periods 1 to 4, employers cannot include employees who had 14 or more consecutive unpaid days in the period.

The program also offers a 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan and the Quebec Parental Insurance Plan.  These refunds would apply in respect of remuneration paid to furloughed employees in respect of weeks of a period where the employer is eligible for CEWS.

Applications for claim periods 1 to 7 are now open. Employers must apply for the CEWS through the CRA My Business Account portal or through the Web Forms application using their web access code.

On October 9, 2020, the government announced that the CEWS will be extended until June, 2021.  It will remain at the current subsidy rate of up to a maximum of 65% of eligible wages until December, 2020.

  1. Temporary Wage Subsidy

Organizations that do not qualify for the CEWS may still qualify for the Temporary Wage Subsidy (“TWS”).  This subsidy is a three month subsidy that allows eligible employers to reduce the amount of payroll deductions they need to remit to the CRA.  It is equal to 10% of the remuneration paid from March 18 to before June 20, 2020, up to a maximum of $1,375 per employee and $25,000 per employer.  Those employers that are eligible for this measure are individuals (excluding trusts), partnerships[3] non-profit organizations, registered charities and Canadian-controlled private corporations that are eligible for the small business deduction.  Businesses that are eligible for this support can benefit by reducing their remittances of income tax withheld on their employees’ remuneration.  [4]

For employers that are eligible for both the CEWS and TWS, any benefit from the TWS paid in a specific period will reduce the amount available to be claimed under the CEWS in that same period.  If employers are eligible for the TWS, but only want to participate in the CEWS, they are able to make a special election for the TWS to be equal to 0% of the paid remuneration.

  1. Business Credit Availability Program (“BCAP”)

BCAP was introduced by the federal government to provide $65 billion of additional support through the Business Development Bank of Canada (“BDC”) and Export Development Canada (“EDC”).

The EDC Loan Guarantee for Small and Medium-Sized Enterprises allows financial institutions to issue operating credit and cash flow term loans of up to $6.25M to existing clients with 80% of the loans guaranteed by the EDC.  These loans are intended to be used for operational expenses and NOT for dividend payouts, shareholder loans, bonuses, stock buyback, option issuance, increases to executive compensation or repayment/refinancing of other debt.  Businesses from all sectors that were otherwise financially viable and revenue generating prior to the outbreak of COVID-19 are eligible to apply.  This program is now available at various financial institutions, including credit unions.[5]

The BDC Co-Lending Program for Small and Medium Enterprises provides term loans for both the operational and liquidity needs of businesses.  The loans may be used to make interest payments on existing debt. This program is available to businesses that were financially viable and revenue-generating prior to the COVID-19 outbreak and loans are available in amounts between $1M and $12.5M, depending on the revenues of a business.[6]

The BDC’s Mid-Market Financing Program provides junior loans between $12.5M and $60M to medium-sized businesses (with annual revenues in excess of $100 million to $500 million) that have been particularly impacted by the COVID-19 pandemic and/or the recent decline in oil and gas prices.  Loans will be available until September 30, 2020 and are provided jointly by BDC and the business’ primary financial institution.[7]

For additional information on any of the BCAP programs or to apply, businesses should contact their primary lender, by phone or email, where they have a pre-existing relationship.[8]

  1. Increased Access to Employment Insurance and Recovery Benefits

On August 20, 2020, the federal government announced that it would extend the Canada Emergency Response Benefit (“CERB”) into September, before it transitioned into to a simplified Employment Insurance program (“EI”) as of September 27, 2020.

In order to qualify, individuals need to have completed a minimum of 120 hours of work in the last 52 weeks.  Qualified individuals receive a one-time insurable hours credit of (1) 300 insurable hours for claims for regular benefits (job loss) and (2) 480 insurable hours for claims for special benefits (sickness, maternity/paternity leave, compassionate care or family caregiver).  Applicants receive between a minimum $400 per week, and maximum $573 per week, depending on past earnings.

