CEWS Audits in Canada: CRA Reviews, Reassessments and What Businesses Should Know

Are CRA CEWS Audits Still Happening?

The Canada Emergency Wage Subsidy (CEWS) provided approximately $100 billion in wage-subsidy support to Canadian employers during the COVID-19 pandemic.

The Canada Revenue Agency (CRA) subsequently carried out extensive post-payment reviews and audits to verify whether employers met the program’s eligibility requirements and calculated their claims correctly.

As of December 31, 2025, the CRA had completed its routine CEWS post-payment validation and audit programs. However, targeted compliance work continues for certain high-risk claims involving suspected aggressive non-compliance, including some claims associated with third-party subsidy preparers.

Businesses that previously claimed CEWS may therefore still encounter reassessments, collection issues, disputes, or targeted CRA review depending on their circumstances.

If your business has received a CRA audit or review letter, see our CRA Audit Letter: What to Do Next guide.

What Was the Canada Emergency Wage Subsidy?

The Canada Emergency Wage Subsidy was introduced during the COVID-19 pandemic to provide wage support to eligible employers whose revenues were affected by the economic disruption caused by the pandemic.

The program evolved significantly over time. Eligibility requirements, subsidy rates, qualifying periods, revenue-decline calculations, employee remuneration rules, and other conditions changed as the program developed.

As a result, whether a particular employer was entitled to CEWS depends on the specific claim period and the legislation and administrative rules applicable at that time.

Why Did the CRA Audit CEWS Claims?

CEWS was implemented quickly during an unprecedented economic emergency.

To deliver assistance rapidly, the government relied substantially on information and attestations supplied by applicants, while carrying out significant compliance work after payments were made.

The CRA developed two main post-payment compliance programs:

• Post-payment validations: project-based reviews targeting claims with specific risk indicators; and
• Post-payment audits: more comprehensive reviews focusing on claimants presenting higher risks of non-compliance.

The CRA states that its CEWS compliance programs used a risk-based approach to identify claims requiring further examination.

For official CRA information, see the CRA CEWS Compliance Snapshot.

What Did the CRA Find During CEWS Audits?

The CRA reports that most CEWS claimants substantially complied with the program requirements.

As of December 31, 2025, the CRA reported:

• 50,823 completed CEWS post-payment verifications;
• Approximately $18.6 billion in CEWS claims reviewed;
• Approximately $892 million in claim amounts reduced or denied;
• Approximately $20 million in penalties applied; and
• Approximately 95% of reviewed claim amounts approved, either as filed or with minor adjustments.

The routine CEWS post-payment validation and audit programs are now complete.

Are Any CEWS Audits Still Ongoing in 2026?

Yes, but the remaining work is more targeted.

The CRA continues compliance activity involving certain high-risk CEWS and Canada Emergency Rent Subsidy claims where there are concerns about willful or aggressive non-compliance.

This includes some claims involving third-party subsidy preparers suspected of assisting claimants in submitting inaccurate or knowingly non-compliant claims.

The CRA currently expects this targeted work to be substantially completed by March 31, 2027.

This means that although the broad routine CEWS audit program has ended, some employers may still face targeted audits, reassessments, penalties, collection activity, or related disputes.

What Issues Can Arise in a CEWS Audit?

The issues examined in a CEWS review depend on the claim periods and the employer’s particular circumstances.

Potential areas of review can include:

• Whether the employer was an eligible entity;
• Revenue calculations and qualifying revenue declines;
• Employee eligibility;
• Eligible remuneration;
• Payroll records;
• Non-arm’s-length employee remuneration;
• Corporate group elections and affiliations;
• Accounting methods used to calculate revenue;
• Supporting documentation for the amounts claimed;
• Transactions or arrangements affecting entitlement; and
• Whether a claim involved deliberate or aggressive non-compliance.

What Documents Should Businesses Keep for CEWS Claims?

A business involved in a CEWS dispute should preserve the records supporting each claim period.

Depending on the issue, relevant records may include:

• Payroll registers;
• Employee remuneration records;
• Bank statements;
• General ledgers;
• Revenue calculations;
• Financial statements;
• Invoices and sales records;
• Corporate records;
• Accounting working papers;
• CEWS calculation worksheets;
• Correspondence with accountants or payroll providers; and
• CRA correspondence relating to the claims.

The specific records required depend on the basis of the CRA’s review.

What Happens If the CRA Denies or Reduces a CEWS Claim?

If the CRA determines that an employer was not entitled to all or part of a CEWS amount, the employer may receive an assessment, reassessment, or other decision requiring repayment.

