On October 6, 2020, CRA updated their website to provide clarification on how baseline revenue is calculated. It notes:
18-2. How is the average weekly eligible remuneration amount calculated for the purposes of determining baseline remuneration? New: October 6, 2020
In general terms, for the purposes of computing baseline remuneration, “average weekly eligible remuneration” is calculated by dividing the total eligible remuneration paid by the eligible employer to the eligible employee during the baseline remuneration period (see Q18 for various baseline remuneration periods) by the total number of weeks to which the eligible remuneration paid relates [total eligible remuneration paid/number of weeks]. Any period of seven or more consecutive days for which the employee was not remunerated is excluded from the calculation.
Example 18-2A
An eligible employer paid an eligible employee $1,400 during each two week period between January 1 and March 15, 2020. During this period, the eligible employer paid, to the eligible employee, eligible remuneration totalling $7,000 covering a period of 10 weeks and the employee was not without remuneration for any period of seven or more consecutive days. In this situation, the eligible employee’s average weekly eligible remuneration would be calculated by dividing the total eligible remuneration paid by the eligible employer ($7,000) by the total number of weeks to which the eligible remuneration paid relates (10 weeks). Accordingly, the baseline remuneration for the employee would be $700 per week ($7,000/10 = $700).
Example 18-2B
An eligible employer paid an eligible employee between January 1 and March 15, 2020, eligible remuneration totalling $7,200 covering a period of 10 weeks. However, during the period for which the employee was paid, the employee took unpaid leave for one of the weeks and therefore, the employee was not remunerated for a period of seven consecutive days. In this situation, the eligible employee’s average weekly eligible remuneration would be calculated by dividing the total eligible remuneration paid by the eligible employer ($7,200) by the total number of weeks to which the eligible remuneration paid relates, excluding any period of seven or more consecutive days for which the employee was not remunerated (10 weeks minus 1 week = 9 weeks). Accordingly, the baseline remuneration for the employee would be $800 per week ($7,200/9 = $800).
Example 18-2C
An eligible employer calculates wages on an hourly basis but pays the employee on the 16th of every month for hours worked during the preceding month. For the period between January 1 and March 15, 2020, the employer paid an eligible employee $3,200 on January 16, 2020, for hours worked December 1 to 31, 2019,and $2,800 on February 16, 2020 for hours worked January 1 to January 31, 2020. The employee was not without remuneration for any period of seven or more consecutive days during that period. In this situation, the eligible employee’s average weekly eligible remuneration would be calculated by dividing the total eligible remuneration paid by the eligible employer ($6,000) by the total number of weeks to which the eligible remuneration paid relates ((31 days + 31 days /7 days per week = 8.86 weeks). Accordingly, the baseline remuneration for the employee would be $677.20 per week ($6,000/8.86 = $677.20).
An alternate calculation that is reasonable in the circumstances may also be acceptable as shown in the following example.
Example 18-2D
In the scenario described in Example 18-2C, if the employee is paid for Monday-Friday working days, during the period December 1, 2019 to January 31, 2020, there are nine full working weeks. Therefore, the eligible employee’s average weekly eligible remuneration could alternately be calculated by dividing the total eligible remuneration paid by the eligible employer ($6,000) by the total number of weeks to which the eligible remuneration paid relates (9 work weeks.) Accordingly, the baseline remuneration for the employee would be $667.67 per week ($6000/9 = $667.67).