Subsection 125.7(1)
Base Percentage
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q.20-1] Example of computation of base wage subsidy
Example 20-2A
An eligible employer had $50,000 in qualifying revenue in September 2020...
Baseline Remuneration
Administrative Policy
16 January 2023 Internal T.I. 2020-0851561I7 F - SSUC/CEWS -– rémunération admissible et rémunérati
After confirming that eligible remuneration for each qualifying period for CEWS purposes includes additional payments, added to the “regular”...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration | eligible remuneration for each qualifying period includes additions for vacation and sick leave, but excludes taxable benefits | 133 |
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q.17-5] General pro-ration of bonuses.
[O]nly eligible remuneration paid by an eligible employer to an eligible employee in respect of a week in...
Eligible Employee
Administrative Policy
15 January 2021 External T.I. 2020-0847781E5 - CEWS - remuneration / SSUC - rémunération
Q.1
Are taxable benefits taken into consideration in determining whether the 14 day remuneration condition is met and, if so, how is a particular...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration | non-cash taxable benefits are not “eligible remuneration” | 67 |
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q.3-9] Pro rata recognition of payroll under a cost-sharing agency arrangement
A cost sharing arrangement (CSA) is generally an agreement under...
Canada Emergency Wage Subsidy (CEWS) Calculator under Determine your eligible employees, 21 April 2020 CRA Webpage
Retroactively hiring and paying employees
Employees who have been laid off or furloughed can become eligible retroactively, as long as you rehire...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration | 63 |
Eligible Entity
Administrative Policy
23 June 2020 External T.I. 2020-0848441E5 F - SSUC - Entité déterminée et institution publique
In response to a question as to whether an “organization” that was an inter-municipal authority held by four regional Quebec county...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(c) | regional county municipalities are municipalities | 145 |
Canada Emergency Wage Subsidy (CEWS) Calculator under Who is an eligible employer, 21 April 2020 CRA Webpage
Types of eligible employers
Eligible employers include:
- individuals (including trusts)
- taxable corporations
- persons that are exempt from...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue | 32 |
Paragraph (a)
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
A non-resident corporation earning Canadian Treaty-exempt income because of no PE may qualify
3-02. Can a non-resident corporation be an eligible...
9 October 2020 External T.I. 2020-0847791E5 - CEWS 81(1)(a) and treaty exempt entities
Is a non-resident corporation that operates an airline that normally flies to and from Canada qualify as an “eligible entity” notwithstanding...
Paragraph (c)
Administrative Policy
3 June 2020 External T.I. 2020-0846831E5 - CEWS - Public institution
In indicating that it could not provide a ruling as to whether a registered charity was a public institution, CRA stated:
[D]ue to the large...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(c) | public bodies performing a function of government are entities that are functionally like municipalities | 115 |
Paragraph (f)
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
Examples of qualifying private schools
3-7. Are all schools and colleges eligible for the wage subsidy?
… [A] person or partnership that...
Eligible Remuneration
Administrative Policy
16 January 2023 Internal T.I. 2020-0851561I7 F - SSUC/CEWS -– rémunération admissible et rémunérati
In confirming that eligible remuneration for each qualifying period for CEWS purposes includes additional payments for vacation and sick leave...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Baseline Remuneration | baseline remuneration includes additions for vacation and sick leave pay, and security allowances | 54 |
22 December 2022 Internal T.I. 2020-0856411I7 F - SSUC/CEWS -– Rémunération admissible
In confirming that mandatory vacation, statutory holiday and sick leave pay provided for in the various collective agreements in the Quebec...
20 October 2020 External T.I. 2020-0856781E5 - CEWS - eligible remuneration and outsource staff
Regarding the implications to an outsource staffing company where it has received the CEWS and the client receiving the staffing services has...
