September 23, 2020
CEWS Audits Have Started
As expected, the Canada Revenue Agency (“CRA”) has commenced CEWS audits for the Canada Emergency Wage Subsidy program. CEWS was a response from the federal government to support employers who had lost revenue due to the COVID pandemic. For more information on this see our blogs on the CEWS program.
As of today, the federal government has paid out more than $37 billion in subsidies.
The funding provided and the speed in which the subsidies were paid by the government made it certain that CEWS audits would take place and the CRA stated that limited audits would start at the end of the summer.
A redacted CEWS audit letter was shared by Aaron Schechter of Crowe Soberman on his LinkedIn account.
CEWS Audit Request Letter
The CRA CEWS audit letter requests detailed information including:
- Support for revenue calculations to determine CEWS eligibility, including general ledger accounts, bank statements supporting deposits, accounts receivable ledgers, etc.
- Support for the calculation of baseline remuneration and eligible remuneration claimed in each period audited paid including payroll journals, reconciliations of cut off between period ends for CEWS and payroll cycles, and evidence of payment.
- Minute books showing support related to the decision to make the CEWS claims.
- A list of all the entities in the corporate group along with the business number of each entity.
- Various agreements including agreements for intercompany loans and employee contracts.
- Support for various elections made
I appreciate that the CRA is auditing claims given the amount of support provided (I’m a taxpayer too) but I’m shocked by the amount of information requested (over 6 pages) and even more shocked by the expected 10-day turn around for “the vast majority of information.”
Manning Elliott Is Here to Help
If you have any questions about CEWS Audits, Manning Elliott is here to help. To assist business owners in navigating through these trying times, visit our blog to stay up to date on the most recent activity related to COVID-19.
The above content is believed to be accurate as of the date of posting. Canadian tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained herein.