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Overview:This Newsletter discusses accounting implications of the Canada Emergency Wage Subsidy under IFRS.
The Government of Canada recently introduced two wage subsidies to help Canadians and businesses facing hardship as a result of the COVID-19 outbreak.
The Temporary 10% Wage Subsidy is a three-month measure that will allow eligible small employers to reduce the amount of payroll deduction required to be remitted to the Canada Revenue Agency (CRA). The bill received Royal Assent and was brought into law on March 25, 2020.
The Canada Emergency Wage Subsidy (CEWS) introduces a wage subsidy of up to 75% for qualifying businesses, for up to 3 months, retroactive to March 15, 2020. The subsidy covers employers of all sizes and across all sectors who have suffered a drop in gross revenues of at least 15% in March, and 30% in April and May. The bill received Royal Assent and was brought into law on April 11, 2020.
Employers eligible for the CEWS are also entitled to receive a 100% refund for certain employer contributions.
This In brief addresses the accounting implications of the subsidies and the impact on reporting periods prior to April 2020.
In our view:
  • The Temporary 10% Wage subsidy is accounted for as a government grant from March 25, 2020 when it was brought into law;
  • The CEWS is accounted for as a government grant from April 11, 2020 when it was brought into law;
  • Accounting for payments to employees relating to the CEWS depends on the arrangement between the employer and employee.

Changes to the subsidy programs or new arrangements introduced by governments or employers may result in a different analysis.
Detailed guidance is available in our In brief.
IFRS In brief - Accounting implications of the Canada Emergency Wage Subsidy (pdf 251kb)
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