The unemployment rate in the region in which a claimant resides determines the number of hours of insurable employment the claimant needs to have accumulated in their qualifying period to be eligible for EI regular benefits, the number of weeks of EI regular benefits the claimant may be entitled to, and the number of best weeks of earnings that will be used to establish their weekly benefit rate.  The government uses a minimum unemployment rate of 13.1% for all EI economic regions in order to lower the hours required to qualify for EI regular benefits.  The government has also frozen the EI premium rate for employees at $1.58 per $100 of insurable earnings for two years.

The government has also introduced three new recovery benefits:

  1. Canada Recovery Benefit

Effective as of September 27, 2020, for one year, the Canada Recovery Benefit provides $400 per week for up to 26 weeks for workers who are not eligible for EI – mainly individuals who are self-employed, and including individuals who work in the gig economy (independent contractors, contract workers, on-call workers and temporary workers).  Claimants can continue to earn income from employment while receiving this benefit as long as they continue to meet the following requirements:

  • be at least 15 years of age and have a valid Social Insurance Number (“SIN”);
  • have stopped working due to the outbreak of COVID-19 and be available and looking for work; or be working and have had a reduction in their employment/self-employment income for reasons related to COVID-19;
  • be ineligible for EI;
  • have had employment and/or self-employment income of at least $5,000 in 2019 or in 2020; and
  • have not quit their job voluntarily.

It is important to note that claimants will need to repay some or all of the benefit through their income tax return if their annual net income, excluding the Canada Recovery Benefit payment, is over $38,000.

  1. Canada Recovery Sickness Benefit

The Canada Recovery Sickness Benefit provides $500 per week for up to 2 weeks, for one year as of September 27, 2020, for workers who are unable to work because they are sick or must self-isolate due to the outbreak of COVID-19.

In order to be eligible, workers need:

  • to be a resident of Canada who is at least 15 years of age and has a valid SIN;
  • to be employed or self-employed at the time of the application; and
  • to have earned at least $5,000 in 2019 or 2020.

Workers will also need to have missed a minimum of 60% of their scheduled work in the week for which they claim the benefit, and cannot also claim other paid sick leave for that period.

  1. Canada Recovery Caregiving Benefit

The new Canada Recovery Caregiver Benefit provides $500 per week, for up to 26 weeks, per household to eligible individuals.  In order to be eligible, individuals need to be residents of Canada, at least 15 years of age on the first day of the period for which they apply for the benefit, have a valid SIN, and

  • be employed or self-employed on the day immediately preceding the period for which the application is made;
  • have earned at least $5,000 in 2019 or 2020; and
  • have been unable to work at least 60% of their normally scheduled work within a given week because of either of the following reasons:
    • they take care of a child who is under 12 years old on the first day of the period for which the benefit is claimed because the child’s school closed down, the child cannot attend school, or the child’s usual caregiver is not available – all for reasons related to COVID-19; or
    • they must provide care to a family member with a disability or a dependent because the family member’s day program or care facility is closed, the family member cannot attend their day program or care facility under the advice of a medical professional, or because the family member’s usual caregiver is not available – all for reasons related to COVID-19.

Further, applicants cannot be receiving paid leave from an employer for the same week, or be in receipt of another form of government assistance including: CERB, EI Emergency Response Benefit (ERB), the Canada Recovery Benefit, the Canada Recovery Sickness Benefit, short-term disability benefits, workers’ compensation benefits, or any EI benefits or Quebec Parental Insurance Plan (QPIP) benefits in respect of the same week.[9]

  1. Canada Emergency Commercial Rent Assistance (“CECRA”)

The CECRA program for businesses and commercial property owners offers forgivable loans to qualifying commercial property owners to cover 50% of 3 to 5 monthly rent payments that are payable by eligible small business tenants between April and September.

The loans will be forgiven if the property owner agrees to reduce the eligible small business tenants’ rent by at least 75% under a rent forgiveness agreement.  The rent forgiveness agreement must include a term not to evict the tenant while the agreement is in place.  Further, property owners must agree that the rent is forgiven, reduced and will never be recoverable.  The program is available to property owners who do, or do not, hold a mortgage.

