Temporary wage subsidy for employers – expanded definition of ‘Eligible Employer’
There is welcome news for many small employers that are not corporations. Legislation passed by the House of Commons included a change in the definition of “Eligible Employer” for the Temporary Wage Subsidy from what had previously been announced. An eligible employer now includes individuals and partnerships whose members include individuals, Canadian-controlled private corporations (CCPC) or charities.
To claim the subsidy, the taxpayer must have an existing business number and payroll program account with the CRA as of March 18, 2020 and pay salary, wages, bonuses or other remuneration to an employee. 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. 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 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.
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