15 January 2021 External T.I. 2020-0847781E5 - CEWS - remuneration / SSUC - rémunération
An “eligible employee” of an eligible entity excludes an individual who is without remuneration by the eligible entity in respect of 14 or...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Employee | non-cash taxable benefits are not “eligible remuneration” for CEWS purposes, but are “remuneration” for “eligible employee” purposes | 347 |
15 July 2020 External T.I. 2020-0847141E5 - CEWS - Payments to Contractors
The operator of a mine (the “Operator”) suspended operations at its mine for COVID-19 reasons, but made gratuitous payments (the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue | gratuitous COVID-alleviation payments to a contractual counterparty are excluded from the latter’s qualifying revenues | 262 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(6) | question of fact whether s. 125.7(6) could apply where gratuitous payroll reimbursements were made | 172 |
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q.17-2] Dividends not eligible remuneration
For the purpose of the wage subsidy, dividends are not considered eligible remuneration. Accordingly,...
Canada Emergency Wage Subsidy (CEWS) Calculator under Determine your eligible employees, 21 April 2020 CRA Webpage
What is eligible remuneration
Eligible remuneration includes amounts you paid an employee as salary, wages and other taxable benefits, fees, and...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Employee | 54 |
Articles
Alex Ghani, Stan Shadrin, Boris Volfovsky, "How Does the Canada Emergency Wage Subsidy Apply to Non-Resident Employers?", COVID-19 and Canadian Tax for the Owner-Manager/Canadian Tax Focus (Canadian Tax Foundation), July 2020, p. 4
Example of Treaty-exempt U.S. corp employee US employees in Canada for several days a quarter (p. 4)
Consider the case of a US-resident...
Paragraph (c)
Administrative Policy
29 March 2021 Internal T.I. 2020-0865791I7 - CEWS - eligible remuneration
The controlling shareholder and an employee of an eligible entity suspended receiving salary, for the performance of the employee’s duties, in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(2) | remuneration not paid by journal entry | 164 |
| Tax Topics - General Concepts - Payment & Receipt | remuneration not considered to be paid by journal entry | 80 |
3 November 2020 External T.I. 2020-0848881E5 F - SSUC/CEWS - rémunération admissible
Corporation A invoiced a non-arm’s length corporation (Corporation B) on a one-off basis for its payroll costs of employees who performed...
Executive Compensation Repayment Amount
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q.28-7 Example 28-7A] Example showing order rule for repayment of executive compensation repayment amount
- This example concerning a TSX-listed...
Public Health Restriction
Administrative Policy
7 June 2021 Internal T.I. 2020-0873601I7 - CERS – restricted activities of a travel agency
Would a travel agency that was required to close its office due to COVID lockdown measures, so that its employees started working from home,...
Paragraph (f)
Administrative Policy
7 June 2021 Internal T.I. 2021-0880401I7 - CERS - Lockdown Support Restricted Activities
Regarding whether the “public health restriction” definition would apply where a retail store (“a Store”) in a shopping mall is required...
Public Institution
Paragraph (a)
Administrative Policy
1 May 2020 External T.I. 2020-0846931E5 - CEWS - public institution
In response to an enquiry as to the definition of “public institution” in the context of Crown corporations referred to in s. 149(1)(d), CRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 149 - Subsection 149(1) - Paragraph 149(1)(d.3) | functional approach to determining the ownership of the “capital” of a non-share corporation | 163 |
Qualifying Entity
Paragraph (a)
Administrative Policy
8 November 2022 Internal T.I. 2022-0941391I7 - (Re)determination of section 125.7 applications
After noting that the instructions provided by CRA both on the application for the CEWS or CRHP benefit and the CRA website indicated that a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(3.4) | no time limit on making s. 152(3.4) determination/ applications can be made on RP account basis | 198 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Prescribed | filing of multiple applications on an RP account basis could be authorized by the Minister | 102 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(5) - Paragraph 125.7(5)(a) | movements of upward or downward adjustments between various RP accounts by redeterminations subject to s. 125.7(5)(a) limitation | 128 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1.2) | application mutatis mutandis of normal reassessment periods | 148 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(16) | s. 125.7(16) does not allow the extension of the time for amending an application, and does not accord the discretion to amend an election | 105 |
| Tax Topics - Income Tax Act - Section 160.1 - Subsection 160.1(1) | no time limitation on s. 160.1(1) assessment | 42 |
Paragraph (c)
Subparagraph (c)(ii)
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
No required link of revenue decline to COVID/Example of application of alternative approach
