Temporary 10% Wage Subsidy
What is it?
The 10% 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). 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.
Who is eligible?
You are an eligible employer if you:
- are an: individual (excluding trusts), partnership, non-profit organization, registered charity, or Canadian-controlled private corporation (including a cooperative corporation);
- have an existing business number and payroll program account with the CRA on March 18, 2020; and
- pay salary, wages, bonuses, or other remuneration to an eligible employee. An eligible employee is an employee who is employed in Canada.
- Partnerships are only eligible for the subsidy if their members consist exclusively of individuals (excluding trusts), registered charities, other partnerships eligible for the subsidy, or eligible Canadian-controlled private corporations (CCPCs).
- CCPCs are only eligible for the subsidy if they would have had a business limit for their last taxation year that ended before March 18, 2020, greater than nil (determined without reference to the passive income business limit reduction).
How do I calculate the subsidy?
The subsidy is equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee to a maximum of $25,000 total per employer.
NOTE: Associated CCPCs will not be required to share the maximum subsidy of $25,000 per employer.
The subsidy must be calculated manually, either by you or whoever is responsible for making your payroll remittances. The CRA will not automatically calculate the allowable subsidy.
For example: if you have 5 eligible employees with a monthly salary of $4,100, your total monthly pay roll would come out to $20,500. Your wage subsidy for the month will be 10% of $20,500, or $2,050.
What about the Canada Emergency Wage Subsidy?
You may be eligible for both the 10% Temporary Wage Subsidy for Employers and the CEWS. Employers who are eligible for both subsidies can only claim a maximum cumulative subsidy of 75% of the eligible remuneration that they pay. Therefore, if you are eligible for both subsidies, you must reduce your CEWS claim by any amount that you reduce your remittances by, under the 10% Temporary Wage Subsidy for Employers in the same period.
However, if you only want to claim the CEWS for a specific period, you may elect for the 10% Temporary Wage Subsidy for Employers to be equal to a lower percentage of the remuneration you pay, between 0% and 10%, for that period.
NOTE: If you elect for the 10% Temporary Wage Subsidy for Employers to be equal to a lower percentage of the remuneration you pay, you must indicate the election on your self-identification form.
How do I apply?
You do not need to apply for the subsidy.
You will continue deducting income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from salary, wages, bonuses, or other remuneration paid to your employees, as you currently do.
The subsidy is calculated when you remit these amounts to the CRA.
Once you have calculated your subsidy, you can reduce your current payroll remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy. You can start reducing payroll remittances of federal, provincial, or territorial income tax in the first remittance period that includes remuneration paid from March 18, 2020 to June 19, 2020.
NOTE: You cannot reduce your remittance of CPP contributions or EI premiums. You must continue remitting the CPP contributions and EI premiums that you deducted from your employees, as well as your share of CPP contributions and EI premiums, to the CRA.