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A Glimmer of Hope on the Distant Horizon



A Glimmer of Hope on the Distant Horizon

The federal government has revealed new details of the Canada Emergency Wage Subsidy. Many will qualify for the relief that is still six weeks away, while others are left to wonder if their circumstances will allow them to access much-needed cash.


Jeffrey Boutilier

We previously wrote of ongoing efforts to provide business relief during the COVID-19 crisis, and the Canada Emergency Wage Subsidy on March 30th.  Click here to review our previous dispatch.

“This is the largest economic program in Canada’s History”

– Finance Minister Bill Morneau on the Canada Emergency Wage Subsidy


Federal Finance Minister Bill Morneau took to the podium today to announce details of how the federal government intended to implement the new Canada Emergency Wage Subsidy.  After delaying the announcement an extra day, businesses could be forgiven for expecting that many new details would be revealed and many urgent questions answered.  Today’s press conference fell well-short of that expectation and several seemingly important details only emerged as the result of questions from the press gallery.


In short: we know more than we did on March 30th, but a lot of important questions remain unanswered, and it’s going to take a lot longer to apply (and even longer to begin receiving funding support) than most businesses were expecting.


Let’s start with a breakdown of the new details the Minister shared today:









  • The subsidy will be based on demonstrating a 30% or greater reduction in gross revenue from the same period the previous year.

  • This means that to qualify for the subsidy, a business must demonstrate that they have experienced a 30% or greater decline in their gross (top-line) revenues compared to their previous year’s results. Businesses will be asked to show their March 2020 statements and March 2019 statements to prove that their year-over-year losses meet the threshold.

  • The Finance Minister seems to have clarified that the program will only be in effect for March, April and May 2020.

  • We speculated in our last dispatch that the government may consider a rolling three-month period based on when the impact of COVID-19 started impacting businesses revenue (particularly those in downstream sectors initially insulated from the full impact of business closures, etc.). This is not the case.

  • Businesses will need to re-apply for the subsidy every month. The Canadian Revenue Agency (CRA) will develop the process to apply for the subsidy and businesses will use their CRA online account to submit their application and supporting information to demonstrate they qualify. The CRA will also process the payments, and businesses are encouraged to sign-up for direct deposit to ensure funds flow as quickly as possible following approval.

  • Businesses will be required to attest that they are doing everything they can to pay the balance (25%) of their employee’s wages not covered by the subsidy. While the Minister was vague when pressed for details, we expect this to be a legal attestation that you are making every effort to pay your employees their full wage, and only failing to do so in situations where the cash simply isn’t there. Companies found to have acted in bad faith in making this attestation would be subject to severe (but not-yet-defined) consequences.

  • The CRA application process will be available in 3 to 6 week’s time. In absolute terms this is between April 22nd and April 29th.

  • Subsidy money is not expected to reach employers for six weeks (May 12th, based on the date of today’s announcement).

This means that for small businesses who are impacted by COVID-19, but do not meet the 30% gross revenue loss threshold, some wage relief is still available.


Before we break down what this means for businesses in practical terms – especially those with unpredictable revenue patterns that might make qualifying difficult – we want to highlight a surprising reveal from today’s press conference:


When the expansion of the wage subsidy was announced, it seemed to be framed as a replacement of the previously announced 10% wage subsidy for small businesses.  Recall this was the program where businesses would lower their federal payroll remittances to retain the equivalent of 10% of the employee’s wages paid subject to certain limits.  In the question and answer period following his opening remarks, the Finance Minister confirmed that this 10% wage subsidy is still in effect and is being treated as a separate program.  This means that for small businesses who are impacted by COVID-19, but do not meet the 30% gross revenue loss threshold, some wage relief is still available.

Take Action Now.


Today’s announcements share important details about how the application process and payment mechanism will function.  While details are light, there are three things business should do immediately to position themselves to access the subsidy:




  1. Make sure your business has a CRA online account. This isn’t a process you can complete in one day, and with the volume of calls the CRA is receiving right now delays are inevitable. Get the process of signing-up underway today.