Qualifying small business tenants are businesses that pay less than $50,000 per month in rent, generate less than $20 million in gross annual revenues calculated on a consolidated basis (at the ultimate parent level) and have experienced at least a 70% drop in pre-COVID-19 revenues at the entity level.[10]  The $50,000 monthly rent cap applies per location and not across all outlets of a chain – however, the tenant must not generate more than $20 million in gross annual revenues, calculated on a consolidated basis using whatever 12-month period the company uses to calculate its financials at the ultimate parent level.

There are two ways by which to calculate the required 70% reduction in revenues:

  • If the small business was operating between April and June 2019 – compare gross revenues from April, May and June of 2020 to revenues of April, May and June 2019.
  • If the small business was not operating between April and June 2019 – compare average gross revenues from April, May and June of 2020 to average gross revenues from January and February 2020.

Eligible small business sub-tenants arrangements are also eligible, as long as the lease structures meet the criteria.  The program is also available to non-profit and charitable organizations. [11] Small businesses that opened on or after March 1, 2020 are not eligible.

Applications are accepted through the Canada Mortgage and Housing Corporation (“CMHC”) website.  As part of the application, applicants must provide their rent reduction agreement(s), and landlord and tenant attestations.  Further details on the application process are available on the CMHC website.[12]

The loan will be forgiven December 31, 2020, as long as the landlord complies with the rent reduction agreement, ensures that the attestations and application provided are accurate and truthful, no fraud or misconduct occurs on the part of the landlord or its representative, and as long as the property owner does not avail itself of any bankruptcy, restructuring, winding-up or arrangement.

It is not mandatory for landlords to participate in CECRA, and it does not impact the ability of landlords and tenants to reach alternative agreements.

As CECRA was extended to include September, 2020, existing approved applicants to the program have until October 30, 2020, to apply for the final extension. The deadline to submit a new application (September 30, 2020) has now passed.

The new Canada Emergency Rent Subsidy

On October 9, 2020, the government announced its intention to introduce new supports for businesses and other organizations that are experiencing a drop in revenue.  The announcement states that the new rent subsidy will pick up where CECRA left off by delivering direct rent support to qualifying organizations without working through the landlords. Eligible organizations include businesses, charities, and non-profits that have suffered a revenue drop, by subsidizing a percentage of their expenses (including rent and interest on commercial mortgages), on a sliding scale, up to a maximum of 65% of eligible expenses until December 19, 2020. Organizations would be able to make claims retroactively for the period that began September 27 and ends October 24, 2020.

The government has also announced a top-up of 25% for organizations that have had to temporarily shut down in accordance with a mandatory public health order issued by a qualifying public health authority in addition to the 65% subsidy.[13]

  1. Economic Assistance Measures for Businesses and Employers

As part of Canada’s COVID-19 Economic Response plan, the government has announced other economic measures aimed at assisting businesses that include:

  • The CRA extended the payment due date for 2019 individual tax returns and 2019 or 2020 corporation or trust returns, as well as for instalments payments, to September 30, 2020.
  • The government has extended the maximum duration of the Work-Sharing program from 38 weeks to 76 weeks.  Note that for employers and employees that are participating in a Work-Sharing program, employment insurance benefits received by employees through the program would reduce the benefit that the employer can receive under the CEWS.
  • The Canada Emergency Business Account (“CEBA”) provides interest-free loans of up to $40,000 to small businesses and not-for-profits.  As of June 26, 2020, eligible businesses now include owner-operated small businesses that do not have a payroll, sole proprietors receiving business income directly, as well as family-owned corporations that remunerate in the form of dividends rather than payroll.  Eligible businesses with $20,000 or less in payroll in 2019 will have to demonstrate Eligible Non-Deferrable Expenses[14] between $40,000 and $1,500,000 in 2020.

