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Important: Learn about the key points to Canada's Economic Stimulus plan

Client Communication:

Temporary Wage Subsidy for Employers

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April 9, 2020

Am I an eligible employer?

You are an eligible employer if you:

  • are a non-profit organization, registered charity, or a Canadian-controlled private corporation (CCPC);
  • have an existing business number and payroll program account with the CRA on March 18, 2020; and
  • pay salary, wages, bonuses, or other remuneration to an employee.

Additionally:

  • The company must have had a small business deduction limit greater than nil allocated in the prior year

  • 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.

Separate subsidy per employer (associated employer rules don’t apply).

How much is the subsidy?

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 employer. Please know payroll must continue and be paid in order to take advantage of this subsidy, if you stop payroll this is not available.

An annual salary of $55,000 per employee will result in getting the maximum benefit.

Owner Payroll:

If you do not get a regular pay cheque this will not work for you. Clients that do lump sum payments should consider going on regular payroll effective immediately until June 20, 2020.

In order for you to take advantage of this subsidy with your personal payroll – your gross payroll paid needs to be $13,750 over March 18, 2020, and June 20, 2020 in order to receive the maximum subsidy of $1,375.

How will I receive the subsidy?

The subsidy is claimed by reducing the tax portion of your monthly remittance. It cannot be applied against the CPP and EI.

When can I start reducing remittances?

You can start reducing your source deduction remittances in the first remittance period that includes remuneration paid between March 18, 2020, and June 20, 2020.

If you use a payroll service please advise them of your qualification.

How do I calculate the subsidy?

The subsidy is claimed by reducing the income tax portion of your remittance ONLY by the minimum of the 3 amounts:

  • Maximum per employer of $25,000
  • Fixed rate of 10% of the remuneration paid to eligible employees during the eligible period
  • Total number of eligible employees multiplied by a fixed amount of $1,375

NOTE: An eligible employee means the employee must be “employed” on the date of the eligible payment.

For example, if you have 5 employees earning monthly salaries of $4,100 (assumes all are under $55K annually) for a total monthly payroll of $20,500, the subsidy would be 10% of $20,500, or $2,050.

Worksheet to calculate subsidy: Click Here

For more information: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html

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