Updated: April 2, 2020
To support small businesses, the government has implemented a three-month wage subsidy for employees that are employed in Canada. The Federal Government’s COVID-19 assistance proposals were passed by Parliament and received royal ascent on March 25, 2020.
Calculation
The subsidy is equal to 10% of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 per employee (i.e. $13,500 of wages) and to a maximum of $25,000 per employer (i.e. $250,000 of wages).
For example, if you have 5 employees, the maximum subsidy you can receive is $6,875 ($1,375 x 5 employees), even though the per employer maximum is $25,000.
The subsidy is taxable to the employer in the year of receipt.
Note this has no impact on the amount of tax, CPP and EI deducted from an employee’s perspective. i.e. net pay does not change.
While association is relevant in evaluating whether a CCPC can qualify, associated CCPCs will not be required to share the maximum subsidy of $25,000 per employer.
Eligible Employers
The subsidy is available to Eligible Employers:
- Canadian Controlled Private Corporations (CCPC’s) with taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, of less than $15 million.
- individuals, non-profit organizations and charities as well as partnerships all of the members of which are individuals, qualifying CCPC’s, charities or partnerships with such members.
Eligible employers must have had an existing business number and a payroll account on March 18, 2020.
Timing
Employers can (i) effective on their next remittance date, reduce their remittances of income tax withheld on their employees’ remuneration, (ii) apply for a refund at the end of the year, or (iii) request that the refund be applied to next year’s remittances.
The subsidy is available for remuneration paid between March 18, 2020 and June 19, 2020. If the subsidy exceeds remittances for a particular period, it can be credited to a future remittance period.
Records Tracking
It is important to maintain records to support your calculation. This would include total remuneration paid from March 18, 2020 to June 19, 2020, tax deducted and number of employees paid in the period.
