Ask Member Support: eligibility requirements and tax impacts of the Canada Emergency Wage Subsidy
Question:
My organization is looking at the various COVID-19 government assistance/relief programs. I have been looking into the Canada Emergency Wage Subsidy but I need more information. Can you tell me if non-profit housing providers are eligible, and if so, are the funds received from this program taxable?
Answer:
The Canada Emergency Wage Subsidy (CEWS) was designed to help businesses weather the challenges posed by the COVID-19 pandemic. The subsidy helps businesses keep workers on their payroll and aims to prevent job losses due to economic downturn. Those eligible for this subsidy include individuals, taxable corporations, non‑profit organizations and registered charities.
If an organization is eligible, the subsidy provided would be the greater amount between:
- 75 per cent 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 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.[i]
Employers may be eligible for a subsidy of up to 100 per cent of the first 75 per cent of existing employees’ wages (with the expectation to maintain individual employees’ pre-existing wages) and up to 75 per cent of wages paid to new employees.
Currently, the subsidy is available for the period between Mar 15, 2020 (retroactive) and, as was recently announced, December 2020.
Eligibility
Eligible organizations must demonstrate a 15 per cent decline in revenues in March 2020, or a 30 per cent decline in revenues from April-July (this may be revisited for the August-December period).
Organizations can either compare revenues to those from the same month in 2019 or to an average of the revenue earned in January and February 2020.
To be eligible for CEWS, an organization must be considered an “eligible entity”. Non-profits that are tax-exempt under the Income Tax Act are considered eligible entities. Most non-profit housing providers should be considered eligible entities as tax-exempt non-profit organizations.
There are some cases where tax-exempt non-profit housing providers fall under provisions in the Income Tax Act that would likely render them ineligible for CEWS. Ineligible non-profit housing providers would likely include:
- limited-dividend housing companies incorporated to construct, hold and manage a low-rental housing project, with payable dividends of 5 per cent or less per year (this exclusion would not apply to most non-profit housing providers)
- organizations that exclusively provide low-cost housing for seniors. Organizations providing other types of housing in addition to low-cost housing for seniors would likely still be considered eligible
Tax implications
For housing providers using the subsidy for employee salaries related to the organization’s non-profit activities, funds received through CEWS would likely not be considered taxable income.
The Canada Revenue Agency (CRA) has indicated that emergency wage subsidies, including CEWS, are considered government assistance and accordingly, would be considered taxable income for an employer’s income calculation. However, tax-exempt organizations in the Income Tax Act (including non-profit organizations) who do not already pay taxes on taxable income would likely not need to pay tax on the subsidies as well.
Visit the CEWS contact webpage for more information and to confirm whether your organization is eligible for CEWS.
Download our new COVID-19 Funding Opportunities Tracker to find more information on funding initiatives that can help your organization, staff and tenants financially during the COVID-19 pandemic.
Need more information on the impacts of the pandemic on your organization and its operations? Chances are other providers are asking the same questions. Visit our COVID-19 FAQ page to stay on top of some of the most pressing issues for housing providers during the pandemic, including more information about CEWS.
Keep checking onpha.on.ca/covid19 for the latest information about how COVID-19 is impacting the community housing sector.
Have questions about CEWS or other government assistance programs? Contact us at member.support@onpha.org. We’re always happy to hear from you, and to help!
[i] https://www.canada.ca/en/department-finance/news/2020/04/the-canada-emergency-wage-subsidy.html
