We are all a little on edge these days about finances, job security and the health of ourselves and loved ones. The Canadian Government is trying to help all Canadians with financial hardships due to COVID-19. For business owners’ this is one part of the economic response plan.
Please be aware this article outlines the Temporary Wage Subsidy for Employers that has been released by the Canadian Revenue Agency (CRA) amid the COVID-19 outbreak. Note that this is different from the Canadian Emergency Wage Subsidy.
Updated as of March 30, 2020: Prime Minister Trudeau announced the following changes subject to further details to be released by the Department of Finance:
- 10% wage subsidy being changed to 75% wage subsidy
- Backdating wage subsidy program to apply starting March 15
- Applicable for Canadian businesses whose revenue has decreased by 30% or more due to the pandemic
- Not limited by number of employees
- The subsidy will be on the first $58,700 earned by an employee, which can result in an amount up to $847/week ($58,700 x 75% / 52 weeks)
The information contained in this article no longer represents the current wage subsidy program as a result of changes announced by the prime minister on March 27 and March 30, which is now being referred to as the Canada Emergency Wage Subsidy. Please refer to the Government of Canada website for more information. Please note this information is subject to change.
What is the Temporary Wage Subsidy?
The Canada Government announced on March 18, 2020, a wage subsidy would be put in place and be available for three months. It will grant eligible employers the opportunity to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).
Do you qualify?
According to the CRA website, you are an eligible employer if you are a:
- Non-profit organization
- Registered charity
- Canadian-controlled private corporation (CCPC) with less than $15 million in taxable capital employed in Canada
- Businesses who pay salary, wages, bonuses, or other remuneration to an employee
How much is the subsidy?
It will be equal to 10% of the total remuneration paid between March 18, 2020, and June 20, 2020, up to a maximum of $1,375 per worker and $25,000 per employer.
For example, if you have 3 employees, the maximum subsidy you can receive is $4,125 ($1,375 x 3 employees).
Who calculates the subsidy?
Back to our example from before the 3 employees earn a monthly salary of $4,000. The total monthly payroll would be $12,000 and the subsidy would be 10% of $12,000 - totaling $1,200.
How will the wage subsidy work?
The subsidy is available immediately, because rather than receiving a cheque from the government for that amount, you will reduce how much you remit in payroll deductions to the CRA.
Important Note - Employers can only reduce remittance of federal, provincial or territorial income tax — not Canada Pension Plan contributions or Employment Insurance premiums.
We encourage you to visit the CRA is frequently asked questions page on its website. You can also reach out to us, we at BAASS can help you get this set up and tracked easily within your payroll software.