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  • May 24th, 2020 9:48 pm
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[OP]
Jr. Member
Apr 2, 2020
191 posts
73 upvotes

Is the CEWS taxable?

I've never received a subsidy before, I assume it's considered taxable income?
15 replies
Deal Addict
Dec 13, 2007
1634 posts
102 upvotes
Toronto
Pronoia wrote: I've never received a subsidy before, I assume it's considered taxable income?
Yes it is.
Jr. Member
Dec 12, 2005
114 posts
28 upvotes
My undersanding is CEWS is taxable with a "but". Your business has an off setting expense which is the wages paid to you employees so in the end taxes if any should be a small amount.
Deal Addict
Dec 13, 2007
1634 posts
102 upvotes
Toronto
yes, it is like any other revenues
[OP]
Jr. Member
Apr 2, 2020
191 posts
73 upvotes
regrus wrote: My undersanding is CEWS is taxable with a "but". Your business has an off setting expense which is the wages paid to you employees so in the end taxes if any should be a small amount.
Good point.
Member
Aug 13, 2003
408 posts
246 upvotes
Calgary
regrus wrote: My undersanding is CEWS is taxable with a "but". Your business has an off setting expense which is the wages paid to you employees so in the end taxes if any should be a small amount.
The wage subsidy income you receive is completely cancelled out by the wage you pay out (wage expense) so in the end the taxes is not a small amount, there is no tax at all.
[OP]
Jr. Member
Apr 2, 2020
191 posts
73 upvotes
DentDude wrote: The wage subsidy income you receive is completely cancelled out by the wage you pay out (wage expense) so in the end the taxes is not a small amount, there is no tax at all.
This is correct, but for me it's just a different way of looking at things.

In Manitoba all seniors will receive a $200 subsidy, but it's not considered taxable income. This is different from the CEWS which is taxable income.
Deal Addict
User avatar
Nov 17, 2004
2756 posts
1012 upvotes
Pronoia wrote: I've never received a subsidy before, I assume it's considered taxable income?
I think what you meant to ask is: “is the CEWS subsidy counted (reported) as business revenue.”

And the answer is yes.
[OP]
Jr. Member
Apr 2, 2020
191 posts
73 upvotes
CensoredByRFD wrote: I think what you meant to ask is: “is the CEWS subsidy counted (reported) as business revenue.”

And the answer is yes.
Now that the CEWS has been extended for 3 more months I have a second question. If the CEWS is to be reported as revenue, is it to be included when determining if the business has a 30% drop in revenue, when qualifying for subsequent periods?
Deal Fanatic
User avatar
Jan 31, 2006
6998 posts
1734 upvotes
Toronto
Pronoia wrote: Now that the CEWS has been extended for 3 more months I have a second question. If the CEWS is to be reported as revenue, is it to be included when determining if the business has a 30% drop in revenue, when qualifying for subsequent periods?
I read that they will compare your May 2019 vs May 2020, June 2019 vs June 2020, and so on, if indeed you revenue by 30% or 70% then you will qualify for subsequent period.
[OP]
Jr. Member
Apr 2, 2020
191 posts
73 upvotes
cgtlky wrote: I read that they will compare your May 2019 vs May 2020, June 2019 vs June 2020, and so on, if indeed you revenue by 30% or 70% then you will qualify for subsequent period.
This is correct. But do you include any wage subsidy that you've received from the previous month when calculating the 30% revenue drop?

Example, lets' say I qualified for the May/June wage subsidy because my May revenue was down 30% from the previous year and I receive $70,000. Do I include this $70,000 in my June 2020 revenue when I'm trying to qualify form the June/July wage subsidy?
Deal Fanatic
User avatar
Jan 31, 2006
6998 posts
1734 upvotes
Toronto
Pronoia wrote: This is correct. But do you include any wage subsidy that you've received from the previous month when calculating the 30% revenue drop?

Example, lets' say I qualified for the May/June wage subsidy because my May revenue was down 30% from the previous year and I receive $70,000. Do I include this $70,000 in my June 2020 revenue when I'm trying to qualify form the June/July wage subsidy?
No, since it is not a revenue from the business.
Deal Addict
Dec 25, 2005
1437 posts
460 upvotes
Pronoia wrote: Now that the CEWS has been extended for 3 more months I have a second question. If the CEWS is to be reported as revenue, is it to be included when determining if the business has a 30% drop in revenue, when qualifying for subsequent periods?
CEWS is not included when you perform your revenue reduction test.

Take a look at the following URL, which has frequently asked questions:
https://www.canada.ca/en/revenue-agency ... tions.html

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