The Canadian government is proposing to provide eligible small employers with a temporary wage subsidy for a period of 3 months. This includes remuneration paid to employees between March 18, 2020 and June 20, 2020.
How do I know if I'm eligible?
This subsidy is not available to everyone. Those eligible will include:
Corporations eligible for the Small Business Deduction
Those not eligible:
Corporations not eligible for the Small Business Deduction
How will it work?
The subsidy will be equal to 10% of remuneration (earnings) paid during that period up to a maximum subsidy of $1,375 per employee and $25,000 per employer (this will require tracking). We are trying to get clarification if this applies to wages paid to business owners on the payroll too.
Employers will be able to benefit immediately by reducing their remittances (tax liability) of income tax withheld on their employees’ remuneration (earnings). For example, if you pay your payroll remittances to the CRA once a month, the first payment you make to the government that will be impacted is the payroll remittance due April 15, 2020.
We have been advised this is a reduction of Income-tax payments and not CPP or EI. As a result, there should be no trigger for PIER reviews next year.
The subsidy benefit is purely for the Employer, to give them a little bit of extra cash flow through these difficult months. Therefore the employees' Paycheque and Net Pay are unaffected by this change. They are still required to pay their fair share of Income Tax, CPP, and EI. As such, the employer will still be required to match the CPP and EI accordingly.
As more information becomes available from the Canadian government on this topic, we expect that this page will be updated by the governement: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
There are a lot of people talking about this topic, and not all the information we have come across has been true. We recommend that you watch your sources of information, and check it to that which has been provided directly by the government.
If you have questions related to your specific situation, we recommend you reach out to your payroll provider, bookkeeper, or accountant for clarification.
Content updated March 23rd, 2020.