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.
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