Depending on the circumstances, the amount owing may include:

• CEWS amounts the CRA says were overclaimed;
• Interest;
• Penalties where applicable; or
• Other related amounts.

An employer should review both the factual basis of the CRA’s decision and the applicable statutory dispute procedure before paying or accepting the assessment.

Can You Object to a CEWS Assessment?

Objection rights may be available in relation to certain CEWS assessments or determinations, depending on the provision under which the CRA acted.

Strict deadlines can apply.

If a formal assessment or reassessment has been issued, the employer should determine immediately what dispute procedure is available and when the deadline expires.

For general information about CRA objections, see our Notice of Objection guide.

For legal representation in CRA disputes, visit our CRA tax objection lawyers page.

What If the CEWS Debt Has Been Sent to CRA Collections?

If an assessed CEWS amount remains unpaid, the CRA may take steps to collect the debt.

Collection issues should be assessed separately from the underlying dispute about whether the CEWS amount was actually repayable.

If you are already dealing with CRA collection action, see our CRA collections, wage garnishment, bank freeze and tax lien guide.

For broader information about payment difficulties, see our guide to owing the CRA money and being unable to pay.

Can Penalties or Interest Be Reduced?

Depending on the type of amount assessed and the circumstances, taxpayer relief may be relevant to eligible penalties or interest.

Taxpayer relief does not generally cancel principal amounts that were validly assessed.

For more information about requesting discretionary relief, see our CRA Form RC4288 taxpayer relief guide.

What Should a Business Do If It Receives a CEWS Audit Letter?

A business receiving a CEWS audit, review, or information request should first determine precisely what the CRA is asking for and which claim periods are involved.

Important initial steps include:

• Identify all CEWS periods under review;
• Preserve the original claim calculations and supporting records;
• Review the revenue calculations used for each period;
• Review payroll and eligible-remuneration records;
• Identify any elections or special rules relied upon;
• Review prior communications with the CRA;
• Note all response deadlines; and
• Consider professional advice before responding to complex or high-value issues.

When Should You Consider a Tax Lawyer?

Legal advice may be particularly useful where:

• The CRA proposes a significant CEWS repayment;
• Multiple claim periods are involved;
• The CRA disputes the employer’s revenue calculations;
• Penalties are being considered;
• The CRA alleges deliberate or aggressive non-compliance;
• The matter involves a third-party subsidy preparer;
• An objection or appeal deadline is approaching;
• CRA collection action has begun; or
• The dispute may proceed to the Tax Court of Canada.

For broader information about responding to a CRA audit, visit our CRA audit lawyers page.

Frequently Asked Questions About CEWS Audits

Are routine CEWS audits still ongoing?

No. The CRA reports that all routine CEWS post-payment validations and audits were closed by December 31, 2025.

Can the CRA still investigate CEWS claims?

Yes. The CRA continues targeted compliance work involving certain high-risk claims, including suspected willful or aggressive non-compliance and some preparer-linked claims.

How much CEWS has the CRA reduced or denied?

As of December 31, 2025, the CRA reported approximately $892 million in CEWS claim amounts reduced or denied through its routine post-payment compliance programs.

Did most employers fail their CEWS audits?

No. The CRA reports that approximately 95% of the claim amounts it reviewed through its routine CEWS compliance programs were approved, either as originally filed or with minor adjustments.

What happens if the CRA says my company must repay CEWS?

The appropriate response depends on the type of CRA decision and the reason for the adjustment. The employer should review whether formal objection or other dispute rights are available and identify the applicable deadline.

Can CRA collect an unpaid CEWS assessment?

Potentially. If an assessed amount becomes payable and remains unpaid, CRA collection procedures may apply.

How KR Law Firm Assists With CEWS Disputes

KR Law Firm assists businesses with CRA audits, reassessments, objections, collections, and tax litigation arising from CEWS and other Canadian tax matters.

Depending on the case, our tax lawyers can assist with:

• Reviewing CEWS audit and information requests;
• Assessing eligibility and claim calculations;
• Organizing supporting evidence;
• Preparing responses to CRA auditors;
• Responding to proposed adjustments;
• Challenging assessments or reassessments;
• Addressing CRA collection action; and
• Representing businesses in tax disputes and litigation.

If your business is dealing with a CEWS audit, reassessment, repayment demand, or related CRA dispute, book a Free Consultation with one of our tax lawyers.

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By Kaveh Rezaei – Principal Lawyer, KR Law Firm

Disclaimer: This article provides general information only and does not constitute legal advice. Tax matters depend on their specific facts and applicable law. Consider obtaining legal advice about your particular circumstances.