  2. Make sure you are set up for CRA direct deposit. With the volume of applications expected, anything you can do to remove steps between your business and subsidy money is prudent. Don’t wait for the government to cut and mail cheques.

  3. Get your monthly financial statements for 2019 in order. The time is now to ensure you have accurate month-by-month statements demonstrating your revenue. We also advise businesses to proactively begin assembling any supporting evidence that would demonstrate you should qualify despite not being able to show a clear year-over-year revenue drop in March, April, or May.

My revenues have been hit hard by COVID-19, but I’m worried I can’t demonstrate a 30% drop from this time last year.


With the delay in today’s announcement, we expected that the federal government was working to address some of the more common scenarios that businesses have asked about since the expanded subsidy was first announced on March 30th.  Instead, the mechanism for the subsidy is an extremely broad brush:  show us what your revenues are by 30% or more this month compared to the same month last year, or you don’t qualify.


This, coupled with the clear threat of harsh penalties for any company deemed to be breaking the “high-trust system” being used to deploy the subsidy has many companies wondering what will be permitted in determining their ability to qualify, and what would be ruled abusing the program.


We expect many businesses following today’s press conference are feeling concerned about their ability to qualify for the subsidy, even though they’re very confident their revenues will be crushed by COVID-19.  Companies in common scenarios like:




  • We’ve grown a lot since last year, and staffed-up accordingly, and so our revenues don’t show a 30% drop compared to the same time last year, but they’re well short of where they would have been given how well we’ve performed and how much we’ve grown over the last year.

  • We’ve made big investments in a new business or new capital to expand our existing business and we planned to have the doors open March 1st. Now we’re faced with huge fixed costs, employees to pay, and we never even had the chance to start earning revenue.

  • We’re a small business that scrambles to generate sales, and often has to extend creative billing arrangements to our clients. As a result, our revenues are very unpredictable and lumpy. We had great revenue in January and February last year, and then had no sales in March – now I’m worried I won’t be able to show the revenue drop I need to access the subsidy.


To their credit, the press pool did ask some questions about these scenarios at today’s press conference.  The Finance Minister stressed that the intent of the program was to help businesses fairly in the context of a high-trust system, and that the 30% year-over-year criteria was the simplest way they could devise to help as many businesses as possible quickly.  He did not have specific answers about what companies that don’t fit neatly into the criteria could do, or if new rules would be introduced to allow them to qualify, but he said something that gives us hope they will:


In response to a question about what companies that did not exist last March could do, the Minister suggested that they might be allowed to show that their March 2020 revenues were off by 30% from their February 2020 revenues – suggesting that the Government intends to work with businesses to understand the unique circumstances they face and adjudicate their eligibility using a wider criteria.

You’re still going to need cash.


The key takeaway today is that help is coming, but it’s going to take a long-time to get here.  Another six weeks will find us two months into the COVID-19 crisis and we fear that many businesses are at risk of default in the interim.  We are also concerned that the mechanism of this new subsidy suggests that employers must first make their monthly payroll and then apply to have it reimbursed after-the-fact.  This will challenge companies already struggling to manage dwindling cash reserves – especially those that choose to re-hire previously furloughed employees in the days before relief programs were announced.  


We encourage businesses to apply for the Canada Emergency Business Account and other emergency credit programs as soon as possible to ensure continued access to cash for the next six to eight weeks.  There are indications major banks intend to begin processing these new loans next week.


We will continue to monitor new developments closely in the hopes that additional clarity will be coming soon for businesses that don’t fit the governments “one-size fits all” approach.

Jeffrey Boutilier

Jeffrey Boutilier

President & Chief Strategist

Ascent was founded on Jeff’s desire to challenge people to dig deeper into their environment and themselves to reveal the insights that light the path to market success.  Driven by a passion for adventure, he prefers to seek out inspiration and ideas in the places others are afraid to look.

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