Determine your revenue drop
Determine your revenue drop
This page contains historical information about calculations and eligibility for COVID-19 wage and rent subsidies for businesses, charities, and non-profits. As of November 4, 2022, you can no longer apply for these subsidies.
What is eligible revenue
Eligible revenue generally includes revenue earned in Canada from:
- selling goods
- rendering services, and
- others' use of your resources
Generally, you should have used your normal accounting method when calculating your eligible revenue. If your normal accounting method is the accrual method, you could elect to use the cash method (and vice versa), but once you chose you must have used the same accounting method for all your claims.
Note: If you chose to use the cash method, you needed to check the “cash method” election box when completing your application.
Read more about calculating eligible revenue in the CEWS technical questions and answers.
Special revenue circumstances
Registered charities and non-profit organizations
Eligible revenue of registered charities, non-profits, and some prescribed organizations includes donations. These organizations may choose whether or not to include government funding, such as grants, when calculating eligible revenue. Once you had chosen, you had to use the same approach for all your claims.
Read more about eligible revenue for charities and non-profit organizations in the CEWS technical questions and answers.
Non-arm's-length transactions and affiliated groups
In the CEWS technical questions and answers, you can find special rules for revenue related to:
Amalgamations and changes of ownership
Special rules applied for calculating eligible revenue when two or more employers have amalgamated, or when an employer purchased all (or substantially all) of the assets used by a person or partnership to carry on a business in Canada.
Read more about calculating eligible revenue for amalgamations and changes of ownership in the CEWS technical questions and answers.
How the claim period revenue drop was calculated
You can use the online calculator or spreadsheet to calculate a past claim period revenue drop:
Or, read the details of how the claim period revenue drop was calculated for the wage and rent subsidies as of July 2020.
How the claim period revenue drop was calculated
Your claim period revenue drop is the decline in eligible revenue you experienced when comparing your claim period revenue with your revenue from a specific period of time prior to March 2020 (the “prior reference period”):
Revenue drop (%) = 1 – (Claim period revenue / prior reference period revenue)
Using the current or prior claim period revenue drop (the “deeming rule”)
For all wage and rent subsidy applications as of July 5, 2020, you calculated two revenue drops and used the higher result in your base rate calculation. If you use the online calculator or spreadsheet to calculate your subsidy amount, both rates are calculated when you enter your revenues and the higher rate is automatically be applied.
Current period revenue drop
Revenue drop (%) = 1 – (Current claim period revenue divided by revenue from the prior reference period for the claim period)
Previous period revenue drop
Revenue drop (%) = 1 – (Previous claim period revenue divided by revenue from the prior reference period for the previous claim period)
The higher rate should have been the one you used to calculate your subsidy amount. This is your claim period revenue drop. You had to repeat this calculation and comparison for each claim period.
Prior reference period options
There are two prior reference period options when calculating your revenue drop.
General prior reference period
The eligible revenue you earned in the corresponding month(s) in a specific earlier year
Alternative prior reference period
The average of the eligible revenue you earned in January and February, 2020
You had to choose one of these prior reference period options and use the same approach when calculating your revenue drop (including any top-up calculations) for all wage and rent subsidy claims that covered July 5, 2020, (CEWS period 5) and later.
However, if you were not operating on March 1, 2019, you may have elected to use the alternative approach for certain claim periods, even if you used the general approach for prior claims.
How to use the alternative approach if you were not operating March 1, 2019
If you normally chose to use the general approach when calculating your revenue drop, you may have made an election to use the alternative approach if you were not carrying on business or otherwise carrying on your ordinary activities on March 1, 2019.
If you made an election to use the alternative approach, you must have used this approach for any claims you submitted for the following periods:
- CRHP, THRP and HHBRP periods 26 to 28 (February 13 to May 7, 2022)
or - CEWS and CRHP periods 14 to 17 (March 14 to July 3, 2021), and CERS periods 7 to 10 (March 14 to July 3, 2021)
For all other periods, you had to continue using the general approach for your claims.
Note: If you chose to use the alternative prior reference period (January and February 2020), you needed to check the "prior reference period" election box when completing your subsidy application form.
If you were only operating as a business for part of January and February 2020, read more about how to calculate your base revenue drop if you choose the alternative prior reference period in the CEWS technical questions and answers.
Revenue drop comparison months
| Claim period | Reference months for comparison: general approach |
Reference months for comparison: alternative approach |
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| THRP, HHBRP, and CRHP: Period 22 |
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| THRP, HHBRP, and CRHP: Period 23 |
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| THRP, HHBRP, and CRHP: Period 24 |
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| THRP, HHBRP, and CRHP: Period 25 |
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| THRP, HHBRP, and CRHP: Period 26 |
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| THRP, HHBRP, and CRHP: Period 27 |
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| THRP, HHBRP, and CRHP: Period 28 |
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If you need to calculate a revenue drop for CEWS before period 17 or CERS before period 10, use an online calculator:
Or, find the full list of relevant reference periods in the CEWS technical questions and answers.