5. How is the reduction in revenue determined for...
Paragraph (d)
Subparagraph (d)(ii)
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
Verification that payroll remittances were made through payroll service
3-8. Can an eligible employer that hires a third party to facilitate the...
Qualifying Property
Administrative Policy
23 November 2021 External T.I. 2021-0881361E5 - CERS - Self-Contained Domestic Establishment
Is a residential property, occupied by a taxpayer unrelated to an eligible entity as a residence but used by an eligible entity in its business,...
27 September 2021 Internal T.I. 2021-0877001I7 - CERS - Rent paid for unoccupied office space
An eligible entity signed a pre-construction lease for new office space several years ago and then moved into this location. It attempted to...
17 May 2021 Internal T.I. 2020-0870041I7 - CERS - Meaning of Qualifying Property
Regarding queries as to whether the determination of a property as a qualifying property for Canada emergency rent subsidy (“CERS”) purposes...
Qualifying Rent Expense
Administrative Policy
14 January 2022 Internal T.I. 2021-0913891I7 - CERS - Sublease
The sublessor and subtenant signed a document prior to October 9, 2020 to sublease the real property at issue. Consent of the landlord was...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | a sublease may in fact constitute a lease assignment | 196 |
20 January 2022 Internal T.I. 2021-0877511I7 - CERS- Written Agreement
On June 25, 2020, the taxpayer (“TP”) entered into a binding offer (the letter of understanding, or “LOU”) to lease real property from a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Effective Date | agreement to lease entered into before cut-off date complied if it contained the essential binding terms | 170 |
11 May 2021 Internal T.I. 2020-0869981I7 - CERS - Hairdressers and barbers - qualifying rent
Regarding a query as to whether an amount paid by a barber or hairdresser (“Stylist”) as “chair rent” to the owner of an establishment...
Variable A
Paragraph (a)
Subparagraph (a)(i)
Clause (a)(i)(C)
Subclause (a)(i)(C)(II)
Administrative Policy
23 March 2021 TEI Roundtable, 2021-0879631C6 - CERS - Net Leases, Qualifying Revenue & Deadlines
In responding to questions as to whether utilities paid by a tenant can qualify as qualifying rent expenses and be claimed under the Canada...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(2.1) | table of filing deadlines | 66 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Rent Subsidy Percentage | CERS/CEWS similarity in computing revenue reduction | 170 |
23 February 2021 External T.I. 2020-0873491E5 - CERS - Energy Costs
If a gross lease does not contain a requirement for a tenant to pay for utilities, would any payments made by the tenant to an energy distributor...
Paragraph (b)
Administrative Policy
16 July 2021 Internal T.I. 2020-0872521I7 - CERS - Qualifying property for rental income
Would the owner of a qualifying property that operates a hotel, or other similar business such as a motel or a bed and breakfast, be considered to...
Subparagraph (b)(i)
Administrative Policy
23 December 2022 Internal T.I. 2021-0880421I7 F - SUCL - Dépenses de loyer admissibles
CRA indicated that government assistance related to interest paid on a debt obligation secured by a mortgage on a qualifying property would not...
