CRA finds that the eligible remuneration for an eligible entity’s employees is not reduced for CEWS purposes where it on-charges a portion of their time to an affiliate
Para. (c) of “eligible remuneration” definition in the CEWS (wage subsidy) rules provides that eligible remuneration excludes any amount that can reasonably be expected to be paid or returned, directly or indirectly, in any manner whatever, to the eligible entity or to a person or partnership not dealing at arm's length with it. Regarding the situation where a corporation (Aco) invoices a non-arm’s length corporation (Bco) for its payroll costs of employees who performed tasks for Bco, CRA stated that this arrangement would not reduce the eligible remuneration to Aco of such employees:
[T]he invoicing of an amount, whether or not marked up, reflecting the cost of salaries and benefits of employees of one entity who performed work for another entity, is not a returned amount falling within paragraph (c) of the definition of "eligible remuneration".
Neal Armstrong. Summary of 3 November 2020 External T.I. 2020-0848881E5 F under s. 125.7(1) – eligible remuneration – (c).