Temporary Wage Subsidy for Employers
Updated: Mar 25, 2020
The Canadian Revenue Agency recently announced the Temporary Wage Subsidy for Employers, which is a three month measure that allows eligible employers to reduce the amount of payroll deductions required to be remitted to CRA. Read on to find out what you should know about this new subsidy, and how you can make use of it.
Your business may be eligible for the Temporary Wage Subsidy if you:
are a non-profit organization, registered charity, or a Canadian-Controlled Private Porporation (CCPC);
have an existing business number and payroll program account with the CRA on March 18, 2020; and
pay salary, wages, bonuses, or other remuneration to an employee.
CCPCs are only eligible for the subsidy if their taxable capital within Canada in the preceding taxation year is less than $15 million. This is calculated on an associated group basis.
How much is the subsidy?
The subsidy is equal to 10% of the remuneration you pay between March 18, 2020 and June 20, 2020 - up to $1,375 per employee and to a maximum of $25,000 total per employer.
This subsidy must be calculated manually. So for instance, if you have 6 employees earning monthly salaries of $3800 for a monthly payroll of $22,800 - the subsidy would be 10% of $22,800, or $2,280.
Receiving the Subsidy
To receive the subsidy, employers can reduce their current remittance of federal,
provincial, or territorial income tax that would otherwise be remitted to the CRA
by the amount of subsidy calculated. Quebec income tax withheld cannot be
reduced and must continue to be remitted to Revenu Québec.
If Subsidies Exceed the Remittances
Remittance reductions can begin in the first remittance period that includes
remuneration paid between March 18, 2020 and June 20, 2020. If income taxes
deducted are not sufficient to offset the value of the subsidy in a specific period,
future remittances can be reduced; this includes remittances that may fall
outside of the application period for the wage subsidy (after June 20, 2020).
Does This Affect Deductions From My Employees?
No. Employers should continue to deduct income tax, Canada Pension Plan
contributions and Employment Insurance premiums from salary, wages, bonus or
other remuneration paid to employees. The subsidy is only deducted when
income tax amounts are to be remitted to the CRA by employers.
If you don’t reduce remittances during the year
Eligible employers who choose not to reduce payroll remittances during the year
can calculate the temporary wage subsidy on remuneration paid between March
18, 2020 and June 20, 2020, and request that the subsidy be paid to them at the
end of the year or transferred to the next year’s remittance.
There is no reduction to the remittance of Canada Pension Plan contributions or
Employment Insurance premiums.
The CRA is currently updating reporting requirements; more information on how
to report this subsidy will be released in the near future.
Please note legislation has not yet been released on this measure; we will update
you as things unfold.