Business Support – 10% Temporary Wage Subsidy

10% Temporary Wage Subsidy

  • This subsidy is a 3-month (March 18 and June 19 2020) measure targeting employers that are small businesses (including incorporated and unincorporated businesses), non-profit organizations and registered charities.
  • Corporations need to be eligible for the small business deduction.  In other words at least some of your income needs to be subject to the 13% income tax rate.
  • For the purposes of this benefit you can ignore the reduction in the small business deduction caused by passive investment income.
  • No revenue test for reduction in revenue
  • Eligible employers will receive a wage subsidy accessible by reducing remittances of income taxes withheld as source deductions from their employees’ remuneration.

how much is it worth?

The subsidy is equal to 10% of the remuneration paid from March 18 to June 19, 2020, capped at the lesser of $1,375 x the number of eligible employees and $25,000.

How do I apply?

  • No need to apply – The employer does the calculation and then reduces the payroll source deduction payment related to income taxes (Not CPP or EI) by the amount of the subsidy.
  • Presumably, there will be an eventual requirement to account for the subsidy claimed and that is likely to happen when T4’s are prepared.
  • If you are eligible for both the 10% wage subsidy and the 75% wage subsidy it is anticipated that the payment of the 75% wage subsidy will be reduced by the amount received under the 10% subsidy program.
  • It might make sense to utilize the 10% subsidy so you have the immediate cash flow relief while we wait for the implementation of the 75% wage subsidy.

The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a post such as this, a further review should be done by a qualified professional.

No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.

2020-04-09T17:58:54-04:00 April 9th, 2020|