To find information about how earlier claim period calculations worked, including past CEWS rates and top-up calculations, find the full details of calculating the wage subsidy in the CEWS technical questions and answers.
How the 12-month average revenue drop was calculated
You only needed to calculate the 12-month average revenue drop one time. You used the same 12-month average revenue drop for all of your claims from period 22 onward.
You can use the calculator to find your 12-month average revenue drop.
Your 12-month average revenue drop is the average of your applicable monthly revenue drops from March 2020 to February 2021 (CEWS claim period 1 to 13, excluding either claim period 10 or 11).
When calculating your 12-month average revenue drop, include:
- claim periods throughout which you were either carrying on your normal activities or were closed because of a public health restriction
Do not include:
- claim periods in which you weren’t carrying on your normal activities for any length of time in the period for any reason other than due to a public health restriction
Differences between the 12-month average revenue drop and the claim period revenue drop calculation
Different rules apply to the 12-month average revenue drop calculation and to the claim period revenue drop.
Include revenue increases
You had to include revenue calculations for all months between March 2020 and February 2021 that related to claim periods during which you either operated or were not operating due to a public health restriction. This means if any of the months you calculated had a revenue increase instead of a drop, you had to include it as part of your 12-month average calculation.
Deeming rule does not apply
Unlike the claim period revenue drop, there was no deeming rule for the 12-month average revenue drop that allowed you to use the better of the two rates. You had to include the actual revenue drop calculation for each claim period.
If you did not claim CEWS or CERS for some periods, you still had to calculate the revenue drop for those claim periods and include those amounts when determining your 12-month average revenue drop if you were operating (or were closed due to a public health restriction) in those claim periods.
How the 12-month average revenue drop is calculated
To get the 12-month average:
If you were operating or only closed due to public health restrictions each claim period
- Calculate your revenue drop for each of the 12 months from March 2020 to February 2021 (the months that relate to CEWS claim periods 1 to 13, excluding period 10 or 11)
- Add all of the resulting rates together
- Divide the result by 12
If you were not operating during some claim periods for reasons other than being closed due to a public health restriction
- Add up the number of claim periods from March 2020 to February 2021 (CEWS claim periods 1 to 13, excluding claim period 10 or 11), throughout which you operated or were not carrying on your ordinary operations due to a public health restriction
- Calculate your revenue drop for each of those claim periods
- Add all of the resulting rates together
- Divide the result by the total number of claim periods from step 1
To calculate your revenue drop for each month, compare that month's revenue (the “calculation month”) with your revenue from a specific period of time prior to March 2020 (the “prior reference period”):
Revenue drop (%) = 1 − (calculation month revenue ÷ prior reference period revenue)
This is your revenue drop for one month.
Important: If any of the months you calculate had a revenue increase instead of a drop, you still had to include those months in your average. This means if you had higher revenue in the calculation month than you did in the prior reference period you’re using to calculate the revenue drop, it would result in a negative number. Any such negative revenue drops (revenue increases) had to be included when calculating your 12-month average.
Prior reference period options
Like the calculation for the claim period revenue drop, the same two options for prior reference period comparisons could be used when calculating your 12-month average, the general approach or the alternative approach.
If you claimed CEWS or CERS from March 2020 to February 2021, you had to use the same calculation approach you used when calculating your revenue drop for your claim.
| Claim period | Calculation month | General prior reference period | Alternative prior reference period |
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From March to June 2020 you had to use either the general approach or the alternative approach for all the calculations. |
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| CEWS period 1 | March 2020 | March 2019 | average of January and February 2020 |
| CEWS period 2 | April 2020 | April 2019 | average of January and February 2020 |
| CEWS period 3 | May 2020 | May 2019 | average of January and February 2020 |
| CEWS period 4 | June 2020 | June 2019 | average of January and February 2020 |
After June 2020, if you were using the general approach, you could switch to the alternative approach, or vice versa. You had to use the same approach for all calculations from July 2020 to February 2021. |
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| CEWS period 5 | July 2020 | July 2019 | average of January and February 2020 |
| CEWS period 6 | August 2020 | August 2019 | average of January and February 2020 |
| CEWS period 7 | September 2020 | September 2019 | average of January and February 2020 |
| CEWS period 8 (CERS period 1) |
October 2020 | October 2019 | average of January and February 2020 |
| CEWS period 9 (CERS period 2) |
November 2020 | November 2019 | average of January and February 2020 |
| CEWS period 10 and 11 (CERS period 3 and 4) |
December 2020 | December 2019 | average of January and February 2020 |
| CEWS period 12 (CERS period 5) |
January 2021 | January 2020 | average of January and February 2020 |
| CEWS period 13 (CERS period 6) |
February 2021 | February 2020 | average of January and February 2020 |
If you were not operating throughout January and February 2020, read more about how to calculate your revenue drop if you choose the alternative prior reference period in the CEWS technical questions and answers.
Note: If you only used the alternative approach to calculate the revenue drop for the months of March to June 2020 as part of your 12-month average revenue drop calculation, you did not need to check the box for the election related to using the alternative method to calculate your revenue drop when completing your subsidy application. You would only check this election box if you used the alternative method to calculate your claim period revenue drop for your application.
