Canadian Medical Association

This document is being updated on a regular basis, in accordance with additions/changes to federal programs. Last updated August 20, 2020 to reflect the CEWS redesign which enhances the eligibility until November 21, 2020 (with intent to extend until December 19, 2020) and now includes cost-sharing arrangements.

COVID-19 has disrupted most industries, including health care. While the pandemic is placing immense demands on health care providers, many physicians and medical learners are also facing financial uncertainty related to loss of income.

The Canadian Medical Association commissioned MNP, a national accounting and tax firm, to provide a detailed analysis of the top four current federal assistance programs.

The Canadian government has created 5 programs to help Canadian businesses facing hardship as a result of the COVID-19 outbreak; which may be applicable to your medical practice:

  • Two wage subsidies: Canadian Emergency Wage Subsidy (CEWS) and Temporary Wage Subsidy for Employers (TWS);
  • A loan program: Canadian Emergency Business Account (CEBA);
  • Canada Emergency Commercial Rent Assistance (CECRA) – please visit CMHC - CECRA for more information; and
  • Canada Emergency Student Benefit (CESB) – please visit CRA - CESB for more information.

However, for business reasons, should the above subsidy programs be deemed not applicable, a worker could apply for relief under the Canada Emergency Response Benefit (CERB) if the criteria are met.

Federal assistance programs at a glance

This dashboard is designed to assist all medical practitioners with questions regarding the specific government subsidies and how each relates to their employment structure.

CEWS

Canadian Emergency Wage Subsidy (CEWS)

CEWS has recently been expanded to November 21, 2020 (possibly December 19, 2020). With the expansion of the program came a new set of rules and measures to access the CEWS program.  As a result, the initial CEWS program and the expanded program have been referred to by some as CEWS 1.0 and 2.0.  We will also adopt this language.

CEWS 1.0 - Periods 1 to 4 (March 15 to July 4, 2020) - covers 75 per cent of salaries for eligible entities, for up to 16 weeks, if a 30% decline in monthly revenue is experienced (15% in March 2020).  

CEWS 2.0 – Periods 5 to 9 (July 5 to November 21, 2020 possibly December 19, 2020) - the subsidy will now be based on the application of varied sliding scales to the actual revenue decline experienced with a potential 25% top-up for the more adversely affected employers.  

Generally, it is intended that employers of all sizes and across all sectors of the economy would be eligible except for public sector entities.

Employment structures

CEWS 1.0 eligibility (periods 1 – 4; March 15 to July 4, 2020)

CEWS 2.0 eligibility (periods 5 – 9; July 5 to November 29, 2020)

A.Self-employed physician or professional corporation

  • Did you have a corporate payroll number by March 15, 2020
  • Did your qualifying revenue decline 15 per cent in March 2020, 30 per cent in April/May 2020, or 30 per cent in other prescribed periods compared to prior reference periods?
  • Do your employees include yourself as a physician and/or family members?
  • Do you have a Canada Revenue Agency (CRA) My Business Account setup?
  • Did you have a corporate payroll number by March 15, 2020?
  • Did your qualifying revenue decline in any month between July to November 2020 compared to prior reference periods?
  • Do your employees include yourself as a physician and/or family members?
  • Do you have furloughed employees?
  • Do you have a Canada Revenue Agency (CRA) My Business Account setup?

B. Cost sharing arrangement (unincorporated association)

 

1. Self-employed physician or employees paid by the professional corporation

Refer to self-employed physician or professional corporation (A)

 

Refer to self-employed physician or professional corporation (A) 

2. Employees jointly paid and employed under cost sharing agreement

  • The government recently legislated that employers who pay their employees through an “agent” can apply for the CEWS if criteria is met (retroactive April 11, 2020). 
  • Did your qualifying revenue decline 15 per cent in March 2020, 30 per cent in April/May/June 2020 compared to prior reference periods?
  • On March 15, 2020, did you employ one or more employees where the payroll was administered by an “agent” who had a corporate payroll number and makes the required payroll remittances.
  • Did your qualifying revenue decline in any month between July to November 2020 compared to prior reference periods?
  • On March 15, 2020, did you employ one or more employees where the payroll was administered by an “agent” who had a corporate payroll number and makes the required payroll remittances.

C. Partnership

 

1. Employees paid by the self-employed physician or professional corporation

   

2.  Employees of a partnership

  • Does the partnership have a payroll number as of March 15, 2020?

  • Did the partnership's qualifying revenue decline 15 per cent in March, or 30 per cent in April/May/June 2020 compared to prior reference periods?

  • Do you have a CRA My Business Account set up?

  • The partnership can apply for subsidy if eligible.

  • Does the partnership have a payroll number as of March 15, 2020?

  • Did the partnership’s qualifying revenue decline in any month between July to November 2020 compared to any prior reference periods?

  • Do you have a CRA My Business Account set up?

  • The partnership can apply for subsidy, if eligible.

How to apply: Eligible entities can apply through the CRA's My Business Account portal and web-based application. Consult their application guide to get started.

TWS

Temporary Wage Subsidy for Employers (TWS)

Should your business not qualify for the CEWS, it may qualify for the previously announced wage subsidy of 10 per cent of remuneration paid from March 18 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per eligible employer.

Employment structures

Eligibility

A. Self-employed physician or professional corporation

  • Is your professional corporation a CCPC?

  • Do you access the small business deduction?

  • No application required

  • Available for physician and family members paid a salary

B. Cost sharing arrangement (unincorporated association)

1. Self-employed physician or employees paid by the professional corporation

      Refer to self-employed or professional corporation (A)

2. Employees jointly paid and employed under cost sharing agreement

  • Relying on the position that the agent's payroll # is in fact the payroll # of the principals

  • As a principal, your eligibility needs to be assessed independent of the other principals in the arrangement

  • Employees belong to the principal on a proportionate basis

C. Partnership

1. Employees paid by the self-employed physician or professional corporation  

2. Employees of a Partnership

  • Does the partnership have a payroll number?

