COVID-19: Temporary wage subsidy for employers – further information
The Temporary Wage Subsidy for Employers was announced by the Government of Canada on March 18, 2020. It is a three-month measure to assist eligible employers by reducing the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).
An eligible employer is a Canadian-controlled private corporation (CCPC), a non-profit organization or a registered charity. To claim the subsidy, the taxpayer must 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. A CCPC with taxable capital employed in Canada for the preceding tax year greater than $15M (calculated on an associated group basis) will not be eligible for the subsidy.
The subsidy is equal to 10% of remuneration paid between March 18, 2020 and June 20, 2020, up to $1,375 per employee to a maximum of $25,000 per employer. Associated CCPCs will not be required to share the maximum subsidy.
The subsidy is manually calculated by the employer and is claimed by simply reducing the current remittance of federal, provincial or territorial income tax that is sent to the CRA. The subsidy cannot be used to reduce Canada Pension Plan contributions or Employment Insurance premiums. Employers can claim the subsidy on the first remittance period that includes remuneration paid after March 18, 2020. For most, that will be for the remittance due on April 15, 2020.
The subsidy is considered government assistance and will be included in the employer’s income for the tax year in which it is received. The subsidy does not affect the employees in any way. Their T4 slip will report the gross amount of federal, provincial or territorial tax.
An employer claiming the subsidy will need to keep information to support the subsidy calculations. This includes the following:
- Total remuneration paid between March 18, 2020 and June 20, 2020;
- The federal, provincial, or territorial income tax that was deducted from that remuneration; and
- The number of employees paid in that period.