Clause (b)(i)(A)
Administrative Policy
19 April 2022 Internal T.I. 2020-0873571I7 - CERS Interest paid on a debt obligation as qualifying rent expense
Regarding the determination of the “lowest total principal amount” {“LPTA”) in s. (b)(i)(A) of A of “qualifying rent expense,” the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Rent Expense - Variable A - Paragraph (b) - Subparagraph (b)(i) - Clause (b)(i)(B) | “cost amount” is the s. 248(1) cost amount in the particular qualifying period | 136 |
Clause (b)(i)(B)
Administrative Policy
19 April 2022 Internal T.I. 2020-0873571I7 - CERS Interest paid on a debt obligation as qualifying rent expense
Is the s. 248(1) “cost amount” definition applicable to s. (b)(i)(B) of A of “qualifying rent expense,” and when should the cost amount be...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Rent Expense - Variable A - Paragraph (b) - Subparagraph (b)(i) - Clause (b)(i)(A) | referenced aggregate amount is the lowest during ownership, and excludes non-amortizing debt | 357 |
Subparagraph (b)(ii)
Administrative Policy
10 January 2022 External T.I. 2020-0873921E5 F - SUCL- Assurance responsabilité civile
After noting that “qualifying property" in s. 125.7(1) generally refers to real or immovable property in Canada used by the eligible entity in...
Qualifying Revenue
Administrative Policy
12 December 2022 External T.I. 2021-0878941E5 F - SSUC - Revenu admissible
Does the share of profits allocated to a member of a partnership constitute "qualifying revenue"? After noting that “qualifying revenue"...
23 January 2022 TEI Roundtable, 2021-0913421C6 - CEWS - Foreign exchange as qualifying revenue
An eligible entity whose normal accounting practice is to convert the inflow of cash, receivables, and other consideration into Canadian currency...
7 January 2022 External T.I. 2020-0866751E5 F - CEWS and government financial assistance
Eligible entities received annual governmental financial assistance based, in whole or in part, on their labour expenditures. Were these...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(4) | government assistance based partly on payroll levels would not be qualifying revenue if normal accounting practice would be to contra payroll expense | 172 |
15 July 2020 External T.I. 2020-0847141E5 - CEWS - Payments to Contractors
The operator of a mine (the “Operator”) suspended operations at its mine for COVID-19 reasons, but made gratuitous payments (the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(6) | question of fact whether s. 125.7(6) could apply where gratuitous payroll reimbursements were made | 172 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration | payments from third-party to cover part of eligible entity’s payroll not within para. (c) | 181 |
21 September 2020 External T.I. 2020-0855831E5 - CEWS - qualifying revenue
S. 125.7(4) requires that qualifying revenue of an eligible entity generally “be determined in accordance with its normal accounting...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(4) | the percentage of completion method can be used in computing qualifying revenue, but not marking securities to market | 282 |
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
6-1 Qualifying revenue includes interest and dividend income arising in course of ordinary activities
The qualifying revenue of an eligible...
Canada Emergency Wage Subsidy (CEWS) Calculator under Who is an eligible employer, 21 April 2020 CRA Webpage
What is an eligible revenue reduction
… Use your normal accounting method when calculating revenue. You can use the cash method or the accrual...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Entity | 88 |
Paragraph (a)
Subparagraph (a)(ii)
Administrative Policy
15 December 2020 External T.I. 2020-0855601E5 - CEWS - Extraordinary item - charitable campaign
Regarding whether funding received by a registered charity from a municipal government and its inclusion in “qualifying revenue” (absent an...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue - Paragraph (c) | donations generated from a charity’s special campaign were not “extraordinary items” | 77 |
Paragraph (c)
Administrative Policy
7 July 2021 External T.I. 2020-0848251E5 F - Donation and CEWS qualifying revenue
In finding that unsolicited gifts received by a registered charity (RC) to carry on a new charitable activity were qualifying revenue, CRA...
3 May 2021 Internal T.I. 2020-0852571I7 - CEWS - Pandemic insurance proceeds
Should an eligible entity include business interruption insurance proceeds, received due to a halt in the entity’s operations and meant to...
