Canadian Government Rolls Out Temporary Wage Subsidy

Canadian Government Rolls Out Temporary Wage Subsidy

Do you know how to access the Canadian government’s temporary wage subsidy? It could help you to reduce payroll deductions and keep your staff through the pandemic.

In less than two weeks, the escalation of the coronavirus has had devastating effects on the Canadian and global economy. With 4038 total cases in Ontario alone as of April 5^th, the spread of coronavirus continues throughout the nation, affecting businesses’ ability to continue their operations and maintain their workforces.

With just a week or two of lowered or altogether halted activity from customers and clients, these small businesses have had to lay staff members off, make significant changes to their services, and dip into their savings. In response, the Canadian government has rolled out an $82 million economic aid package, intended to support families, small businesses, and other members of the Canadian economy.

A key aspect of this package is a temporary wage subsidy – do you know how it works, and how to access it?

How Does The Temporary Wage Subsidy Work?

Small businesses will receive wage support in the form of a reduction of the amount they have to pay to the Canada Revenue Agency (CRA) in payroll deductions. Instead of a handout, this subsidy will be a reduction in expenses.

The subsidy is equal to 10 percent of the remuneration paid between March 18 and June 20, 2020, up to $1,375 per employee and a maximum of $25,000 total per employer, according to the CRA.

“If you calculated a subsidy of $2,050, you would reduce your current remittance of federal, provincial or territorial income tax by $2,050,” the CRA said to Global News. “You could continue reducing future income tax remittances, up to the maximum of $25,000, for all remuneration paid before June 20, 2020.”

Is My Business Eligible For The Temporary Wage Subsidy?

To benefit from the temporary wage subsidy, you must:

• Be 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 as of March 18
• Pay salary, wages, bonuses or other remuneration to an employee
• Are a private company with earnings and other capital in Canada amounting to less than $15 million

It’s important to note that companies that are closed or did not pay salary, wages, bonuses or other remuneration to an employee between March 18 and June 20, 2020, cannot receive the benefit.

What Else Do I Need To Know About The Temporary Wage Subsidy?

Even if you are eligible according to the above guidelines, to access the subsidy you also need to have the following documentation available:

• Total remuneration paid between March 18 and June 20, 2020
• Federal, provincial or territorial income tax that was deducted from that remuneration
• Total number of employees paid from March 18 to June 20, 2020

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