Private Opcos should examine the passive income of their shareholders from a CEWS perspective

An affiliated group of eligible entities may all elect under s. 125.7(4)(b) for their qualifying revenue for CEWS (wage subsidy) purposes to be determined on a consolidated basis. The definition of an “eligible entity” is broader than that of a ”qualifying entity,” so that an individual controlling an Opco could jointly elect with the Opco even though the individual did not have a payroll remittance number. This could be helpful to Opco if, for example, the individual sustained a significant decrease in interest income during the testing period.

However, since the joint election must be made with all group members, the qualifying revenue of each one should be examined – for example, the passive income of the individual’s spouse.

Neal Armstrong. Summary of Martin Lee and Thanusan Raveendran “Affiliation Election for CEWS: Private Corporation Applications,” COVID-19 and Canadian Tax for the Owner-Manager/Canadian Tax Focus (Canadian Tax Foundation), July 2020, p. 3 under s. 125.7(4)(b).