These loans have 0% interest and require no minimum monthly principal payments until December 31, 2022.  There is also a $10,000 loan forgiveness available provided that the outstanding balance is fully paid on or before December 31, 2022.[15]

On October 9, 2020, the government announced that CEBA will be expanded to allow eligible businesses and not-for-profit organizations to access an interest-free loan of up to $20,000 in addition to the original CEBA loan of $40,000.  Half of this additional financing will be forgivable if repaid by December 31, 2022.  [16]

    • The federal government is providing $962M through the Regional Relief and Recovery Fund (“RRRF”) to assist businesses and organizations in sectors such as manufacturing, technology and tourism that are important to local economies.  The fund is specially targeted for those businesses and organizations that require assistance to recover from the effects of the COVID-19 pandemic, but have been unable to access other support measures.
    • The Northern Business Relief Fund (“NBRF”) provides a non-repayable grant to small and medium-sized territorial businesses that were economically impacted by COVID-19 to help with ongoing operational costs.[17]


  • The Large Employer Emergency Financing Facility (“LEEFF”) is administered by the Canada Enterprise Emergency Funding Corporation and is open to large Canadian employers who:
    1. have a significant impact on Canada’s economy demonstrated by (i) having significant operations in Canada or (ii) supporting a significant workforce in Canada;
    2. can generally demonstrate approximately $300M or more in annual revenues; and
    3. require a minimum loan size of “about” $60M.[18]


LEEFF provides bridge financing to Canada’s largest employers when conventional financing is unavailable or insufficient.

    • The government has extended time periods for temporary layoffs by up to six months in the Canada Labour Standards Regulations to allow employers more time to recall laid-off employees.  For employees laid off prior to March 31, 2020, the time period is extended by six months or to December 30, 2020, whichever comes first.  For employees laid off between March 31, 2020 and September 30, 2020, the time period is extended until December 30, 2020, unless a later recall date was provided in a written notice at the time of the layoff.[19]


At Sotos LLP, our team of experts has been advising businesses in the automotive, restaurant, grocery, personal, home and professional services, hotel, retail and cannabis sectors as they face challenging economic and financial issues relating to the current pandemic. Please contact us if you wish to discuss your eligibility for any of the government assistance programs, and to determine an effective approach to combatting business challenges caused by the outbreak of COVID-19.


[1] https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

[2] https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-who-apply.html, https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-how-revenue-drop-subsidy-rate-calculated.html#basedrop

[3] Note that partnerships are only eligible if members of the partnership consist exclusively of individuals, registered charities, or Canadian-controlled private corporations eligible for the small business deduction.

[4] https://www.cpacanada.ca/en/business-and-accounting-resources/taxation/blog/2020/april/temporary-wage-subsidy

[5] https://www.edc.ca/en/solutions/working-capital/bcap-guarantee.html

[6] https://www.bdc.ca/en/pages/co-lending-program.aspx

[7] https://www.bdc.ca/en/pages/mid-market-financing-program.aspx


[9] https://www.canada.ca/en/employment-social-development/news/2020/08/supporting-canadians-through-the-next-phase-of-the-economy-re-opening-increased-access-to-ei-and-recovery-benefits.html

[10] https://www.cmhc-schl.gc.ca/en/finance-and-investing/covid19-cecra-small-business

[11] https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses

[12] https://www.cmhc-schl.gc.ca/en/finance-and-investing/covid19-cecra-small-business

[13] https://www.canada.ca/en/department-finance/news/2020/10/government-announces-new-targeted-support-to-help-businesses-through-pandemic.html

[14] Expenses are considered “Eligible Non-Deferrable Expenses” if they were already incurred in January and/or February 2020, or are due to a legal or contractual obligation as at March 1 and cannot be avoided or deferred beyond 2020 even during a period of shut down and depressed revenues as a result of COVID.

[15] https://ceba-cuec.ca/

[16] https://www.canada.ca/en/department-finance/news/2020/10/government-announces-new-targeted-support-to-help-businesses-through-pandemic.html

[17] https://www.cannor.gc.ca/eng/1587153226618/1587153246025

[18] https://www.cdev.gc.ca/home-ceefc/

[19] https://www.canada.ca/en/employment-social-development/news/2020/06/the-government-of-canada-temporarily-extends-time-periods-given-to-employers-to-recall-employees-laid-off-due-to-the-covid-19-pandemic.html