April 1, 2020 – 4:30PM
By Nizam Shajani, CPA, CA, MBA
Finance Minister Bill Morneau and the Department of Finance have today provided more information on the Canada Emergency Wage Subsidy. This subsidy will be made available in approximately six-weeks via a CRA portal and will cover 75% of wages paid by employers, up to $847 per week for twelve weeks. To qualify, revenues of your business must have decreased by a minimum of 30% when compared to the same month the year before.
Those organizations that do not qualify for the Canada Emergency Wage Subsidy may continue to qualify for the previously announced Temporary Wage Subsidy of 10% of remuneration paid from March 18 to before June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
What businesses qualify?
The subsidy will be available for businesses where revenues have decreased by 30% or more. Revenues will be compared to the same month last year for March, April or May, to make this determination. The application will need to be made each month.
This subsidy is available to Canadian businesses, big or small, individuals, partnerships and corporations that are not publicly funded. This will also be available for not for profit organizations and charities.
Employers will have to attest they are doing everything they can to pay the remaining 25% of their employee’s income. However, the system will be flexible and on a best effort basis. The employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees.
The Prime Minister and Finance Minister have warned that there will be severe and serious consequences for businesses that take advantage of this subsidy or use the funds for fraudulent purposes. The government is relying on good faith and trust. It seems the policy will be to pay first and reassess later.
How much is the subsidy?
The federal government will cover 75% of wages paid to employees on the first $58,700 of normal salary, up to $847/week per employee. The number of employees does not matter. There is no cap per employer.
The subsidy will be retroactive to March 15, 2020 and available for a twelve-week period to June 6, 2020.
How do you get the subsidy?
You will be able to apply through a Canada Revenue Agency portal that will be made available soon. Funds will be available in approximately six weeks.
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