15 December 2020 External T.I. 2020-0855601E5 - CEWS - Extraordinary item - charitable campaign
A registered charity undertook a special campaign in response to the COVID-19 pandemic that resulted in a large increase in its donation revenue. ...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue - Paragraph (a) - Subparagraph (a)(ii) | “funding received from government sources” includes from municipalities | 50 |
6 May 2020 Internal T.I. 2020-0846711I7 - CEWS - Meaning of extraordinary item
Would provincial support payments to childcare centres to assist them during the COVID-19 crisis be qualifying revenue” under s. 125.7(1)? ...
Paragraph (d)
Administrative Policy
28 September 2020 External T.I. 2020-0851731E5 - CEWS - 125.7(4)(d) election - NAL chain
CRA indicated that s. 125.7(4)(d) was not available in the situation where all of Canco’s revenues were derived from manufacturing and selling...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(4) - Paragraph 125.7(4)(d) | s. 125.7(4)(d) election is not available for a multi-tiered chain of entities that are not dealing with each other at arm’s length | 329 |
Rent Subsidy Percentage
Administrative Policy
23 March 2021 TEI Roundtable, 2021-0879631C6 - CERS - Net Leases, Qualifying Revenue & Deadlines
Does an eligible entity compute its qualifying revenue using the same approaches and elections for both the CEWS and the CERS for a particular...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Rent Expense - Variable A - Paragraph (a) - Subparagraph (a)(i) - Clause (a)(i)(C) - Subclause (a)(i)(C)(II) | requirement for utilities to be paid under the lease can permit payments to 3rd party | 186 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(2.1) | table of filing deadlines | 66 |
Top-Up Percentage
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q.20-3] Table of top-up percentages
Top-up percentage examples for claim periods 5 to 9
Top-up revenue reduction percentage Top-up...
Subsection 125.7(2)
Administrative Policy
3 May 2021 External T.I. 2020-0850231E5 - CEWS - Amount of Wage Subsidy to be Claimed
Can a qualifying entity apply for a lesser amount than the amount for which it is eligible under s. 125.7(2)? CRA responded:
Variable A of the...
29 March 2021 Internal T.I. 2020-0865791I7 - CEWS - eligible remuneration
The controlling shareholder and an employee of an eligible entity suspended receiving salary, for the performance of the employee’s duties, in...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration - Paragraph (c) | eligible remuneration that is returned to the eligible employer as a capital contribution or shareholder loan adjustment is excluded for CEWS purposes | 187 |
| Tax Topics - General Concepts - Payment & Receipt | remuneration not considered to be paid by journal entry | 80 |
Element A
Paragraph (b)
Element B
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q. 21] Wage subsidy reduced by 10% temporary wage subsidy as calculated, even where the latter has not yet been fully claimed through available...
Subsection 125.7(2.01)
Administrative Policy
7 October 2022 APFF Roundtable Q. 3, 2022-0942121C6 F - THRP- PRTA – Versement de dividendes imposables
Reference was made to the impact on the Tourism and Hospitality Recovery Program ("THRP") of the introduction of ss. 125.7(2.01) and 125.7(14.1)...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(14.1) | there is no adverse CEWS impact of a non-resident parent paying dividends to individuals | 111 |
25 July 2022 External T.I. 2021-0922321E5 - Wage Subsidy-Application of 125.7(2.01) and (14.1)
Q.10 Does the wage subsidy denial under s. 125.7(2.01) equal 100% of its amount for a qualifying period even if the dividend amount is less? CRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(14.1) | potential double application of ss. 125.7(2.01) and (14.1) | 286 |
3 August 2022 External T.I. 2021-0922231E5 - 125.7(2.01) - Wage Subsidy - Dividend Payer
Does the payment of a dividend only affect the dividend payer under s. 125.7(2.01), or can, for example, the payment of a dividend by a publicly...
22 February 2022 External T.I. 2022-0922921E5 - CEWS, THRP, & HHBRP
CRA indicating regarding the interpretation of s. 125.7(2.01):
- “Taxable dividends” include taxable dividends that are deemed...
