April 6, 2020 – 8:30 AM
By Nizam Shajani, CPA, CA, MBA
Two subsidies and a benefit were announced recently that have many of our corporate clients asking what subsidy they should apply for. Only one of the Emergency Wage Subsidy, Temporary Wage Subsidy or the Canadian Emergency Response Benefit (CERB) should be attributed to an individual.
If you are a business owner, you will want to do some math to determine what works best for you before you make any application. We have provided a decision tree to help you in this process. The COVID-19 Business Subsidies & Benefit Decision Tree for Owner Managed Remuneration facilitates maximizing the amount of funds that end up in your pocket.
75% Emergency Wage Subsidy
If the revenues of your business have decreased by more than 30%, your business would qualify for the Emergency Wage Subsidy. That subsidy will see the government reimburse your business for 75% of the wages paid to each employee up to $847 per week per employee. If you are paid an annual wage of $58,700 or more, your business would receive the maximum $847 per week for your remuneration. Your business would have to pay you the remaining 25% of wages.
As an individual, your business could receive up to $10,164 to maintain your employment.
Your business would receive a subsidy of 75% of total wages paid up to a maximum per employee. There is no maximum amount for the employer.
The CERB will pay $2,000 every four weeks for those who qualify. The math indicates if your wage is less than $667 per week ($34,684 per year), you will receive more from the CERB than the Emergency Wage Subsidy.
This calculation does not consider situations in which there are a number of staff employed by your business. If that is the case, please engage our firm for a detailed analysis.
The CERB requires yourself, as a worker to qualify. The CERB is available to workers;
- Residing in Canada who are at least 15 years old;
- Who have stopped working because of COVID-19 or are eligible for employment insurance;
- Who has income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
- Who are or expect to be without employment or self-employment for at least 14 consecutive days in the initial four-week period.
As an individual, you could receive up to $8,000 over sixteen weeks for the CERB.
10% Temporary Wage Subsidy
If your business does not qualify for the Emergency Wage Subsidy and you do not qualify for the CERB, your business may claim the Temporary Wage Subsidy. The Temporary Wage Subsidy is a maximum subsidy of $1,375 per employee paid over a three-month period.
The maximum amount an employer can claim is $25,000.
To maximize on the subsidy, your annual salary should be more than $54,996, with $4,583 paid each month. If that is the case, as an individual, your business would receive $1,375 to maintain your employment.
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