There's a lot of information available on the wage subsidy for employers.  Check out the Latest information on the Government of Canada website here

 

RE:   The Canada Emergency Wage Subsidy

The Prime Minister has announced the following criteria for the 75% Canada Emergency Wage Subsidy;

• Businesses who experience a 15% drop in revenue in March will be eligible for 75% wage subsidy in March.  Business must show a decrease in revenue of at least 30% in April and May to receive the subsidy in that month.
• 75 per cent wage subsidy means the government will pay up to the first $58,700. I.e government will pay up to $847 a week.
• The subsidy applies to both non-profits and charities in addition to for-profit small, medium and large businesses.
• This is effective March 15, 2020.
• Compare March 2020 revenues to February 2020 revenues; if the drop from February to March is 15% or more, then you will be eligible for the subsidy.

For those companies experiencing a decrease in revenues of at least 15% in March and 30% in April / May, the government will cover up to 75 percent of a salary on the first $58,700, which could mean payments of up to $847 per week. The prime minister also encouraged businesses to top up their employees wages with the remaining 25 per cent of their salaries.

The wages the subsidy covers will be capped at $847 a week and backdated to March 15,  The subsidy is considered taxable income.

Who is eligible?

• Businesses (regardless of the number of employees)
• Not for profit organizations
• Charities

that experienced a 15% reduction of their revenue in March, and 30% in  April and May.

How do I calculate a 15% reduction in revenue?

You will have 2 options:

1. compare your revenue for the month you wish to receive the subsidy with your revenue for the previous month last year  (ex: compare March 2020 to March 2019, April 2020 to April 2019) to show a decrease of at least 15% in March and at least 30% in April and May.

2. compare your gross revenue for the month you want to receive the subsidy with your average from revenue from January and February 2020.

Regardless of the options you choose, you will have the option to use accrual or cash accounting.  Once you choose an accounting method, you will also have to keep using it for all the claiming periods you are applying for.

As the subsidy is for salaries paid since March 15, the three claiming periods are the following:

• March 15 to April 11: .
• April 12 to May 9:
• May 10 to June 6: 9

 

Eligible period?

For salaries paid between March 15 and June 6.

How much can I receive?

The subsidy will cover 75% of the wage of the employee up to a maximum weekly subsidy per employee of $847. The subsidy will be based entirely on the salary or wages actually paid to employees. More details to come.

Do I have to pay the remaining 25%?

All employers would be expected to at least make best efforts to top up salaries to 100%.

How can I apply?

You will be able to apply through the CRA’s My Business Account portal as well as a web-based application. More details to come.

What if I am not eligible?

You will be able to use the 10% wage subsidy (see details below). Using the 10% wage subsidy will reduce the amount you will be able to receive from the 75% wage subsidy.

 

 

Those companies that do not meet the 15% criteria will still be eligible for the previously announces 10% wage subsidy from march 18 to before June 20, 2020.  This subsidy is paid via a reduction in employer payroll remittances.

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

Associated CCPCs will not be required to share the maximum subsidy of $25,000 per employer.

Eligible employers are:

• Canadian-Controlled Private Corporation (incorporated) eligible to the small business deduction or non-profit organizations, registered charities; and
• Have an existing business number & payroll program account with CRA on March 18; and
• Pay salary, wages, bonuses, or other remunerations to an employee.

Eligible period:

For salaries paid between March 18 to June 20, 2020

How do I calculate the subsidy?

It is a 10% subsidy, so if you have 2 employees that you pay $1,500 each, every two weeks, the subsidy will be $150 * 2 = $300

What is the maximum subsidy I can receive? 

Over the 90 days period, the limit is $1,375 per employee and $25,000 per employer

How do I receive the subsidy? 

You can reduce your remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy. You will be able to keep a portion of your employees’ income tax instead of giving it all to CRA

For example, if you have 2 employees for a total bimonthly labour cost of $3,000 and you deduct $700 from their pay for the federal and provincial income tax, you will be able to remit to CRA only $400 and keep the remaining $300 for you as you have a subsidy of $300 (as calculated above)

The calculation is the following: Planed income Tax remittance – 10% subsidy = New Income Tax remittance

You cannot however reduce your remittance of Canada Pension Plan contributions (CPP) or Employment Insurance (EI) premiums.

When can I receive the subsidy?  

In the first remittance period that includes remuneration paid between March 18, 2020, and June 20, 2020

 

More information on the 10% wage subsidy can be found here.

 

If the income taxes you deduct are not sufficient to offset the value of the subsidy in a specific period, you can reduce future remittances to benefit from the subsidy. This includes reducing remittances that may fall outside of the application period for the wage subsidy (after June 20, 2020).

For example: If you calculated a subsidy of $2,050 on remuneration paid between March 18, 2020, and June 20, 2020, but only deducted $1,050 of federal, provincial, or territorial income tax from your employees, you can reduce a future income tax remittance by $1,000, even if that remittance is in respect to remuneration paid after June 20, 2020.

 

Other benefits to Small Businesses:

Canada Emergency Business Account

The new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.   To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.

Loan Guarantee for Small and Medium-Sized Enterprises

EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to SMEs.

Co-Lending Program for Small and Medium-Sized Enterprises

BDC is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.  Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program.

These programs will roll out in the three weeks after March 27, and interested businesses should work with their current financial institutions.

 

 

Other benefits to Small Businesses:

Canada Emergency Business Account

The new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.   To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.

Loan Guarantee for Small and Medium-Sized Enterprises

EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to SMEs.

Co-Lending Program for Small and Medium-Sized Enterprises

BDC is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.  Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program.

These programs will roll out in the three weeks after March 27, and interested businesses should work with their current financial institutions.