Subsection 125.7(2.1)
Administrative Policy
23 March 2021 TEI Roundtable, 2021-0879631C6 - CERS - Net Leases, Qualifying Revenue & Deadlines
What are the deadlines to file an application for the CEWS and the CERS? CRA responded:
The following table shows all the upcoming application...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Rent Expense - Variable A - Paragraph (a) - Subparagraph (a)(i) - Clause (a)(i)(C) - Subclause (a)(i)(C)(II) | requirement for utilities to be paid under the lease can permit payments to 3rd party | 186 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Rent Subsidy Percentage | CERS/CEWS similarity in computing revenue reduction | 170 |
Subsection 125.7(3)
Administrative Policy
6 November 2020 Internal T.I. 2020-0865661I7 F - SSUC-moment de l'inclusion au revenu/CEWS-inclusion in income
a) A qualifying entity filed a CEWS application at its May 31, 2020 taxation year end for period 1 (ending April 11, 2020) for $100,000, which was...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) | s. 9 rather than 12(1)(x) could apply to CEWS, which would be included for the related period even if not applied for until much later | 192 |
Subsection 125.7(4)
Administrative Policy
7 January 2022 External T.I. 2020-0866751E5 F - CEWS and government financial assistance
Eligible entities received annual governmental financial assistance by virtue of the Industrial Research Assistance Program, and the Tax Credit...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue | government assistance that under normal accounting practice was applied to reduce recorded expenses would not be qualifying revenue | 76 |
26 October 2020 External T.I. 2020-0856791E5 - CEWS - meaning of inflow
Regarding a question as to the timing of recognition of qualifying revenue, whose definition in s. 125.7)1) referred to the “inflow” of cash,...
21 September 2020 External T.I. 2020-0855831E5 - CEWS - qualifying revenue
(a) When is “qualifying revenue” recognized where the eligible entity recognizes revenue under the “percentage of completion” method,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue | recognition of qualifying revenue based on an inflow requirement | 141 |
Paragraph 125.7(4)(a)
Administrative Policy
14 February 2022 External T.I. 2020-0851361E5 - CEWS - Consolidated qualifying revenue
Can a group of eligible entities who prepare consolidated financial statements in accordance with their normal accounting practices choose to use...
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q. 9] Normally, qualifying revenues of each eligible employer determined by the consolidated statements
The qualifying revenue of an eligible...
Paragraph 125.7(4)(b)
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q.10] Example 10A of two affiliated but not commonly controlled corporations making the election
- CRA provides Example 10A of two silos making...
Articles
Martin Lee, 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
Example of using interest income decline of controlling individual shareholder to meet revenue test (p. 3)
Opco [wholly-owned by Mr. X] currently...
David Carolin, Manu Kakkar, "The Canada Emergency Wage Subsidy: Affiliated Group Issues", COVID-19 and Canadian Tax for the Owner-Manager/Canadian Tax Focus (Canadian Tax Foundation), July 2020, p. 1
Example of application of s. 125.7(4)(b) election to an affiliated multinational group (p. 2)
Example: Affiliated Group with International...
Paragraph 125.7(4)(c)
Administrative Policy
15 February 2022 Internal T.I. 2020-0870731I7 - CEWS-qualifying rev in respect of a joint venture
Two brothers each wholly-own a corporation (Holdco 1 and Holdco 2) which, in turn, own equally all of the shares of Opco. Holdco 1 and Holdco 2...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(4) - Paragraph 125.7(4)(d) | election available to servicesco that derived all its revenues from two JV participants who were related to it | 170 |
Paragraph 125.7(4)(d)
Administrative Policy
15 February 2022 Internal T.I. 2020-0870731I7 - CEWS-qualifying rev in respect of a joint venture
Two related corporations (Holdco 1 and Holdco 2) were equal participants in a joint venture and Opco (owned by them on a 50/50 basis) earned all...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(4) - Paragraph 125.7(4)(c) | para. (d) of qualifying revenue definition effectively indicates that s. 125.7(4)(c) is not available for revenue derived from JV participants who are NAL | 255 |
28 September 2020 External T.I. 2020-0851731E5 - CEWS - 125.7(4)(d) election - NAL chain
Canco, an “eligible entity,” manufactures and sells all the Product to Forco A, which uses the Product in its manufacturing process to make...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue - Paragraph (d) | FA1 earning qualifying revenue from arm's length customers through FA2 had no qualifying revenue | 114 |
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
Examples of application of the special elective rule to use the qualifying revenues of NAL persons to determine reduction in qualifying...
