Emergency Wage Subsidy and Financial Stability Powers

Summary#

This bill creates a large, temporary wage subsidy to help employers keep workers during COVID‑19 and sets time‑limited powers to support Canada’s financial system. Part 1 adds the Canada Emergency Wage Subsidy (CEWS) to the Income Tax Act. Part 2 lets the Minister of Finance make certain contracts, loans, and other moves to stabilize the financial system, but these powers end after September 30, 2020.

• Pays employers up to 75% of employee wages, capped at $847 per week, for March 15–June 6, 2020, if they show big revenue drops (Bill Part 1, s. 125.7(1)–(2)).
• Covers charities and many non‑profits; excludes public institutions like schools and hospitals (Bill Part 1, s. 125.7(1)).
• Lets the government refund employer EI/CPP/QPP/QPIP contributions for employees on paid leave (Bill Part 1, s. 125.7(2)(D)).
• Requires an application and a signed attestation; CRA may publish the names of applicants (Bill Part 1, s. 125.7(1); s. 241(3.5)).
• Adds anti‑avoidance rules and penalties, including a 25% penalty for schemes to reduce revenue just to qualify (Bill Part 1, s. 125.7(6); s. 163(2.901)).
• Gives Finance temporary tools to buy assets, lend, guarantee debts, or set up entities to support financial stability, ending after September 30, 2020 (Bill Part 2, FAA ss. 60.2–60.4).

What it means for you#

• Households

  • If your employer uses CEWS, your job may be kept or restored. The government pays the employer up to 75% of your wages, capped at $847 per week, for March 15–June 6, 2020 (Bill Part 1, s. 125.7(1)–(2)).
  • You must be paid during the claim period. If you had 14 or more straight days without pay in a claim period, your employer cannot claim the subsidy for you for that period (Bill Part 1, s. 125.7(1) “eligible employee”).
  • If you are on paid leave, the government also refunds your employer’s EI/CPP (or QPP/QPIP) contributions for those weeks (Bill Part 1, s. 125.7(2)(D)).

• Workers who own or are related to the owner

  • The subsidy for non‑arm’s‑length employees (e.g., owner or family) is limited to 75% of pre‑crisis “baseline” weekly pay, capped at $847 per week (Bill Part 1, s. 125.7(2)(A)(b); s. 125.7(1) “baseline remuneration”).

• Businesses (including sole proprietors and partnerships)

  • Who qualifies: Taxable corporations, individuals (sole proprietors), certain non‑profits, and charities; public institutions are excluded (Bill Part 1, s. 125.7(1) “eligible entity,” “public institution”).
  • Revenue drop: At least 15% in March 2020 and 30% in April or May 2020 compared to the same month in 2019, or an elected average of January–February 2020 (Bill Part 1, s. 125.7(1) “specified percentage,” “prior reference period”).
  • Periods covered: March 15–April 11; April 12–May 9; May 10–June 6, 2020 (Bill Part 1, s. 125.7(1) “qualifying period”).
  • Amount: Up to 75% of wages per employee, capped at $847/week; calculated against current pay or baseline pay, with anti‑inflation rules (Bill Part 1, s. 125.7(2)).
  • Application: File to CRA in the required form before October 2020; a senior financial officer must attest the application is accurate (Bill Part 1, s. 125.7(1) “qualifying entity”).
  • Deeming rule: If you qualify for one period, you are deemed to qualify for the next period (Bill Part 1, s. 125.7(9)).
  • Interactions: The CEWS is reduced by any 10% temporary wage subsidy remittances and by EI work‑sharing benefits (Bill Part 1, s. 125.7(2) “B,” “C”).
  • Payroll account: You must have had a payroll remittance account (business number) on March 15, 2020 (Bill Part 1, s. 125.7(1)(d)).

• Charities and non‑profits

  • Qualifying revenue includes donations and related business income; you may elect to exclude government funding consistently across periods (Bill Part 1, s. 125.7(1) “qualifying revenue”).

• Public institutions and local governments

  • Public institutions such as schools, school boards, hospitals, health authorities, and public universities/colleges are not eligible for CEWS (Bill Part 1, s. 125.7(1) “public institution”).

• All applicants

  • CRA may publish the names of CEWS applicants (Bill Part 1, s. 241(3.5)).
  • Anti‑avoidance: If you or a related party reduce revenue mainly to qualify, you face a penalty equal to 25% of the subsidy tied to that period, plus normal gross‑negligence penalties for false statements (Bill Part 1, s. 125.7(6); s. 163(2)(i); s. 163(2.901)).

• Financial sector and markets

  • The Minister of Finance can, with Governor in Council approval, buy or sell securities, make loans or lines of credit, give guarantees, insure credit, or set up new entities to support financial stability. Payments can be made from the Consolidated Revenue Fund. These powers end after September 30, 2020 (Bill Part 2, FAA ss. 60.2–60.4).

Expenses#

• Estimated net cost: CAD $73.0 billion for the initial CEWS periods (FY2020–2021).

Notes:

• The bill authorizes CEWS refunds “at any time” and payments from the Consolidated Revenue Fund; it sets no dollar cap in the text (Bill Part 1, s. 164(1.6); Payments out of CRF clause).
• Later government updates revised total CEWS costs as the program evolved; this bill covers the initial three periods only. Figures above reflect early official estimates.

Proponents' View#

• CEWS helps employers avoid layoffs by covering up to 75% of wages, capped at $847/week per employee, for March–June 2020 (Bill Part 1, s. 125.7(2)).
• The design targets harder‑hit employers using revenue‑drop tests of 15% (March) and 30% (April–May), with an option to use a January–February 2020 baseline for new or growing firms (Bill Part 1, s. 125.7(1)).
• Reimbursing employer EI/CPP/QPP/QPIP for paid‑leave employees reduces the cost of keeping staff on payroll even when work is not available (Bill Part 1, s. 125.7(2)(D)).
• Broad eligibility includes charities and many non‑profits, with flexibility to exclude government funding from revenue tests for consistency (Bill Part 1, s. 125.7(1) “qualifying revenue”).
• Anti‑avoidance rules, public naming of applicants, and penalties deter abuse and support accountability (Bill Part 1, s. 125.7(6); s. 163(2.901); s. 241(3.5)).
• Time‑limited Finance powers provide tools to stabilize credit markets and institutions during the crisis, with an automatic end after September 30, 2020 (Bill Part 2, FAA ss. 60.2–60.4).

Opponents' View#

• Fiscal cost is very high: about $73.0 billion for the initial rollout, with open‑ended refund authority in the bill text (Expenses; Bill Part 1, s. 164(1.6)).
• Cliff effects: Firms just above the revenue‑drop cutoffs get no subsidy, while those just below get up to 75%, creating uneven results (Bill Part 1, s. 125.7(1) “specified percentage”).
• Complexity and compliance burden: Detailed revenue definitions, baseline choices, and anti‑inflation rules are hard for small employers to apply correctly (Bill Part 1, s. 125.7(1)–(4)).
• Access limits: Employers needed a payroll remittance account on March 15, 2020; public institutions are excluded; employees with 14+ unpaid days in a period are not eligible for that period’s claim (Bill Part 1, s. 125.7(1)).
• Enforcement risks: The 25% anti‑avoidance penalty and public naming may penalize mistakes or create reputational harm if revenue calculations are later adjusted (Bill Part 1, s. 163(2.901); s. 241(3.5)).
• Cash‑flow timing: The law allows refunds “at any time,” but sets no payment deadline or service standard, which may strain employers while they wait (Bill Part 1, s. 164(1.6)).