Temporary Wage Subsidy for Employers

For a period of three months eligible employers are permitted to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA)

Payroll Support: According to the CRA, small business will get a wage subsidy which will be 10 % of the remuneration paid between March 18 and June 20, 2020, up to $1,375 per employee to a maximum of $25,000 total per employer

Here's The Catch – No Cashback

Simply put, government is not doing a cashback but offering a discount on what you submit to CRA as payroll deduction, However, this is Canada and this is a government, there is always a catch, or a cap.

The cap, according to the CRA, is that, the subsidy being offered is equal to 10 per cent of the remuneration paid between March 18, 2020 and June 20, 2020, (a three-month period).

Another ceiling is that of for each employer the amount being a maximum of $25,000 and for each employee up-to $1,375.

So, if a small business has four employees on their payroll then at the rate of $1,375 per employee, they will qualify for a maximum subsidy of $5,500.

 

DO NOT TOUCH THE CPP AND EI

Most importantly, the CPP contributions and EI premiums cannot be reduced. The company can reduce its current remittance of federal, provincial or territorial income tax sent to the CRA. Businesses are required to do the math themselves for the total subsidy, based on CRA guidelines.

As per CRA example, "If you calculated a subsidy of $2,050, you would reduce your current remittance of federal, provincial or territorial income tax by $2,050, You could continue reducing future income tax remittances, up to the maximum of $25,000, for all remuneration paid before June 20, 2020."

ASSESSING YOUR BUSINESS ELIGIBILITY

CRA mandates that employers are eligible to receive the benefit if they fulfill following criteria:

1. Are non-profit organizations, registered charities or a Canadian-controlled private corporation (CCPC)
2. Have an existing business number and payroll program account with the CRA as of March 18
3. Pay salary, wages, bonuses or other remuneration to an employee
4. Private companies are eligible for the subsidy if their earnings and other capital in Canada for the last year is less than $15 million.

 

FOLLOWING ELIGIBLE BUSINESS WILL NOT QUALIFY

CRA drew a line for those companies who are closed or did not pay salary, wages, bonuses or other remuneration to an employee between March 18 and June 20, 2020. Such companies do not qualify to receive the benefits.