CRA indicates that CEWS is excluded from gross revenue and wages for Reg. 402(3) purposes

CRA indicated that the Canadian emergency wage subsidy ("CEWS") should be excluded in computing gross revenue for the purposes of the interprovincial income allocation formula in Reg. 402(3) in accordance with CRA’s “longstanding position … that financial assistance received by a corporation from a government in respect of expenditures incurred or to be incurred by the taxpayer is normally excluded in determining gross revenue” for Reg. 402(3) purposes.

Furthermore, “although the CEWS is intended to offset a portion of salaries and wages, it does not in itself constitute salary or wage paid to an employee,” e.g., for the purposes of that formula.

Neal Armstrong. Summary of 4 July 2025 Internal T.I. 2025-1054791I7 F under Reg. 402(3).