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COVID-19 Federal Benefits And Supports – Temporary Wage Subsidy Increased To 75%

COVID-19 Federal Benefits and Supports – Temporary Wage Subsidy Increased to 75%

COVID-19 Federal Benefits and Supports

Temporary Wage Subsidy Increased to 75%

March 27, 2020 – 5:30PM

By Nizam Shajani, CPA, CA, MBA

Prime Minister Justin Trudeau announced wage subsidies for qualifying businesses struggling with COVID-19 have been increased from 10% to 75%.  This is a significant increase and welcomed by the business community.

The subsidy is to be retroactive to March 15 and additional details will be release soon.

Details of the subsidy previously announced included the following:

The temporary wage subsidy for employers is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).

Who qualifies?

Employers that were eligible included the following:

  • Canadian-controlled private corporations, registered charity, or a non-profit organization;
  • Have an existing business number and payroll program account with the CRA on March 18th; and
  • Pay salary, wages, bonuses or other remuneration to an employee.

 

How much is the subsidy?

The subsidy has now increased to 75% of remuneration paid.  It is anticipated this will continue to be during a three-month period.  The previous subsidy was up to a maximum subsidy of $1,375 per employee and $25,000 per employer.  This is anticipated to increase.

The subsidy will be retroactive to March 15th.  The previous subsidy was effective from March 28, 2020 to June 20, 2020.  So the subsidy would have been based on the remuneration you pay between that period of time.  To benefit from this support, eligible employers were to reduce the remittance of federal, provincial, or territorial income tax by the amount of the subsidy.  Now that the subsidy has increased to what will be higher than then the tax remittances to CRA, a cash disbursement may be required.

Taxable Income

The subsidy will likely be considered taxable income requiring disclosures in the businesses tax reporting.

Conclusion

If you feel you qualify for the wage subsidy, and our firm processes your payroll, please let us know if you would like to make application of the wage subsidy by contacting your account manager at Shajani.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. © 2020 Shajani LLP