  • Are your partners individuals or CCPCs that access the small business deduction?

  • No application required

How to apply: No application required. Eligible entities can visit the Government of Canada’s TWS FAQ.

CEBA

Canadian Emergency Business Account (CEBA)

CEBA is available for eligible businesses and provides for a loan up to $40,000 to fund certain expenses incurred by the business. The loan is interest free up to December 31, 2022 and no principal payments are required.  If you pay at least 75 per cent of the loan ($30,000) by December 31, 2022 then the remaining $10,000 is forgiven. If the loan balance is not repaid by December 31, 2022, then the loan is converted into a term loan with a 5 per cent interest rate and due December 31, 2025. No principal payments are due during the term of the loan; however, the full balance is due by December 31, 2025. Expansion of this program was announced on May 19, 2020 by the government.CEBA program overview

Employment structures

Eligibility

A. Self-employed physician or professional corporation

  • Do you have a CRA business number and a chequing/operating bank account as of March 1, 2020?
  • Do you need assistance in covering your current operating costs?
     
  • Was your 2019 T4 payroll between $20,000 to $1,500,000 or 
     
  • If your 2019 payroll is less than $20,000, do you have eligible non-deferrable operating expenses between $40,000 and $1,500,000?

 

B. Cost sharing arrangement (unincorporated association)

1. Self-employed physician or employees paid by the professional corporation

      Refer to self-employed or professional corporation (A)

2. Employees jointly paid and employed under cost sharing agreement

  • The CRA appears to not accept the “agent” relationship for purposes of filing a CEBA application at this time;

  • As a principal, your eligibility needs to be assessed independent of the other principals in the arrangement.

C. Partnership

1. Employees paid by the self-employed physician or professional corporation  

2. Employees of a partnership

  • Do you have a CRA number and a business chequing/operating bank account as of March 1, 2020?

  • Does the partnership need assistance in covering its current operating costs?

  • Was the partnership's 2019 T4 payroll between $20,000 to $1,500,000?

  • If the partnership’s 2019 payroll is less than $20,000, does it have eligible non-deferrable operating expenses between $40,000 and $1,500,000?

How to apply: Contact your financial institution for more information on this type of assistance.

CERB

Canada Emergency Response Benefit (CERB)

A taxable benefit of $2,000 for a 4-week period, up to 24 weeks is available to eligible workers who have lost their income due to COVID-19. Generally, this will be available to workers who have stopped work for at least 14 consecutive days within the initial four-week application period, due to reasons related to COVID-19 and receive $1,000 or less of income (pre-tax) in respect of the consecutive days they ceased work.

If this applies to your situation, you may be eligible to apply for a previous period, starting March 15, 2020.

Employment structures

Eligibility

A. Self-employed physician or professional corporation

  • Have you or an employee including family members stopped work or will stop work?

  • Are you or an employee including family members receiving $1,000 or less for at least 14 consecutive days within the initial four-week period?

B. Cost sharing arrangement (unincorporated association)

1. Self-employed physician or employees paid by the professional corporation

      Refer to professional corporation or self-employed (A)

2 Employees jointly paid and employed under cost sharing agreement

  • Has a joint worker stopped work or will stop work?

  • Has a joint worker stopped receiving employment income or receiving $1,000 or less for at least 14 consecutive days within the initial four-week period?

C. Partnership

1. Employees paid by the self-employed physician or professional corporation  

2. Employees of a partnership

  • Has a worker stopped work or will cease work?

  • Has a worker stopped receiving employment income or receiving $1,000 or less in for at least 14 consecutive days within the initial a four-week period?

How to apply: Employees can apply on either the Service Canada or Canada Revenue Agency (CRA) websites

 

Federal assistance program overview

Canada Emergency Wage Subsidy (CEWS)

The CEWS was initially introduced as a 75 per cent wage subsidy to eligible entities for up to 12 weeks, retroactive from March 15 to June 6, 2020. Eligibility of this initial program offering was premised on an eligible entity demonstrating a 15% decline in revenue in March 2020 and/or a 30% decline in revenue in April/May 2020 as compared to the corresponding month of the prior year or alternatively the average of January and February 2020 (if elected for all periods).

The government later announced that it intended to extend this program by an additional 12 weeks to August 29, 2020. June 2020 would require a 30% decline in revenue when compared to the prior reference periods. July and August revenue decline requirements were not announced until the government completed a public consultation.

On July 17, 2020, the government announced proposed legislation to fully redesign the CEWS program. This proposed legislation received Royal Assent July 27, 2020. Stemming from the consultations, the government has expanded the CEWS to all eligible entities who experience any decline in July through November 2020 (with an intended expansion to December 2020) monthly revenue as compared to its prior reference periods. The legislation implemented a base subsidy with varied sliding scales that adjust the amount of the CEWS subsidy to correlate to the month’s revenue decline plus a potential 25% top-up for more adversely affected businesses. These new rules are complex and multi-faceted.  

In order to facilitate an effective discussion of the CEWS program, the original CEWS program will be referred to as “CEWS 1.0” while the most recent legislation of the CEWS will be referred to as “CEWS 2.0”.

CEWS 1.0 – includes periods 1 - 4 (March, April, May and June 2020)

  • The CEWS for these periods provides a 75% wage subsidy to eligible employers for up to 16 weeks, retractive from March 15 to July 4, 2020.  

CEWS 2.0 – includes periods 5 - 9 (July, August, September, October, November 2020) with an intended 10th period (December)

  • Base subsidy – available to all eligible entities who are experiencing a decline in revenues, with the subsidy amount varying depending on the scale of revenue decline; and
  • Top-up subsidy – of up to an additional 25 per cent for those employers that have been most adversely affected by the COVID-19 crisis.

