Regulations Amending the Income Tax Regulations (COVID-19 — Wage Subsidy for Furloughed Employees): SOR/2020-207

Canada Gazette, Part II, Volume 154, Number 21

SOR/2020-207 September 23, 2020


P.C. 2020-673 September 20, 2020

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 221 footnote a of the Income Tax Act footnote b, makes the annexed Regulations Amending the Income Tax Regulations (COVID-19 — Wage Subsidy for Furloughed Employees).

Regulations Amending the Income Tax Regulations (COVID-19 — Wage Subsidy for Furloughed Employees)


1 The heading of Part LXXXIX.1 of the Income Tax Regulations footnote 1 is replaced by the following:

COVID-19 Wage Subsidy

2 The Regulations are amended by adding the following after section 8901.1:

8901.2 The amount determined by regulation in respect of a qualifying entity for the purposes of clause (b)(iv)(B) of the description of A in subsection 125.7(2) of the Act for a week in the qualifying period described in paragraph (c.4) of the definition qualifying period in subsection 125.7(1) of the Act is the greater of

Coming into Force

3 These Regulations are deemed to have come into force on August 30, 2020.


(This statement is not part of the Regulations.)


On July 17, 2020, the Government of Canada announced that the Canada Emergency Wage Subsidy (CEWS) would be extended for five additional four-week periods ending on November 21, 2020, with the ability to further extend the CEWS until the end of December 2020. The rules for this extension are set out in An Act respecting further COVID-19 measures (S.C. 2020, c. 11), which received royal assent on July 27, 2020.

The rules specify the CEWS treatment for furloughed employees (i.e. employees on temporary paid leave) for periods five and six (from July 5 to August 1, 2020, and from August 2 to August 29, 2020, respectively). For these periods, the CEWS provides employers a maximum weekly subsidy of $847 for each furloughed employee who was paid in respect of the week. For period seven (from August 30 to September 26, 2020) and any subsequent period, the CEWS rules provide the authority to prescribe by regulation amounts to be used in the computation of the CEWS subsidy available in respect of a furloughed employee.

On August 20, 2020, the Government announced a four-week extension, from August 30 to September 26, 2020, of the Canada Emergency Response Benefit (CERB). With the extension of the CERB, it was announced on August 21, 2020, that the Government would propose to extend the treatment of furloughed employees under the CEWS for periods five and six to period seven. This extension would maintain the existing treatment of furloughed employees under the CEWS for period seven, which is the same period for which the CERB was extended.


Description and rationale

The amendments to the Income Tax Regulations (the Regulations) provide that, for the period from August 30 to September 26, 2020, the amount determined for a furloughed employee in respect of a week is the same as the amount determined for a furloughed employee in respect of a week in the prior qualifying periods (i.e. periods five and six). This provides a maximum subsidy of $847 per week in respect of remuneration paid to a furloughed employee. This extension of the CEWS treatment for furloughed employees is intended to provide certainty to employers regarding the wage subsidy for which they are eligible.

These amendments are intended to maximize employment during the post-pandemic economic recovery. In particular, they continue to ensure that employees that are furloughed as a result of the COVID-19 pandemic have timely and efficient support.

The treatment for furloughed employees, through the amendments to the Regulations, will limit situations where the Employment Insurance (EI) system would otherwise be relied upon. It will also continue to promote the maintenance of the relationship between employers and employees, especially where businesses are partly shutdown or facing decreased demands for their goods or services.


Through town halls, round tables, online surveys and correspondence, the Government is continuously consulting with the public, including business and labour representatives, regarding potential adjustments to the measures implemented to support workers, as they transition back to work through the recovery phase of the pandemic.

These regulatory amendments consider many stakeholder views to the CEWS.

Cost-benefit analysis

Aligning the extension of the CEWS treatment for furloughed employees with the extension of the CERB from August 30 to September 26, 2020, will continue to meet the Government of Canada’s priority that Canadians can access the support they need through the COVID-19 crisis. It will also contribute to preserving the employee-employer relationship in situations where employers were ordered to shut down their business or are facing decreased demand, while maintaining the incentive to work.

The cost to Government of the CEWS measures, before these amendments, has been estimated to be approximately $83.6 billion. It is expected that the extension of the treatment of furloughed employees for periods five and six to period seven will add approximately $335 million to the total cost of the CEWS.

Eligible entities and employers applying for the CEWS for this additional four-week qualifying period for their employees will likely encounter some administrative costs through the process. However, these costs would not outweigh amounts received as a benefit under this program.

Small business lens

Small businesses may, but are not required to, apply for the CEWS. Any small business that does apply may encounter some administrative costs to apply for these benefits. Nevertheless, these costs should not outweigh amounts received by small businesses as a subsidy under the CEWS. Small businesses may benefit from these measures as they help to preserve the employee-employer relationship while maintaining an incentive to work in this period of reduced economic activity.

One-for-one rule

The one-for-one rule applies because any employer that becomes eligible, or continues to be eligible, and applies for the CEWS will encounter some administrative costs. The amendments address an emergency circumstance and are exempt from the requirement to offset administrative burden under the one-for-one rule.

Regulatory cooperation and alignment

Due to the urgency and specificity of this measure, there were no requirements regarding the CEWS Regulations and, therefore, no steps were taken to coordinate or to align with other regulatory jurisdictions.


The Canada Revenue Agency (CRA) administers the CEWS. The CRA will apply the amendments in respect of a qualifying period, as defined in the Income Tax Act, for one additional four-week period (from August 30 to September 26, 2020), with respect to eligible employers.

The Regulations are subject to the existing reporting and compliance mechanisms available under the Income Tax Act. These mechanisms allow the Minister of National Revenue to assess and reassess tax payable, conduct audits and seize relevant records and documents.


Lori Merrigan
Income Tax Legislation
Tax Policy Branch
Telephone: 343‑542‑6855

Dominique D’Allaire
Finance Legal Services
Telephone: 613‑668‑6650