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  • May 24th, 2020 9:48 pm
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[OP]
Member
Apr 2, 2020
205 posts
89 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
2026 posts
536 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
2026 posts
536 upvotes
Toronto
yes, it is like any other revenues
[OP]
Member
Apr 2, 2020
205 posts
89 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.
Sr. Member
Aug 13, 2003
501 posts
342 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]
Member
Apr 2, 2020
205 posts
89 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
Nov 17, 2004
3082 posts
1406 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]
Member
Apr 2, 2020
205 posts
89 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
7672 posts
2101 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]
Member
Apr 2, 2020
205 posts
89 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
7672 posts
2101 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
1442 posts
471 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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