Eligible entity

To qualify, you must be an eligible entity. For all qualifying periods, an eligible entity includes individuals, taxable trusts and corporations, and partnerships (provided 50% or more of the members are eligible entities).

An eligible entity must make a number of attestations which includes that its CEWS application is true and complete and is not false or misleading in all material respects. In addition, the eligible entity must attest that the qualifying revenue from activities carried on in Canada has declined by the specified amount as compared to their revenue before the COVID-19 crisis. See qualifying period below.

The government has encouraged all eligible entities to rehire employees as quickly as possible and to apply for the CEWS if they are eligible. To ensure that the CERB applies as intended, the government introduced a process to allow individuals rehired by their employer during the same eligibility period to repay any CERB they no longer qualify for. 

Qualifying entity – (now includes entities that pay employees through a payroll service provider/"agent")

In order to be a qualifying entity and hence be able to qualify for the CEWS, the eligible entity must either: 

  1. have a payroll number by March 15, 2020 or 
  2. use a payroll service provider who is a person or partnership and by March 15, 2020:
    •   the qualifying entity employs at least one employee and
    •   the payroll service provider has a payroll number it uses to make required remittances with respect to the employees of the eligible entity.

Calculating revenues

Revenue would be calculated using the employer's normal accounting practices (typically the accrual method) or the cash method (if elect to do so). If your normal accounting method is the cash method, new legislation will now permit you to elect to use the accrual method. Revenue would include inflows of cash, receivables or other consideration arising from the rendering of services (or the sale of goods) in Canada. Revenues would not include extra-ordinary items or amounts received under this program or the TWS.CRA has noted that extra-ordinary items would include federal, provincial or municipal government assistance/relief received due to COVID-19.
 
In addition, there are further rules that impact the calculation of revenue.

  • Affiliated groups may elect to compute revenue on a consolidated basis.
  • Certain eligible entities receiving substantially all (90% or more) of their revenue from non-arm's length persons are eligible to elect to calculate their decline in revenue based on the non-arm's length persons' decline in revenue. These rules are complex and should be reviewed with your tax advisor. 

CEWS 1.0 - amount of subsidy and qualifying periods

Amount of subsidy 

The subsidy amount for a given employee on eligible remuneration paid between March 15 and July 4, 2020 would be the greater of:

  • 75 per cent of the amount of eligible remuneration paid, to both existing and new employees, up to a maximum benefit of $847 per week or if the employee is not dealing at arm's length with the employer, nil; and
  • The amount of eligible remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee's baseline remuneration (previously referred to as the pre-crisis weekly remuneration), whichever is less.

Qualifying periods 1 through 4

Employers will be allowed to calculate their change in revenue in March/April/May/June, 2020 using a year-over-year or an alternative approach to determine their eligibility and must maintain consistency in the approach they use over the periods 1 through 4 of the program.

The following table from the Department of Finance provides for the reference periods (period to test revenue) and the qualifying period (period in which remuneration has been paid). 

 

 

Qualifying period

Required reduction of revenue
(equal to at least these percentages) *

Reference period for eligibility

Period 1

March 15 – April 11

15%

  • March 2020 over:
    • March 2019 OR
    • Average of January and February 2020

Period 2

April 12 – May 9

30%

  • Eligible for period 1 OR
  • April 2020 over:
    • April 2019 or
    • Average of January and February 2020

Period 3

May 10 – June 6

30%

  • Eligible for period 2 (based on revenue decline in period 2) OR
  • May 2020 over:
    • May 2019 or
    • Average of January and February 2020

Period 4

June 7 – July 4

30%

  • Eligible for period 3 (based on revenue decline in period 3) OR
  • June 2020 over:
    • June 2019 or
    • Average of January and February 2020
         

In order to provide certainty for employers, once they are found to be eligible for a specific period, they will automatically qualify for the immediately following period.

CEWS 2.0 - base subsidy, top-up subsidy and qualifying periods

Base subsidy would be a specified rate, applied to the amount of eligible remuneration paid to the employee for the eligibility period, on remuneration of up to $1,129 per week as shown in the table below:

Claim period

Qualifying period

Reference period for eligibility

Base rate if revenue
reduction percentage (RRP)
is at least 50%

Base rate if RRP < 50%

Maximum weekly base
subsidy per employee

Period 5 *

July 5 – August 1

  • June 2020 over:
    June 2019 or
  • July 2020 over:
    July 2019 or
  • June/July 2020 over:
    Average of Jan. and Feb. 2020**

60%

1.2 x RRP

 

 

Up to $677

Period 6 *

August 2 – August 29

  • July 2020 over:
    July 2019 or
  • August 2020 over:
    August 2019 or
  • July/August 2020 over:
    Average of Jan. and Feb. 2020**

60%

1.2 x RRP

Up to $677

Period 7

August 30 – September 26

  • August 2020 over:
    August 2019 or
  • September 2020 over:
    September 2019 or
  • August/September 2020 over:
    Average of Jan. and Feb. 2020**

50%

1.0 x RRP

Up to $565

Period 8

September 27 – October 24

  • September 2020 over:
    September 2019 or
  • October 2020 over:
    October 2019 or
  • September/October 2020 over:
    Average of Jan. and Feb. 2020**

40%

0.8 x RRP

Up to $452

Period 9

October 25 – November 21

  • October 2020 over:
    October 2019 or
  • November 2020 over:
    November 2019 or
  • October/November 2020 over:
    Average of Jan. and Feb. 2020**

20%

0.4 x RRP

Up to $226

Potential period 10

TBD but ending no later than December 19, 2020

TBD

TBD

TBD

TBD

*In periods 5 and 6, employers who would have been better off in the CEWS design in periods 1 to 4 would be eligible for a 75 per cent wage subsidy if they have a revenue decline of 30 per cent or more (safe harbour rule).

