How do I calculate a Reduction in Revenue
The Canada Emergency Wage Subsidy program has been extended through December and has radically been expanded to include periods up to November 21, 2020.
Our subsidy application program has been effective and economical for our clients.
The new periods include many changes to the rules. There are now two approaches with the dividing line being a 50% drop in revenue. This opens the program up to companies that had a drop in revenue that was less than 30%. Under the new rules, even a 10% drop will qualify, it just won’t qualify for much.
| Claim Period | Revenue Drop of 50% or more | Revenue Drop of Less than 50% | |
| Jul 5 to Aug 1 | 5 | 60% | 1.2X Revenue Drop |
| Aug 2 to Aug 29 | 6 | 60% | 1.2X Revenue Drop |
| Aug 30 to Sept 26 | 7 | 50% | 1.0X Revenue Drop |
| Sept 27 to Oct 24 | 8 | 40% | 0.8X Revenue Drop |
| Oct 25 to Nov 21 | 9 | 20% | 0.4X Revenue Drop |
At Period 5, a re-calculation is permitted to determine how to calculate your revenue drop. You are allowed to re-elect to use an average of Jan-Feb 2020, or a direct year comparison. Once selected you must continue through Period 9 on the same basis, but it is whichever method benefits you the most.
For Periods 5 and 6, the old calculations and methods are still effective under a grandfathering rule. If you have a 30% drop or more, you still qualify for a 75% subsidy up to August 29.
There is also an introduction of “top up” subsidies businesses with greater than a 50% drop over a 3 month span. The maximum top up would be 25% for a business with a 70% drop on average. A business with between 50% and 69% drop is calculated as (Revenue Drop /2) X 1.25
A revised calculation spreadsheet is available from the Canada Revenue Agency and is also hosted on our website www.ribeyre.ca/covid
Owner compensation and subsidy rules have also changed. While most owners will not have a problem, an ‘edge’ case we’ve identified is an owner who took little or no pay in January or February but did in calendar 2019 and did after March 15, 2020. The impact of these new rules might be to increase the wage subsidy that can be claimed for your pay. For clients we are continuing to prepare claims for, we are already studying this. If you think you might be in this category and require assistance, please contact your RCH Partner.
| Claim period |
Pre-crisis pay period options |
Claim period |
Pre-crisis pay period options |
Claim period
|
Pre-crisis pay period options |
||
|
Periods 1 to 3 |
January 1 to March 15, 2020 (75 days)
March 1 to May 31, 2019 (92 days) |
Period 4 |
January 1 to March 15, 2020 (75 days)
March 1 to May 31, 2019 (92 days)
March 1 to June 30, 2019 (122 days) |
Periods 5 and later |
January 1 to March 15, 2020 (75 days)
July 1 to December 31, 2019 (184 days) |