Payroll Legislation

Canada’s temporary wage subsidy program – is my business eligible?

Posted by Farkhod Fayzullaev | March 26, 2020

On March 19th, the Government of Canada announced a temporary wage subsidy program for employers, effective March 18th.

The program is aimed at helping employers reduce payroll income tax deductions and retain workers amid the COVID-19 outbreak.

Eligible businesses can opt in on remuneration paid between March 18 and June 20, 2020.

Private companies are eligible for the subsidy if their earnings and other capital in Canada for the last year is less than $15 million.

What is the Temporary Wage Subsidy for Employers?

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).

Is my business eligible?

Eligible Employers include:

  • Canadian-controlled private corporations (CCPCs), registered charities, or non-profit organizations;
  • Companies with an existing business number and payroll program account with the CRA as of March 18th; and
  • Businesses that pay salary, wages, bonuses or other remuneration to an employee.

How much is the subsidy?

The subsidy will be equal to 10% of remuneration paid during a three-month period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.

The subsidy will be effective from March 18 to June 20, 2020, so its amount will be based on the remuneration you pay in that time period. To benefit from this support, eligible employers may reduce their remittance of federal, provincial or territorial income tax by the amount of the subsidy.

Associated CCPCs will not have to share the maximum subsidy.

How do I calculate the subsidy?

Avanti is providing our clients with an updated vendor remittance report for use through to the end of the year. The updated report is similar to the current version, but includes the required columns to calculate the wage subsidy. It can be found in the Avanti Help Centre with specific instructions on using it in your instance.

If you have 5 employees earning monthly salaries of $4,100 for a total monthly payroll of $20,500, the total subsidy for the period would be 10% of $20,500, or $2,050.

How will I receive the subsidy?

Once you have calculated your subsidy, you can reduce your current remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy.

Important: You cannot reduce your remittance of Canada Pension Plan contributions or Employment Insurance premiums.

When can I start reducing remittances?

You can start reducing remittances of federal, provincial, or territorial income tax in the first remittance period that includes remuneration paid between March 18, 2020, and June 20, 2020.

For example, if you are a regular remitter, you can reduce your remittance that is due to the CRA on April 15, 2020.

When you’re worried about cash flow, the last thing you need is your payroll processor withholding your money. This might be the time to think about your payroll solutions provider and how they meet your needs when challenges arise.

For more information on Avanti’s all-in-one payroll solutions, contact us. We can talk you through the benefits of self-serve payroll and the control it gives you when you need it most.

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