** Average of January and February is only available if the eligible entity makes an election to use this alternative approach consistently for period 5 and all subsequent periods.

Top-up subsidy of up to 25 per cent will be available to employers who were the most adversely impacted by COVID-19. The top-up will be determined based on the revenue drop experienced by an eligible employer when comparing revenues in the preceding three months to the same three months in the prior year or the average monthly revenue in the preceding 3 months to the average monthly revenue in January and February 2020.

The following chart illustrates the calculation of the top-up:

3 – month average revenue drop

Top-up CEWS rate

Top-up calculation = 1.25 x
(3-month revenue drop – 50%)

70% and over

25%

1.25 x (70% - 50%) = 25%

65%

18.75%

1.25 x (65% - 50%) = 18.75%

60%

12.5%

1.25 x (60% - 50%) = 12.5%

55%

6.25%

1.25 x (55% - 50%) = 6.25%

50% and under

0%

1.25 x (50% - 50%) = 0%

 

Eligible remuneration for both CEWS 1.0 and 2.0 includes salary, wages, and other remuneration such as taxable benefits, not including severance pay or items such as stock option benefits.

Baseline remuneration for a given employee will be determined on the average weekly eligible remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in which the employee was not remunerated. Legislation expanded the definition of baseline remuneration to allow employers to choose between periods when calculating the baseline remuneration of their employees. Employers would be allowed to calculate baseline remuneration for an employee as the average weekly eligible remuneration excluding any period of 7 or more consecutive days without remuneration paid to the employee from:

  • January 1 to March 15 (all periods) or, 
  • Elect on an employee by employee basis 
    • March 1 to May 31 of 2019 (for periods 1 – 3), 
    • March 1 to June 30 of 2019 (for period 4 if March 1 to May 31, 2019 was not already elected), or 
    • July 1 to December 31, 2019 (for periods 5 – 9).

Different alternative methods for determining baseline remuneration may be elected for different qualifying periods.

The subsidy for employees not dealing at arm's length with their employers will only be available to those employed at some point from January 1 to March 15, 2020 and/or between March 1 to May 31, 2019 (periods 1 - 3), March 1 to June 30, 2019 (for period 4) or July 1 to December 31, 2019 for periods 5 to 9.

Refund for certain payroll contributions

A 100 per cent refund for certain employer-paid contributions to EI, the CPP, the QPP and the QPIP was introduced as part of this program.  This refund is available on employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay, and for those employees that the employer is eligible to claim the CEWS. 

An employee is considered on leave if that employee is paid by the employer but does not perform any work for the employer. The refund has no weekly maximum benefit per employee and no overall limit to the refund amount that an eligible entity may claim. 

Employers will be required to collect and remit employer and employee contributions to each program as usual; eligible employers will apply for a refund at the same time as they apply for the CEWS.

Eligible employees

Eligibility for the CEWS of an employee's remuneration, is limited to individuals employed in Canada and who have not been without remuneration for 14 or more consecutive days in the qualifying period. The 14-day rule does not apply to Periods 5 onward. 

Employers that were previously cautioned to exercise particular care in regards to the hiring and dismissing of an employee in any period because of this rule no longer have to worry about qualifying for the CEWS when they hire new employees (or hire back previously laid off employees) during a qualifying period.

CEWS for furloughed employees

For periods 5 and 6, the subsidy calculation for a furloughed employee will remain the same as for periods 1 to 4. 

Beginning in period 7, CEWS support for furloughed employees will be adjusted to align with the benefits provided through the CERB and/or Employment Insurance (EI). This will ensure equitable treatment of employees on furlough between both programs.  

For periods 5 and subsequent periods, the CEWS for furloughed employees will be available to eligible entities who qualify for either the base rate or the top-up for active employees in the relevant period.

The employer portion of contributions in respect of the CPP, EI the QPP and the QPIP in respect of furloughed employees will continue to be refunded to the employer.

How to apply

Eligible entities can apply for the CEWS through the CRA's My Business Account portal as well as a web-based application until January 31, 2021.

Please note that the government intends to communicate, or otherwise make available to the public, the name of the employer that makes an application for the CEWS. It is unclear in what manner this communication will be made.

Employers need to keep all records that support the CEWS application including those that demonstrate their decline in revenue and remuneration paid to employees.   

For more information, visit the Government of Canada’s:

Temporary Wage Subsidy for Employers (TWS)

The TWS for employers is a three-month measure to help prevent layoffs and support businesses.

The subsidy is equal to 10 per cent of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer.

Note that associated Canadian-controlled private corporations ("CCPC") will not be required to share the maximum subsidy of $25,000 per employer.

The subsidy is calculated and deducted from payroll remittances owing to the CRA. The current payroll remittance of federal, provincial or territorial income tax owing to the CRA would be reduced by the amount of the subsidy.

If the income taxes deducted are not enough to offset the value of the subsidy in a specific period, future payroll remittances can be reduced. This includes reducing remittances that may fall outside of the application period for the wage subsidy (after June 19, 2020).

Eligibility

TWS is limited to the following employers:

  1. A CCPC that is eligible for the small business deduction subject to rules. A medical professional corporation would generally be a CCPC. Consult your tax advisor regarding eligibility and status of your professional corporation as a CCPC;
  2. An individual (other than a trust);
  3. A partnership, all members of which are: eligible CCPCs, individuals, partnerships and registered charities;
  4. A non-profit organization exempt from tax; and
  5. A registered charity.

