COVID-19 Temporary Wage Subsidy For Employers
On March 18th the Government of Canada announced a Temporary Wage Subsidy (“Subsidy”) as part of its COVID-19 response plan for businesses. Canada Revenue Agency (“CRA”) has provided further details on the Subsidy, which can be found at the following website. The relevant legislation can be found here.
The Subsidy is a three-month measure that will be available to “eligible employers” to reduce the number of payroll deductions (federal, provincial, territorial income tax) required to be remitted to CRA.
An “eligible employer” includes the following entities with a business number (or payroll account) on March 18, 2020, and who employ one or more individuals employed in Canada:
- Registered Charities and non-profit organizations;
- Individuals (i.e. sole proprietors), other than a trust;
- Certain partnerships;
- Canadian-controlled private corporations (“CCPC”) that could claim any portion of the small business deduction and where taxable capital employed in Canada for the preceding tax year (calculated on an associated group basis) is less than $15 million.
The Subsidy amount is equal to 10% of the remuneration that the eligible employer pays between March 18, 2020, and June 20, 2020, up to $1,375 per employee and to a maximum of $25,000 total per employer. Associated corporations are not required to share the maximum subsidy of $25,000 per employer.
CRA indicates that to claim the Subsidy, the eligible employer can reduce its next remittance of payroll that includes the period of March 18th to June 20th. For example, a monthly remitter would reduce its next remittance due on April 15th. Most payroll providers (ex. ADP or Ceridian) will have their own processes for claiming the Subsidy and so the employer will need to check with their provider on this matter. Also, the Subsidy amount received by the employer will have to be reported as income in the tax year received by the employer.
Please feel free to reach out to us if you have any questions.
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