Temporary Wage Subsidy for Employers
On March 18, 2020, the Government of Canada announced a temporary wage subsidy for a period of three months. This temporary measure will allow eligible employers to reduce 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;
- A registered charity;
- One that has an existing business number and payroll program account with CRA on March 18, 2020; and,
- One that pays salaries, wages, bonuses, or other remuneration to an employee.
Please note that a CCPC with taxable capital employed in Canada for the preceding taxation year in excess of $15M will not be eligible for this subsidy. Taxable capital is calculated on an associated group basis.
This temporary subsidy is equal to 10% of the remuneration paid between March 18, 2020 and June 20, 2020, up to $1,375 per employee to a maximum of $25,000 per employer. Please note that associated CCPCs do not have to share the maximum subsidy.
The employer must manually calculate this subsidy which is claimed by simply reducing the current payroll remittance for federal, provincial, and territorial income taxes. This subsidy cannot be used to reduce CPP contributions or EI 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.
Unfortunately, the subsidy is considered government assistance and must be included in the employer’s taxable income. There is no impact to the employee.