An eligible employer qualifies provided they:

  • Employ one or more individuals in Canada;
  • Have an existing business number and payroll program account with the CRA on March 18, 2020; and
  • Pay salary, wages, bonuses or other remuneration to an eligible employee.

Other

Note that the subsidy is required to be reported as income in the year in which it is received. To the extent that any amount is received under TWS, this will generally reduce the amount that can be claimed under the CEWS. CRA has released Form PD27 for the 10% Temporary Wage Subsidy Self-Identification Form for Employers. 

For more information, visit the Government of Canada’s FAQ on TWS.

Canada Emergency Business Account (CEBA)

The CEBA is available for eligible businesses and provides a loan for up to $40,000 to fund certain expenses incurred by the business.  The loan is interest free up to December 31, 2022 and no principal payment are required.  If you pay at least 75% of the loan ($30,000) by December 31, 2022 then the remaining $10,000 is forgiven.

If the loan balance is not repaid by December 31, 2022, then the loan is converted into a term loan with a 5% interest rate and due December 31, 2025.  No principal payments are due during the term of the loan; however, the full balance is due at December 31, 2025.

As the banks are administering this program, please consult your financial institution for specific criteria; however, based on our current understanding, the loan is available to Canadian operating businesses who meet the criteria below:

  • an active business chequing/operating account with a bank on March 1, 2020 (should your business operate through a personal account, it will not qualify);
  • a business number with the CRA as of March 1, 2020;
  • either:
    • payroll between $20,000 and $1,500,000 for the 2019 calendar year (and supported by your T4 Summary or  
    • payroll less than $20,000 for the 2019 calendar year and you have:
      • filed a 2018 or 2019 tax return
      • eligible non-deferrable expenses between $40,000 and $1,500,000.  Eligible non-deferrable expenses include costs such as rent, property taxes, utilities, and insurance.  Expenses will be subject to verification and audit by the Government of Canada; and
  • good credit standing (which may be required by some banks).

The loan is available through your primary banking institution and is to be used to cover non-deferrable costs such as payroll, rent, insurance and utilities.

Contact your primary business bank to apply.

For more information about the program, visit the Government of Canada’s FAQ on CEBA.

Canada Emergency Response Benefit (CERB)

The legislation provides that a worker will be eligible for the program if he/she has ceased work for at least 14 consecutive days within the initial four-week application period,  due to reasons related to COVID-19 and does not receive income in the consecutive days they ceased work A worker can re-apply for CERB for multiple 4-week periods, to a maximum of 24 weeks (6 our of the 7 available periods). 

Although not legislated, the Government expanded the eligibility to the CERB program to situations where an individual earns $1,000 (before taxes) or less during an eligibility period.  If this applies to your situation, you may be eligible to apply for a previous period, starting March 15, 2020.

The CERB provides a payment of $2,000 for a 4-week period (equivalent to $500 a week) for up to 24 weeks. The amount of the support payment is subject to change by government regulation. The benefit is available until October 3, 2020. Applications can be filed until December 2, 2020.

Per the CRA, payments received under the CERB will be included in the recipient's taxable income, meaning there will be no tax withheld on the payment. As a result, the recipient will owe income tax when they file their personal tax return for 2020.

Eligibility

A person will be eligible if they are considered a worker and if they meet certain eligibility requirements for the program.

worker is a person who is at least 15 years of age, who was a resident of Canada in 2019 and had total income of at least $5,000 from employment, self-employment or non-eligible dividends in either 2019 or in the 12 months immediately preceding their application. We also understand that a worker can count non-eligible dividends towards the $5,000 income requirement.

A worker will be eligible for the program if work he/she has non-voluntarily stopped working because of reasons related to COVID-19 and has not earned more than $1,000 in employment/self-employment income or non-eligible dividends for 14 or more consecutive days within the initial four-week benefit period of their claim.  When submitting subsequent claims, one cannot have earned more than $1,000 in employment/self-employment income for the entire four-week benefit period of the new claim. The reasons for ceasing work could include sickness, quarantine, closure of business, taking care of an ill family member or taking care of children due to closure of schools and daycares.

Other

This program applies to wage earners, contract workers and self-employed individuals who would not otherwise be eligible for EI. Additionally, a worker could also receive payments under this program if they are still employed but are not receiving more than $1,000 of income due to a COVID-19 related disruption.

You will be able to apply for the new CERB through CRA's My Account or using the dedicated phone line starting April 2020.

For more information, visit the Government of Canada’s main webpage for CERB.


Federal assistance program eligibility by employment scenario

A. Employees of a self-employed physician or professional corporation

The following commentary is directed at self-employed physicians and professional corporations. The professional corporation may employ/compensate you as a physician and other staff which may include family members. While the self-employed physician cannot employ him/herself as a physician, he/she may employ or compensate other staff which could include family members.

CEWS – A

The Department of Finance has released the CEWS program and has recently legislated an expansion to this program until November 21, 2020 and possibly until December 19, 2020. The following are a few of the factors that should be considered:

