Wage subsidy 10% – Last update: August 18, 2020
The federal government has granted a temporary wage subsidy to eligible small business employers for a period of three months. Here are the details applicable to this grant:
The subsidy is equal to 10% of the remuneration paid over a three-month period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. The period runs from March 18, 2020 to June 19, 2020.
Eligible employers:Employers benefiting from this measure are :
- Canadian-controlled private corporations (CCPCs)* eligible for the small business deduction (SBD);
- non-profit organizations (NPOs);
- registered charities;
- Individuals other than a trust;
- partnerships, all the partners of which are the persons referred to in points 1 to 4.
AND, they must :
- Have a business number and payroll account with CRA as of March 18, 2020;
- To have paid a salary, wages, bonuses or any other remuneration to an employee.
Note that CCPCs are eligible for the subsidy only if their taxable capital employed in Canada for the previous taxation year, calculated according to the associated group, is less than $15 million.
*It is important to note that CCPCs that are associated with other companies do not have to share their maximum subsidy of $25,000 per employer. The $25,000 limit is therefore per employer, not per group of companies.
Calculate the subsidy
CRA has confirmed that the calculation of the temporary 10% wage subsidy must be done on a paid salary basis. In other words, an eligible company that would have paid its employees on March 19, for the period worked from March 1 to March 14, can claim the 10% subsidy on these wages. Conversely, an eligible employer who pays his employees on June 25, for the period worked from June 7 to June 20, will not be able to claim the 10% wage subsidy on these wages.
An employer eligible for the Temporary Wage Subsidy who would also be eligible for the Canada Emergency Wage Subsidy (75% subsidy) is required to deduct the 10% subsidy amount from its 75% subsidy calculation. However, it is now possible for an employer who is eligible for both programs to elect to claim only the 75% subsidy.
It may be advantageous for an employer with several employees who are not eligible for the Canada Emergency Wage Subsidy to continue applying for the temporary wage subsidy.
How to apply
Companies will be able to benefit immediately from this support measure by reducing their income tax payments withheld from their employees’ remuneration. It’s important to note that the subsidy does not apply to Canada Pension Plan or Employment Insurance contributions.
Eligible employers will be required to retain information to support their calculations, including :
- the total remuneration paid from March 15, 2020 to June 20, 2020;
- the amount of federal, provincial or territorial income tax deducted from this remuneration;
- the number of employees paid during this period.
Form to complete
All eligible employers are required to complete the form. Eligible employers who do not wish to receive the subsidy will have to choose on the form to calculate the subsidy with a rate of 0%.
The form must be submitted via the CRA portal, by fax or by mail.
Other considerations
It’s also important to note that this grant constitutes taxable income for the company, and that this applies only to tax payments made to the CRA.
