The controlling shareholder and an employee of an eligible entity suspended receiving salary, for the performance of the employee’s duties, in April, May or June, 2020 for the performance of his duties because of COVID-related financial hardship. Can the corporation pay the individual’s salary retroactively for periods 1 through 4 and claim the CEWS therefor?
CRA responded:
[S]alary and wages paid to an employee retroactively in respect of a week in qualifying periods 1 to 4 can generally be considered eligible remuneration paid in respect of those weeks for purposes of the CEWS to the extent that the eligible remuneration reflects the actual amount paid in respect of the particular claim period. … However … where salary and wages are only reflected by journal entry as an expense by the employer with a corresponding credit to a due to shareholder loan account, such salary and wages are not considered eligible remuneration paid to an eligible employee for purposes of subsection 125.7(2).