PRECs and Wage Subsidy Programs
CATEGORY: Practice Tips
TAGS: Canada Emergency Response Benefit (CERB) Canada Emergency Wage Subsidy (CEWS) COVID-19 Financial Aid Personal Real Estate Corporations (PREC)
If you have a Personal Real Estate Corporation (PREC), navigating Canada’s COVID-19 aid programs can seem even more complicated. If you receive a T4 from your PREC and you meet the Canada Emergency Relief Benefit (CERB) income threshold requirement (read more here), you’ll want to calculate which is more beneficial, the CERB or the wage subsidy programs since you can’t apply for both as an individual. Here’s an overview of the Canada Emergency Wage Subsidy (CEWS) and Temporary Wage Subsidy (TWS) programs to help you understand what programs are right for you and your PREC.
CEWS was launched to prevent further job losses, encourage employers to re-hire workers previously laid off as a result of COVID-19, and help employers to more easily resume normal operations following the crisis. It provides up to a 75% wage subsidy for the period from March 15 (retroactively) to June 6, 2020 to eligible employers. For more information, visit the government's website.
How do I know if I am an eligible employer?
PRECs meet the government’s eligible employer criteria (so do brokerages) but, to qualify, eligible employers also have to meet the revenue requirements. This means you have experienced at least a 15% drop in revenue for the first eligibility period and a 30% drop for the following eligibility periods.
To determine if you meet the revenue requirements, compare your revenue for each eligibility period to the same period in 2019. Alternatively, you can compare your revenue for each of the three eligibility periods to your average revenue for January and February 2020. Whichever benchmark you use, you will need to continue using it for the duration of the program.
What are the eligibility periods?
There are three eligibility periods:
- March 15 to April 11,
- April 12 to May 9, and
- May 10 to June 6.
How is the CEWS subsidy amount calculated?
The subsidy amount for the period between March 15 and June 6, 2020 is the greater of:
- 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week, or 75% of the employee's pre-crisis weekly remuneration, whichever is less.
What is an employee’s “eligible remuneration”?
Eligible remuneration includes wages, salaries or other remuneration like fees, commissions or other amounts for services paid to employees. It is based on the average weekly pre-crisis remuneration paid between January 1 and March 15, excluding any seven-day periods during which the employee did not receive remuneration.
How do I apply for CEWS?
You apply through the Canada Revenue Agency’s (CRA) My Business Account portal. Go here for more information.
Can PREC shareholders receive the CEWS?
Under the current rules, you only can receive the subsidy for wages that are included in a T4, which means dividends don’t qualify.
About the TWS
The 10% TWS keeps more money in employees’ pockets by reducing the amount of payroll deductions employers are required to remit to the CRA. As an employer, you don’t apply for this subsidy. Instead, you can manually deduct 10% of your total CRA remittances for the period between March 18 and June 19, 2020, up to $1,375 for each eligible employee to a maximum of $25,000 per employer. Find out more here.
Can I reduce other deductions as well?
No. You will continue deducting income tax, Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums from salary, wages, bonuses or other remuneration paid to your employees, as you currently do, as well as your share of CPP contributions and EI premiums, to the CRA.
Can I apply for CEWS and take advantage of TWS as well?
Yes, but amounts received under the TWS will reduce the amount received from CEWS.
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