  • Are you an eligible entity? Eligible entity includes an individual and taxable corporation.  As such, both, a self-employed physician and a professional corporation would meet the definition of an eligible entity;
  • An eligible entity will have to calculate their qualifying revenue in order to determine their eligibility.
    • CEWS 1.0 (periods 1 – 4; March 15 – July 4, 2020)  
      • A decline in revenue of at least 15 per cent in March 2020 or 30 per cent for April/May/other prescribed periods as compared to each month's prior reference period will need to be demonstrated;
      • The amount of the CEWS that can be claimed for each employee (new or existing) is calculated as the greater of:
        • 75 per cent of eligible remuneration (includes salary, wages and other remuneration) up to a maximum of $847 per week or if the employee is not dealing at arm's length with the employer, nil, whichever is less; and
        • the amount of eligible remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee's baseline remuneration (previously referred to as the pre-crisis weekly remuneration), whichever is less.
  • CEWS 2.0 (periods 5 – 9; July 5 – November 21, 2020)
    • The requirement for a minimum 30 per cent revenue decline was eliminated.  Effective July 5, 2020, the CEWS consists of two parts:
      • A base subsidy available to all eligible employees who are experiencing a decline in revenues, with the subsidy amount varying depending on the scale of revenue decline; and
      • A top-up subsidy of up to an additional 25 per cent for those employers who have been most adversely affected by the COVID-19 crisis.
      • The base subsidy rate and top-up subsidy rate is to be applied to each employee for the eligibility period, on remuneration paid up to $1,129 per week.
  • The government has recently expanded the definition of baseline remuneration as the average weekly eligible remuneration paid to the eligible employee which excludes any period of seven or more consecutive days for which the employee was not remunerated during the period of:  
    • January 1, 2020 through March 15, 2020 or
    • Alternatively (if the eligible entity elects):
      • March 1 to May 31, 2019, (for periods 1-3);
      • March 1, to June 30, 2019 (for period 4 if March 1 to May 31, 2019 was not elected); or
      • July 1 to December 31, 2019 (for period 5 and onward). 
  • Employers would be able to choose which period to use on an employee-by-employee basis and elect alternative methods for determination of baseline remuneration for different qualifying periods.
  • There are additional rules pertaining to eligible remuneration that prevent any amount received by an employee to be paid or returned to the employer, a non-arm's length party or to another person/partnership at the direction of the entity.  These rules also preclude remuneration arrangements being entered into between the employee and employer whereby one of the main purposes for the arrangement is to increase the amount of the CEWS.

Eligible employees are to be employed in Canada and not without remuneration for 14 or more consecutive days in the qualifying period. The 14 or more consecutive day restriction has been eliminated for periods 5 onward. 

Physicians who suspect that their qualifying revenue has decreased or will decrease by at least 15 per cent in March or 30 per cent in April/May/June or experiences any decline in revenue in July through November 2020 periods should consult with their accountant regarding evidence to support this position.

More information on the CEWS program

For further insights on how CEWS can apply to both self-employed physicians and professional corporations, read the frequently asked questions on this topic.

CEWS FAQ

TWS – A

The TWS is a three-month measure to help prevent layoffs and support businesses. The subsidy is equal to 10 per cent of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per eligible employer.

As an employer, it would be necessary to assess the eligibility with respect to obtaining the TWS. 

More information on the TWS program

For further insights on how TWS can apply to both self-employed physicians and professional corporations, read the frequently asked questions on this topic.

TWS FAQ

CEBA – A

CEBA is available for eligible businesses and provides a loan for up to $40,000 to fund certain expenses incurred by the business.  The loan is interest free up to December 31, 2022 with no principal payments required.  If you pay at least 75 per cent of the loan ($30,000) by December 31, 2022 then the remaining $10,000 is forgiven.

If the loan balance is not repaid by December 31, 2022, then the loan is converted into a term loan with a 5 per cent interest rate and due December 31, 2025.  No principal payments are due during the term of the loan; however, the full balance is due at December 31, 2025.

More information about the CEBA program

For further insights on how CEBA can apply to both self-employed physicians and professional corporations, read the frequently asked questions on this topic.

CEBA FAQ

CERB – A

For business reasons, should the CEWS, TWS and CEBA programs be deemed not applicable, a worker could apply for relief under the CERB if the criteria are met. 

A worker will be eligible for the program if he/she has involuntarily stopped work due to reasons related to COVID-19 and does not earn more than $1,000 (pre-tax) in employment and/or self-employment income for 14 or more consecutive days within the 4-week benefit period of the initial claim.  A worker can re-apply for CERB for multiple 4-week periods, to a maximum of 24 weeks (6 periods) and must not earn more than $1,000 (pre-tax) in employment and/or self-employment income and/or non-eligible dividends with respect to each additional 4-week period claim.

The Benefit is available from March 15, 2020, to October 3, 2020. You can apply no later than December 2, 2020 for payments retroactive to within that period.

More information about the CERB program

For further insights on how CERB can apply to both self-employed physicians and professional corporations, read the frequently asked questions on this topic.

CEBA FAQ

B. Cost sharing arrangement

Under a cost-sharing arrangement, employees would be jointly employed by the principals in the arrangement. Typically, the principals (self-employed physicians or their professional corporation) under an agency relationship would delegate responsibility or authority to an agent. The agent would be given discretion to pay the employees, withhold the appropriate amount of taxes, file T4 slips, hire and terminate on behalf of the principals.     

Generally, there are two situations to assess with respect to the new government programs for a physician in a cost sharing agreement:

  1. Employees of the principals (self-employed physicians or professional corporations) - may include the physician's staff (if applicable) and the physician's family members that work in the practice. The professional corporation may also include the physician him/herself as an employee. Please refer to discussion under A (Employees of a Self-Employed Physician or Professional Corporation); and
  2. Jointly employed staff – includes employees who are jointly employed under a cost sharing arrangement. For purposes of this discussion, we assumed that staff jointly employed in a cost sharing agreement are considered employees of each principal (self-employed physicians or professional corporations). Please confirm this assumption with your tax advisor.

CEWS – B

In a cost sharing arrangement employees are jointly employed by any combination of self-employed physicians and professional corporations and an "agent" is administrating payroll. 

The concept of "agency" is not defined in the Income Tax Act (ITA). An "agency" relationship has been accepted by CRA on an administrative basis with respect to payroll, on particular facts. 

