Changes to the Canada Emergency Wage Subsidy (CEWS) program announced in July have left many dealers across the nation with questions and concerns about how those changes will impact their particular situation.
Some of the top concerns among dealers hover around the CEWS calculation formula and how to separate the base rate and the top-up rate, along with questions regarding the continuation of the deeming rule, according to Oumar Dicko, Chief Economist at the Canadian Automobile Dealers Association (CADA).
“CADA has worked tirelessly over the past couple of months to ensure that dealers were adequately supported throughout the crisis, but also during the recovery, so that the introduction to the sliding scale wage subsidy program is good for dealers,” said Dicko in an interview with Canadian auto dealer. “It ensures that any dealership with a revenue decline can continue using the wage subsidy until December.”
Concerns around new formula
Dicko said the new formula is more complicated, but that resources have been made available to dealers through CADA and the Canada Revenue Agency (CRA).
Dealer members that have questions or concerns with regards to the new formula and how to calculate the new rate of the wage subsidy based on that formula can have access to those resources through CADA. Non-members can browse detailed information from the CRA.
The deeming rule
Another concern among dealers is the continuation of the deeming rule, which aims to provide certainty for businesses and to make it easier for them to plan ahead. Dicko said the CRA has provided some interpretation on this and confirmed that the deeming rule will continue until December.
“One important outstanding item was the final Canada Revenue Agency (CRA) interpretation of the deeming rule for the remainder of the program,” said Dicko. “The CRA has now published new details on the wage subsidy program, including the new calculation sheet and the application of the deeming rule going forward. This is very good news for dealers and a key improvement that CADA has been advocating strongly for.”
What is the deeming rule? If a dealership qualifies for a period in the CEWS (for example, in April their revenue decline was 35 per cent), then they can qualify for the 75 per cent wage subsidy. If the dealer qualifies for a period, then they would automatically qualify for the next period so they do not have to have the revenue decline. However, it should be noted that the deeming rule will take a new form.
“This new deeming rule and clarification will provide greater flexibility and certainty for dealers across Canada in accessing the CEWS going forward,” said Dicko. “CADA strongly encourages dealers and their accounting teams to consult the CRA CEWS Website for additional information on the new deeming rule and how to use it to get improved access to CEWS.”
