Written by Richard Ouellette, CPA, CA on Mar. 23, 2020
1. What is the Temporary Wage Subsidy
Temporary Wage Subsidy for Employers is a three-month measure that will allow
eligible employers to reduce the amount of payroll deductions required to be
remitted to the Canada Revenue Agency (CRA).
2. Which employers are eligible?
You are an
eligible employer if you:
a non-profit organization, registered charity, or a Canadian-controlled private
an existing business number and payroll program account with the CRA on March
18, 2020; and
salary, wages, bonuses, or other remuneration to an employee.
Note: CCPCs are only eligible for the
subsidy if their taxable capital employed in Canada for the preceding taxation
year, calculated on an associated group basis, is less than $15 million.
Temporary Wage Subsidy for Employers is limited to the eligible employers
3. How much is the subsidy?
is equal to 10% of the remuneration you pay between March 18, 2020, and June
20, 2020, up to $1,375 per employee and to a maximum of $25,000 total per
CCPCs will not be required to share the maximum subsidy of $25,000 per
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.
4. How do I calculate the subsidy?
must be calculated manually.
if you have 5 employees earning monthly salaries of $4,100 for a total monthly
payroll of $20,500, the subsidy would be 10% of $20,500, or $2,050.
5. How will
I receive the subsidy?
have calculated your subsidy, you can reduce your current remittance of
federal, provincial, or territorial income tax that you send to the CRA by the
amount of the subsidy.
Important: You cannot
reduce your remittance of Canada Pension Plan contributions or Employment
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.
6. When can I start reducing
start reducing remittances of federal, provincial, or territorial income tax in
the first remittance period that includes remuneration paid between March 18,
2020, and June 20, 2020.
if you are a regular remitter, you can reduce your remittance that is due to
the CRA on April 15, 2020.
7. What if subsidies exceed the
income taxes you deduct are not sufficient to offset the value of the subsidy
in a specific period, you can reduce future remittances to benefit from the subsidy.
This includes reducing remittances that may fall outside of the application
period for the wage subsidy (after June 20, 2020).
If you calculated a subsidy of $2,050 on remuneration paid between March 18,
2020, and June 20, 2020, but only deducted $1,050 of federal, provincial, or
territorial income tax from your employees, you can reduce a future income tax
remittance by $1,000, even if that remittance is in respect to remuneration
paid after June 20, 2020.
8. Will the subsidy affect deductions
from my employees?
No. You will
continue deducting income tax, Canada Pension Plan contributions, and
Employment Insurance premiums from salary, wages, bonuses, or other
remuneration paid to your employees, as you currently do. The subsidy is only
calculated when you remit these amounts to the CRA.
9. What if I don’t reduce remittances
during the year?
If you are
an eligible employer, but choose not to reduce your payroll remittances during
the year, calculate the temporary wage subsidy on remuneration paid between
March 18, 2020, and June 20, 2020. You can then ask for the subsidy to be paid
to you at the end of the year, or transferred to the next year’s remittance.
10. What books and records do I need
to support the subsidy?
need to keep information to support your subsidy calculation. This includes:
total remuneration paid between March 18, 2020, and June 20, 2020;
federal, provincial, or territorial income tax that was deducted from that
number of employees paid in that period.
The CRA is
currently updating reporting requirements. More information on how to report
this subsidy will be released in the near future.
11. Is the subsidy considered taxable
Yes. If you
receive the subsidy, you have to report the total amount as income in the year
in which the subsidy is received.
12. What if my business is closed?
If you did not pay salary, wages, bonuses, or other remuneration to an employee between March 18, 2020, and June 20, 2020, you cannot receive the subsidy, even if you are an eligible employer.
KWB Chartered Professional Accountants are using direct quotations from both the Federal and Provincial Government pages, i.e. www.canada.ca and www.alberta.ca.
Richard Ouellette, CPA, CA
Richard joined KWB in November 2007. He graduated from the University of Lethbridge in 2003 with a Bachelor of Management. Before joining KWB, Richard articled and worked at a national firm. He successfully wrote the 2005 UFE, and obtained his CA designation in 2006.
On his personal time, Richard enjoys going home to his wife and playing with his two young children. He also enjoys traveling, golfing, biking, working out, and spending time with friends and family.
Richard's Contact Information
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