Paragraph 125.7(4)(e)
Administrative Policy
23 January 2023 External T.I. 2020-0865161E5 F - SSUC/CEWS – Sous-alinéa 125.7(4)e)(i) et personne
Regarding the time at which an amount is regarded as received by an eligible entity which has made an election under s. 125.7(4)(e)(i) to use the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Payment & Receipt | a cash-basis taxpayer can receive an amount when it is received through a third party | 147 |
Subparagraph 125.7(4)(e)(ii)
Administrative Policy
2020 IFA-YIN Seminar on COVID-19 Guidelines, Q.15
S. 125.7(4)(e)(ii) allows an eligible entity to elect to use accrual accounting “in accordance with generally accepted accounting principles”....
Subsection 125.7(4.1)
Administrative Policy
12 April 2021 External T.I. 2020-0863701E5 - CEWS - Asset Sale Followed by Amalgamation
In January 2018, ParentCo acquired all the shares of TargetCo, which also was a taxable Canadian corporation and which, until the spin-off...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(g.6) | application of ss. 87(2)(g.6) and s. 125.7(4.1) continuity rules where target business is spun off to Newco subsidiary of purchaser followed by their amalgamation | 198 |
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
[Q. 8-3] Example of s. 125.7(4.2) not being available where only a business division is acquired
Example 8-3B
A corporation, Toys Inc., operates...
Paragraph 125.7(4.1)(b)
Subparagraph 125.7(4.1)(b)(i)
Administrative Policy
8 June 2021 External T.I. 2020-0864051E5 - CEWS - Asset transfer rules
An eligible entity (ACo) acquired from a non-arm’s length corporation (BCo) all machinery, infrastructure, contracts, goodwill, real property,...
Subsection 125.7(4.2)
Administrative Policy
28 January 2021 External T.I. 2020-0870981E5 - CEWS - Asset sales rules 125.7(4.1)
On October 11, 2020, (recently-incorporated) NewCo purchased all the assets of a third party (OldCo), with the result that it became the employer...
Subsection 125.7(5)
Paragraph 125.7(5)(a)
Cases
Lemay Co Inc. v. Attorney General of Canada, 2024 CF 995
On audit, CRA determined that the taxpayer (Lemay) had made Canada Emergency Wage Subsidy (CEWS) claims for periods 6, 7 and 13 to 15 that were...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(16) | argued potential relief under s. 125.7(16) respecting potential relief for underclaimed CEWS did not preclude a motion to argue that such relief was available under ss. 164(1)(b) and 152(3.4) | 276 |
Administrative Policy
8 November 2022 Internal T.I. 2022-0941391I7 - (Re)determination of section 125.7 applications
After noting that the instructions provided by CRA both on the application for the CEWS or CRHP benefit and the CRA website indicated that a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(3.4) | no time limit on making s. 152(3.4) determination/ applications can be made on RP account basis | 198 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Entity - Paragraph (a) | application for the benefit could be made on an RP by RP account basis | 150 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Prescribed | filing of multiple applications on an RP account basis could be authorized by the Minister | 102 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1.2) | application mutatis mutandis of normal reassessment periods | 148 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(16) | s. 125.7(16) does not allow the extension of the time for amending an application, and does not accord the discretion to amend an election | 105 |
| Tax Topics - Income Tax Act - Section 160.1 - Subsection 160.1(1) | no time limitation on s. 160.1(1) assessment | 42 |
Subsection 125.7(6)
Administrative Policy
15 July 2020 External T.I. 2020-0847141E5 - CEWS - Payments to Contractors
The operator of a mine (the “Operator”) suspended operations at its mine for COVID-19 reasons, but made gratuitous payments (the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Revenue | gratuitous COVID-alleviation payments to a contractual counterparty are excluded from the latter’s qualifying revenues | 262 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Eligible Remuneration | payments from third-party to cover part of eligible entity’s payroll not within para. (c) | 181 |
Canada Emergency Wage Subsidy (CEWS) Calculator under How to apply, 21 April 2020 CRA Webpage
Incorrect or fraudulent claims
… If you artificially reduce your revenue for the purpose of claiming the wage subsidy you will be required to...
