The Federal Government has provided a temporary wage subsidy for eligible small business employers for a three-month period. Here are some details about the subsidy:

The subsidy is equal to 10% of earnings paid for a period of up to three months for a maximum grant of $1,375 per employee and a maximum of $25,000 total per employer. The period runs from March 18, 2020 to June 20, 2020.

You are an eligible employer if you are:

A Canadian-controlled private corporation (CCPC)* eligible for the Small Business Deduction (SBD);
A non-profit organization;
A registered charity.

AND, if you:

Have an existing business number and payroll program account with the CRA on March 18, 2020;
Pay salary, wages, bonuses, or other remuneration to an employee.

*It is important to note that CCPCs who are associated with other companies do not have to share their maximum grant of $ 25,000 per employer. The ceiling of $25,000 is therefore per employer, and not per group of companies.

An employer will be able to benefit immediately from this support measure by reducing their income tax payments withheld from their employees’ compensation. It is important to clarify that employers cannot reduce their remittance of Canada’s Pension Plan contributions nor Employment Insurance premiums.

In practice, if employers are a regular remitter, they can reduce their remittance due to the CRA on April 15, 2020.

Employers will need to keep information to support their subsidy calculation. This includes:

The 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.

The CRA is currently updating reporting requirements. More information on how to report this subsidy will be released soon.

It is also important to note that this grant constitutes taxable income to the corporation and that it only applies to payments made to the CRA.

If you have any question, please feel free to contact our experts.