Previously we noted, that CRA did not respect the “agency” relationship for purposes of claiming the CEWS which led to the CMA advocating for legislation to be inclusive to eligible entities that employ employees through an “agent”. On July 17, 2020, the government announced that entities who had their payroll administered by a “payroll service provider” would qualify for the CEWS. It is viewed that the term “payroll service provider” is synonymous with the term “agent”. Thus, if the following criteria is met on March 15, 2020, eligible entities would also qualify for the wage subsidy:

  • The eligible entity employs one or more individuals in Canada; 
  • The “agent” had its own payroll account number; and
  • The “agent” made the appropriate remittances for the employees of the entity. 

It is still necessary for each self-employed physician and professional corporation to calculate their qualifying revenue in order to determine their eligibility for each qualifying period. 

As a successful CEWS application may be based on the relevant facts and application of the law, please contact your tax advisor or legal counsel to discuss further.

Please refer to the question and answers in the self-employed physician or professional corporation section for more information.

TWS – B

The TWS is a three-month measure to help prevent layoffs and support businesses. The subsidy is equal to 10 per cent of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per eligible employer.

Like CEWS, because the employees are jointly employed by any combination of self-employed physicians and professional corporations, each "employer" would be required to assess their eligibility with respect to obtaining the TWS. The concept of "agency" is not defined in the ITA.  An "agency" relationship has been accepted by CRA on an administrative basis with respect to payroll, on particular facts. A successful TWS application is dependent upon the on the relevant facts and an application of law. This is best explained by example:

  • Let's assume that PC A ("A"), PC B ("B"), and self-employed physician C ("C") are each "eligible employers" of all employees and that each of A, B, and C have engaged Agent Company to discharge the responsibilities related to all employees under an agency relationship.
  • On the basis that the PCs and the self-employed physician are "eligible employers", the Agent Company may claim the TWS on behalf of each of A, B and C.  Each of A, B, and C would be required to recognize their "share" of the subsidy as income in the year in which the subsidy is received.  
  • If for example, A is not an eligible employer, the Agent Company may claim the TWS on behalf of B and C.  Assuming, that they all share costs equally regarding employees (33% each), the Agent Company would claim 66% of the TWS or the proportion that relates to B and C. Each of B and C would recognize their "share" of the subsidy (33%) as income in the year in which the subsidy is received. A may have no income inclusion because A was not eligible.

Please contact your tax advisor or legal counsel with regard to claiming TWS via an agent and how this may interact with claiming the CEWS.

Please refer to the question and answers in the self-employed physician or professional corporation section for more information.

CEBA – B

Each principal of a cost sharing arrangement would need to apply for the CEBA and assess based on facts specific to each of them. A principal who is a self-employed physician or a professional corporation may also qualify for the CEBA if its 2019 payroll was less than $20,000.

Please refer to the question and answers in the self-employed physician or professional corporation section for more information.

CERB – B

For business reasons should the CEWS, TWS and CEBA programs be deemed not applicable, a worker could apply for relief under the CERB if the criteria are met.

A worker will be eligible for the program if he/she has involuntarily stopped work due to reasons related to COVID-19 and does not earn more than $1,000 (pre-tax) in employment and/or self-employment income for 14 or more consecutive days within the 4-week benefit period of the initial claim.  A worker can re-apply for CERB for multiple 4-week periods, to a maximum of 24 weeks (6 periods) and must not earn more than $1,000 (pre-tax) in employment and/or self-employment income with respect to each additional 4-week period claim.

Please refer to the question and answers in the self-employed physician or professional corporation section for more information.


C. Partnerships

Generally, there are two situations to assess with respect to the new government wage subsidy and loan programs for a physician or a physician's professional corporation who is a partner in a partnership:

  1. Employees of the partners (self-employed physicians or professional corporations) – may include the physician's staff (if applicable) and the physician's family members that work in the practice. The professional corporation may also include the physician him/herself as an employee; and
  2. Employees who are employed by the partnership.

1. Workers directly employed by partner (self-employed physician or professional corporation)

The following commentary is directed at employees of either a self-employed physician or professional corporation which could include the physician, arm's length employees and non-arm's length employees such as the physician's family members who work in the practice. For clarity, it is assumed that both the self-employed physician and/or the professional corporation are partners (members) of the partnership.  

CEWS – C - 1

The self-employed physician and/or professional corporation rather than the partnership would be required to assess the eligibility with respect to obtaining the CEWS for its own employees (the employees of the self-employed physician and/or professional corporation could be different than the employees of the partnership).

If subsidies or payments are available and received directly by the partner, they would be taxed at the partner's relevant income tax rate (marginal tax rates for the self-employed physician and either the small business rate or the general rate for a professional corporation).

The key question to be answered here with regard to the eligibility is the decline in qualifying revenue. If the partner and the partnership are not dealing at arm's length, then special rules could apply to the partner to take into account the revenue of the partnership in computing the decline. Please consult your tax advisor for further information in this regard as these rules are complex.

If the partner is dealing at arm's length with the partnership, it is unclear as to whether the revenue of the partnership could be used to compute the revenue of the partner and you should consult your tax advisor in this regard. 

Although the CEWS program has been legislated, the following are some of the unresolved issues that should be considered:

  • How does a partner measure qualifying revenue?
    • Does a partnership draw from a partnership constitute an "inflow of cash" using your normal accounting practices?
    • If no, can you elect to use the cash method to include draws in qualifying revenue?
    • Because a partnership is deemed to be a taxpayer, do we assume that normal partnership concepts may not apply?
  • For non-arm's length employees, the eligible remuneration paid is the lesser of the maximum benefit of $847 per week or 75 per cent of the employee's baseline remuneration (previously referred to as the pre-crisis weekly remuneration for periods 1 through 4. 

For more information on the baseline remuneration please refer to the self-employed physician or professional corporation section. Even with the unanswered questions above, it would be advisable to review the compensation paid to all non-arm's length employees with your accountant.

 Please refer to the question and answers in the self-employed physician or professional corporation section for more information.