Subsection 125.7(7)
Administrative Policy
7 December 2022 External T.I. 2020-0846891E5 F - SSUC - Revenu admissible
After quoting from the definition of “qualifying revenue,” CRA stated:
[A] limited partner's share of the profits of a limited partnership, as...
Subsection 125.7(9)
Paragraph 125.7(9)(a)
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
s. 125.7(9) rule can be applied successively
5. How is the reduction in revenue determined?
… Once an eligible employer has determined that it...
Paragraph 125.7(9)(b)
Administrative Policy
Frequently asked questions - Canada emergency wage subsidy (CEWS) CRA Webpage 24 September 2021
Example of application of “greater of rule” for claim periods 5 to 9
5-02. Can an eligible employer qualify for the wage subsidy if it does...
Subsection 125.7(14.1)
Administrative Policy
7 October 2022 APFF Roundtable Q. 3, 2022-0942121C6 F - THRP- PRTA – Versement de dividendes imposables
Regarding the presented proposition that publicly traded companies or their subsidiaries are not entitled to any CEWS grants for the claim period...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(2.01) | parent could pay a dividend in, say, Period 27, without adverse CEWS impact on Canadian sub | 205 |
25 July 2022 External T.I. 2021-0922321E5 - Wage Subsidy-Application of 125.7(2.01) and (14.1)
Q.12 In what situations does s. 125.7(14.1) apply, given that s. 125.7(2.01) seems to apply in the same circumstances?
CRA responded:
Taxable...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(2.01) | need to track common dividend payments to “holders” who are individuals | 189 |
Subsection 125.7(16)
Cases
C.W. Carry Ltd. v. Canada (Attorney General), 2024 FC 1983
A CRA audit of the CEWS benefits received by the Applicant revealed that, due to a transposition error of an employee, it had made an erroneous...
Lemay Co Inc. v. Attorney General of Canada, 2024 CF 995
On audit, CRA determined that Lemay had made Canada Emergency Wage Subsidy (CEWS) claims for periods 6, 7 and 13 to 15 that were excessive to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(5) - Paragraph 125.7(5)(a) | taxpayer had a reasonable argument that s. 125.7(5)(a) did not preclude it from making an amended increased CEWS claim | 353 |
Administrative Policy
8 November 2022 Internal T.I. 2022-0941391I7 - (Re)determination of section 125.7 applications
The Directorate noted that pursuant to s. 152(1.2), the normal reassessment period rules in s. 152(4) also essentially were applicable to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(3.4) | no time limit on making s. 152(3.4) determination/ applications can be made on RP account basis | 198 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(1) - Qualifying Entity - Paragraph (a) | application for the benefit could be made on an RP by RP account basis | 150 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Prescribed | filing of multiple applications on an RP account basis could be authorized by the Minister | 102 |
| Tax Topics - Income Tax Act - Section 125.7 - Subsection 125.7(5) - Paragraph 125.7(5)(a) | movements of upward or downward adjustments between various RP accounts by redeterminations subject to s. 125.7(5)(a) limitation | 128 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(1.2) | application mutatis mutandis of normal reassessment periods | 148 |
| Tax Topics - Income Tax Act - Section 160.1 - Subsection 160.1(1) | no time limitation on s. 160.1(1) assessment | 42 |