During a press conference on July 13, 2020, Prime Minister Justin Trudeau stated that the Canada Emergency Wage Subsidy (the “CEWS”) will be extended to December 2020 (the “December Extension”). No further particulars were provided in respect of the December Extension; however, the Prime Minister indicated that a formal announcement would be forthcoming this week. 

The December Extension is the second extension of the CEWS. When first introduced, the CEWS was to be available for 12 weeks ending June 6, 2020, with the possible extension by regulation to no later than September 30, 2020. The initial 12 week period was comprised of three separate qualifying periods (i.e., Period 1 – March 15, 2020 to April 11, 2020; Period 2 – April 12, 2020 to May 9, 2020; and Period 3 – May 10, 2020 to June 6, 2020).

On May 15, 2020, the Government of Canada announced that the CEWS would be extended to August 29, 2020 (the “August Extension”), but did not provide particulars as to how the CEWS would apply during the extension. Instead, the Government stated that it would “consult with key business and labour representatives over the next month on potential adjustments to the program to incent jobs and growth, including the 30 per cent revenue decline threshold.”

Subsequent to the announcement of the August Extension, the Canada Revenue Agency confirmed that the extension would be broken down into three separate four week qualifying periods (i.e., Period 4 – June 7, 2020 to July 4, 2020; Period 5 – July 5, 2020 to August 1, 2020; and Period 6 – August 2, 2020 to August 29, 2020), and the Government approved regulations that effectively extended to Period 4 the same rules that applied for Periods 1 to 3. The regulations did not address Periods 5 and 6, and details in respect of the eligibility criteria for those periods have yet to be released.

In its Economic and Fiscal Snapshot 2020 released on July 8, 2020, the Government indicated that its consultation with businesses, labour representatives, not-for-profit organizations, registered charities and individual Canadians on proposed adjustments to the CEWS has been completed and that changes to the CEWS would soon be announced. The Government’s Economic and Fiscal Snapshot 2020 can be found here.

Notably, since the initial legislation did not contemplate extension beyond September 30, 2020, the December Extension will require legislative amendment. Legislative amendment is also required to pass certain other changes announced in May 2020, including amendments to deal with: (i) seasonal employees and employees returning from extended leave, (ii) amalgamations and wind-ups, and (iii) tax-exempt trusts.

Additional tax commentary from our Firm on the CEWS can be found here, here and here.