CEWS and Temporary Wage Subsidy
1. Which institutions are considered “Public Institutions” for the purposes of CEWS eligibility?
“Public institutions” are those described in paragraphs 149(1)(a) to (d.6) of the Income Tax Act (which includes municipalities and their subsidiaries, local governments and Crown corporations) as well as schools, school boards, hospitals, health authorities, public universities and colleges.
2. Are public institutions eligible for the Temporary Wage Subsidy?
No, the legislation exempts public institutions from the entities that are eligible for the Canada Emergency Wage Subsidy.
3. Can CEWS be combined with Work-Sharing?
The legislation does not restrict remuneration paid under a work-sharing agreement from being eligible for a subsidy under the CEWS.
The amount of the subsidy will depend on the amount actually paid by the employer to the employee under the work-sharing agreement.
4. Can we recall employees to go on CEWS even if there is no work for them?
The legislation does not require the employer to provide work to eligible employees in order to receive the CEWS. Rather, to receive the subsidy, the employees must not be without remuneration for 14 or more consecutive days in the qualifying period.
Work-Sharing
5. What is a Government Business Enterprise (GBE)?
A Government Business Enterprise is defined in the Public Sector Accounting Standards as a government organization that meets all of the following criteria:
- It is a separate entity with the power to contract in its own name, and can sue and be sued.
- It has been delegated the financial and operational authority to carry on a business.
- It sells goods and services to individuals and organizations outside of the government reporting entity as its principal activity.
- It can, in the normal course of its operations, maintain its operations and meet its liabilities from revenues received from sources outside of the government reporting entity.
According to Chartered Professional Accountants of British Columbia (CPABC), the above criteria are readily apparent except for the question of financial independence. CPABC has stated that this issue is difficult to assess and recommends seeking professional judgment to ensure this question is determined in accordance with the guidance provided in the Public Sector Accounting Standards.
6. Are publicly funded colleges and universities eligible for Work-Sharing?
Yes.
7. What is the impact of Work-Sharing on employee benefits? Do benefits continue during Work-Sharing periods?
Employers are required to maintain all existing employee benefits (including health/dental insurance, pension benefits, vacation, group disability, etc.) for the duration of the Work-Sharing agreement. However, if benefits are calculated based on earnings or hours of work, those benefits (including any subsequent payout of benefits) may be reduced. Statutory holidays occurring within a Work-Sharing period are not compensated by Employment Insurance benefits and are the responsibility of the employer.
8. Are individuals who are engaged in a Work-Sharing Agreement to receive the CERB?
No. Individuals who are engaged in a Work-Sharing Agreements are not eligible to receive the CERB.
CERB and EI
9. Do employees have to reapply for each CERB period or do they keep receiving it automatically for subsequent periods?
Eligibility periods are fixed in 4-week periods starting March 15, 2020. Employees must confirm eligibility for each 4-week period by reapplying each period. Employees may apply for multiple 4-week periods up to a maximum of 16 weeks (4 periods)
10. Are CERB benefits taxable?
Yes. Employees must report any CERB payments received on their 2020 tax return.
Supplementary Unemployment Benefit (“SUB”) Plans
11. Can an employee on a SUB Plan earn income from other sources?
Yes, however the employer may consider these other earnings and the EI benefit amount when calculating the SUB payment to the employee. The employee is required to report all earnings. Under the regular rules for working while receiving Employment Insurance benefits, an employee is allowed to retain up to 50% of their earnings from other sources. Once the employee has earned 90% of the average weekly earnings amount used to calculate their benefit rate, then the earnings are deducted dollar for dollar.
12. Can a SUB Plan be used to “top up” CERB or only EI?
SUB plans top-up EI. As the legislation creating the CERB does not allow persons to collect more than $1,000, the SUB Plan must not be used to top-up the CERB.
The federal government recently introduced the Interim Order Amending the Employment Insurance Act during this period (the “Employment Insurance Emergency Response Benefit”), which modifies EI during this crisis. Although we anticipate that these changes will allow employers to continue to top-up EI under a SUB plan, the government has not yet clarified how SUB plans will be administered during this period. At this time, we recommend that you seek legal advice before providing a top up under a SUB plan.
13. Can you extend the duration of an existing and already approved SUB Plan or do you need to re-apply?
Employers who are already participating in the program will automatically receive a request to renew from Service Canada – SUB Program before the end date of their plan. A SUB Plan must be in effect for at least one year but may be in effect for up to five years.
Summer Jobs Program
14. Is it available to both public and private sector employers?
Yes, it is. The Summer Jobs Program provides wage subsidies to employers from not-for-profit organizations, the public sector, and private sector organizations with 50 or fewer full-time employees.
The deadline to apply for funding under the Summer Jobs Program has closed. However, the government explains that it is working with Members of Parliament to identify organizations that provide essential services in the community and could provide youth jobs. Employers that provide essential services and are interested in receiving Summer Jobs Program funds should contact their Member of Parliament.
For more information on this article, please contact Sari Wiens, Ilan Burkes, Nicole Toye or Jessica Fairbairn.
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