The Canada Revenue Agency (CRA) recently published a report detailing the findings of its audits on the Canada Emergency Wage Subsidy Program (CEWS). As a result of the auditing process, the CRA has denied or adjusted approximately $458 million in funds disbursed to employers through the program. While the majority of employers were found to be highly compliant, there were instances of calculation errors and lack of documentation that resulted in claim adjustments.
One notable finding from the report is the significant level of non-compliance among claimants who used third parties to prepare their applications. The audits revealed that 85% of these claims resulted in funding reductions or denials. The CRA discovered cases of aggressive non-compliance where intermediaries knowingly facilitated the production of inaccurate or non-compliant claims. Many of these cases were linked to small businesses with 25 or fewer employees.
To address these non-compliant cases, the CRA has already applied over $15 million in penalties as of the end of September. The agency conducts targeted audits to identify and address third-party preparers who may be circumventing the law. In some instances, cases have been referred to the CRA’s criminal investigations program.
The CRA acknowledges the overall high level of compliance among the majority of employers who applied and received the wage subsidy. The agency believes it has identified the right risks and is actively working to tackle them. The audits of the CEWS program are ongoing and are expected to continue until at least 2025.
The adjustments and denials of funds underscore the importance of accurate calculations and documentation when applying for government subsidies. Employers should ensure they meet all eligibility criteria and carefully review their applications to avoid potential penalties and financial repercussions.
FAQ:
Q: What is the Canada Emergency Wage Subsidy Program?
A: The Canada Emergency Wage Subsidy Program is a government initiative that subsidizes businesses’ staff wages by 75% to encourage companies to retain their employees during the COVID-19 pandemic.
Q: What were the primary reasons for claim adjustments in the CRA’s audits?
A: The majority of claim adjustments were due to calculation errors and lack of documentation rather than ineligibility.
Q: Did the CRA find significant non-compliance among claimants who used third parties to prepare their applications?
A: Yes, 85% of audits on such claims resulted in funding reductions or denials.
Q: Are there any penalties for non-compliant claimants?
A: The CRA has already applied over $15 million in penalties to address non-compliance cases.
Q: How long will the CRA’s audits of the CEWS program continue?
A: The audits are expected to continue until at least 2025.