TWS - C - 1

As an employer, the self-employed physician and/or professional corporation rather than the partnership would be required to assess the eligibility with respect to obtaining the TWS for its own employees (the employees of the self-employed physicians and/or professional corporation could be different than the employees of the partnership).

Subsidies or payments received directly by the partner would be taxed at the partner's relevant income tax rate (marginal tax rates for the self-employed physician and either the small business rate or the general rate for a professional corporation).

Please refer to the question and answers in the self-employed physician or professional corporation section for more information.

CEBA – C - 1

The CEBA is available for eligible businesses and provides a loan for up to $40,000 to fund certain expenses incurred by the business. The loan is interest free up to December 31, 2022 and no principal payments are required. If you pay at least 75 per cent of the loan ($30,000) by December 31, 2022 then the remaining $10,000 is forgiven.

If the loan balance is not repaid by December 31, 2022, then the loan is converted into a term loan with a 5 per cent interest rate and due December 31, 2025. No principal payments are due during the term of the loan; however, the full balance is due at December 31, 2025.

Please refer to the question and answers in the self-employed physician or professional corporation section for more information.

CERB – C - 1

For business reasons should the CEWS, the TWS and the CEBA programs be deemed not applicable, a worker could apply for relief under the Canada Emergency Response Benefit if the criteria are met.

A worker will be eligible for the program if he/she has involuntarily stopped work due to reasons related to COVID-19 and does not earn more than $1,000 (pre-tax) in employment and/or self-employment income for 14 or more consecutive days within the 4-week benefit period of the initial claim.  A worker can re-apply for CERB for multiple 4-week periods, to a maximum of 24 weeks (6 periods) and must not earn more than $1,000 (pre-tax) in employment and/or self-employment income with respect to each additional 4-week period claim.

Both arm's length and non-arm's length individuals are eligible for the program provided they meet the conditions.

Please refer to the question and answers in the self-employed physician or professional corporation section for more information.

2. Employees of partnership

The following commentary is directed at a partnership that employs workers. Of note, a partnership cannot pay a partner a salary. For clarity, partners receive draws or cash payments and the partnership allocates its taxable income to its partners at year-end pursuant to its partnership agreement. 

CEWS – C - 2

The partnership would be required to assess its eligibility to access the CEWS. 

We currently know that the partnership will need:

  • to assess that all partners meet the definition of eligible entity (includes: individuals, trusts, non-profit organizations and taxable corporations) and
  • to calculate its qualifying revenue in order to determine its eligibility. A revenue decline of at least 15 per cent in the month of March 2020 when compared to March 2019 or alternatively, the average of January and February 2020 will need to be demonstrated. For April, May and June, it will be necessary to demonstrate at least a 30 per cent reduction using the same benchmark and methodology used for March. Once an employer is found eligible for a specific qualifying period, the employer will automatically qualify for the next qualifying period (applicable to periods 1 to 4 only). For all periods from July onwards, the 30 per cent revenue decline requirement has been eliminated. Rather, a base subsidy will be available to all eligible entities who are experiencing a decline in revenues with a potential top-up subsidy of an additional 25 per cent for those employers who have been most adversely affected by the COVID-19 crisis. 

Receipt of the CEWS is taxable. The partnership would include the CEWS received in its taxable income which is allocated to the partners (in accordance with the partnership agreement) at the end of the year. The allocation of partnership taxable income is taxed at the partner level

For partnerships filing SR&ED claims, a wage subsidy received under this program would also reduce the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration. Please contact your tax advisor for further details.

TWS - C - 2

The TWS is a three-month measure to help prevent layoffs and support businesses. The subsidy is equal to 10 per cent of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per eligible employer.

The partnership itself would be required to assess its eligibility with respect to claiming TWS.  Generally, the partnership must meet the following criteria:

  • employs one or more eligible employees;
  • has a registered payroll number with CRA on March 18, 2020; and
  • all partners/members of the partnership are exclusively individuals, Canadian-controlled private corporations eligible for the small business deduction and/or registered charities. Of note, if any partners are a trust, the partnership will not be eligible.

Receipt of the TWS is taxable.  The partnership would include the TWS received in its taxable income which would be allocated to the partners (in accordance with the partnership agreement) at the end of the year.  The allocation of income from the partnership is taxed at the partner level.

For partnerships claiming SR&ED, a wage subsidy received under this program would also reduce the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration.

Please consult your tax advisor for further information if you would like to apply.

CEBA – C - 2

The CEBA is available for eligible businesses and provides a loan for up to $40,000 to fund certain expenses incurred by the business. The loan is interest free up to December 31, 2022 and no principal payments are required. If you pay at least 75 per cent of the loan ($30,000) by December 31, 2022 then the remaining $10,000 is forgiven.

If the loan balance is not repaid by December 31, 2022, then the loan is converted into a term loan with a 5 per cent interest rate and due December 31, 2025. No principal payments are due during the term of the loan; however, the full balance is due at December 31, 2025.

A partnership could be eligible for the CEBA. Please confirm the partnership's eligibility with your financial institution.

CERB – C - 2

For business reasons and after subsidy programs (CEWS, TWS and CEBA) are evaluated, if it is decided by the partnership that there is no longer work to be completed, a worker, employed by the partnership, could apply for the CERB program provided they are eligible.

A worker will be eligible for the program if he/she has involuntarily stopped work due to reasons related to COVID-19 and does not earn more than $1,000 (pre-tax) in employment and/or self-employment income for 14 or more consecutive days within the 4-week benefit period of the initial claim.  A worker can re-apply for CERB for multiple 4-week periods, to a maximum of 24 weeks (6 periods) and must not earn more than $1,000 (pre-tax) in employment and/or self-employment income with respect to each additional 4-week period claim.
 

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