Examples of a 12-month revenue drop calculation
Example: Calculating a 12-month average revenue drop as a seasonal business
Teshia's food truck is normally open from March to October, and does not operate in the winter. Since the food truck was not operating from November to February because it was their regular seasonal closure and not due to a public health restriction that required them to close, Teshia will not include those claim periods in the calculation.
To calculate the 12-month revenue drop, Teshia will:
- Total the number of claim periods from March 2020 to February 2021 in which they were operating: 8 (March 15 to October 24, 2020)
- Determine the revenue drop for each of the remaining months:
- March 2020 over March 2019: 95.05%
- April 2020 over April 2019: 78.33%
- May 2020 over May 2019: 60.15%
- June 2020 over June 2019: 29.08%
- July 2020 over July 2019: -5.05% (increase)
- August 2020 over August 2019: 42.22%
- September 2020 over September 2019: 48.83%
- October 2020 over October 2019: 61.08%
- Add the drops together: 409.69%
- Divide by the number of operational claim periods (8): 51.21%
Teshia's resulting 12-month average revenue drop is 51.21%, which is high enough to meet the 12-month average revenue drop eligibility requirement for the THRP (40% or greater) or the HHBRP (50% or greater). Teshia has already determined that the food truck meets the definition of a qualifying tourism and hospitality entity, making the THRP a better option because it provides a higher rate of subsidy. Although Teshia will need to calculate the business’s revenue drop for each claim period to determine its THRP eligibility for that claim period, this 12-month average revenue drop only needs to be calculated once.
Example: Calculating a 12-month average revenue drop when you've claimed a subsidy in the past
Ravi's book store opened in June 2019. He has no employees to make a wage subsidy claim, but has a qualifying property with qualifying expenses to make a CERS claim. Therefore, he applied for the CERS as soon as it became available after September 27, 2020.
Because Ravi has applied for CERS in the past, he has already calculated revenue drops for the months of October 2020 to February 2021.
Ravi chose the general approach when calculating his CERS revenue drops, so he must use the general approach when calculating his revenue drops for the 12-month average from July 2020 onward. Even though he did not qualify for any subsidy from March 2020 to June 2020 (CEWS claim periods 1 to 4), he must determine which approach to use to calculate the revenue drops for these periods. Because Ravi was not in carrying on his business on March 1, 2019, he cannot use the general approach and must use the alternative approach to calculate the revenue drop for these periods.
To calculate the 12-month revenue drop, Ravi will:
- Calculate his revenue drops for March to June, 2020 (corresponding to CEWS claim periods 1 to 4), using the alternative approach:
- Average revenue Jan and Feb 2020: $24,000
- Drop = 45.83%
- Average revenue Jan and Feb 2020: $24,000
- Drop = 64.58%
- Average revenue Jan and Feb 2020: $24,000
- Drop = 39.17%
- Average revenue Jan and Feb 2020: $24,000
- Drop = 27.08%
- Calculate his revenue drops using the general approach for July 2020 to February 2021
- July 2019 revenue: $27,000
- Drop = 44.44%
- August 2019 revenue: $23,000
- Drop = 36.96%
- September 2019 revenue: $30,000
- Drop = 34.00%
- October 2019 revenue: $28,500
- Drop = 22.84%
- November 2019 revenue: $38,200
- Drop = 61.26%
- December 2019 revenue: $26,500
- Drop = 47.17%
- January 2020 revenue: $23,000
- Drop = 37.83%
- February 2020 revenue: $25,000
- Drop = 35.28%
- Add the 12 drops together: 496.44%
- Divide by 12: 41.37%
| Calculation month revenue | Alternative approach: revenue and result |
|---|---|
| March 2020 revenue: $13,000 | |
| April 2020 revenue: $8,500 | |
| May 2020 revenue: $14,600 | |
| June 2020 revenue: $17,500 |
| Calculation month revenue | General approach: revenue and result |
|---|---|
| July 2020 revenue: $15,000 | |
| August 2020 revenue: $14,500 | |
| September 2020 revenue: $19,800 | |
| October 2020 revenue: $21,990 | |
| November 2020 revenue: $14,800 | |
| December 2020 revenue: $14,000 | |
| January 2021 revenue: $14,300 | |
| February 2021 revenue: $16,180 |
Ravi's resulting 12-month average revenue drop is 41.37%.
This revenue drop would be high enough to meet the 12-month average revenue drop eligibility requirement for a qualifying tourism or hospitality entity to apply for a rent subsidy through the THRP (40% or greater). However, because Ravi has determined that his business is not considered a qualifying tourism or hospitality entity, he is not able to apply for the THRP under this set of conditions.
This revenue drop also disqualifies him from applying for a rent subsidy through the HHBRP, which needs a 12-month average revenue drop of 50% or greater.
If Ravi’s business faces a qualifying public health restriction during a claim period in the future, he may still be able to apply. He would still need to calculate his claim period revenue drop to see if he can apply for a rent subsidy through the THRP under that set of conditions, but his 12-month average revenue drop does not need to be considered in that case.
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