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COVID-19: An Update on Wage Subsidies

Wage Subsidies - Clearline CPAThe Federal Finance Minister has announced further details on the Canada Emergency Wage Subsidy.

Following the announcement, there was a technical briefing with officials from the Department of Finance.

Here are the latest details:

 

 

 

 

Canada Emergency Wage Subsidy (“Subsidy”)

  • The Subsidy will cover up to 75% of employees’ wages for Eligible Employers.
  • Eligible Employers include:
    • Corporations (any size – private or public), except non-taxable corporations and public sector entities
    • Sole proprietorships and Partnerships
    • Non-Profits and Registered Charities
  • Eligible Employers must have a decline of 30% or more in gross revenue compared to the same month last year (i.e. March 2020 to March 2019, April 2020 to April 2019).
  • For newer companies (who were not active in previous years), the Government has not announced specific details. They are trying to find an equal measurement (i.e. maybe March 2020 to February 2020).
  • The maximum Subsidy is $847 per week per employee. This is based on 75% of a capped salary of $57,800. There is no Employer maximum.
  • The Subsidy will be based on wages paid from March 15, 2020 to June 6, 2020.
  • Employers must “attempt” to pay the remaining 25% of their salary. Further details on this are to be released.
  • Associated corporations test their decrease in gross revenues on a company-to-company basis. Therefore if one company has a decrease of 30%, then the wages for that company will qualify for this Subsidy but not the other companies.
  • Companies will need to apply for each month separately (i.e. March, April, and May) through a new CRA online portal which is being developed.
  • Subsidy payments are expect to take up to 6 weeks.
  • Professional corporations will qualify for the Subsidy if they meet the other criteria. The salary to the professionals will be based on “pre-crisis” wages.

 

We understand that this may require Parliamentary approval of the enabling legislation. Therefore there may be significant changes in the final enabling legislation.

 

 

Temporary Wage Amount (“Temporary Subsidy”)

  • The previously announced Temporary Subsidy still exists for those Eligible Employers that do not qualify for the Canada Emergency Wage Subsidy.
  • Eligible Employers include:
    • A Canadian-controlled private corporation (CCPC) eligible for the $500,000 small business deduction;
    • Sole proprietorships and Partnerships of either CCPCs or individuals;
    • A non-profit organization; or
    • A registered charity.
  • The amount of the Temporary Subsidy is 10% of remuneration paid from March 18, 2020 to June 20, 2020, subject to maximums of $1,375 per employee and $25,000 per employer.
  • This Temporary Subsidy only applies to reduce federal or provincial income (except Quebec) tax withholding. It does not apply to reduce CPP and EI premiums.
  • Associated CCPCs are not required to share the maximum Temporary Subsidy of $25,000 per employer.

 

Please note: A company is not allowed to “double dip” between the subsidies. If you claim the Temporary Subsidy, then you must reduce the amount of the other Subsidy by the amount claimed by this Temporary Subsidy.

 

More Information

Please visit: https://www.canada.ca/en/department-finance/news/2020/04/government-announces-details-of-the-canada-emergency-wage-subsidy-to-help-businesses-keep-canadians-in-their-jobs.html

 

If you have any questions about the information outlined above, please reach out to our team at we_are@clearlinecpa.ca.

We will continue to release further information and updates as they become available.

Team Clearline