The Canada Revenue Agency has published new details on how the proposed wage subsidy will be implemented and who will qualify.
There is new information available to business owners on the federal government’s proposed temporary wage subsidy that is part of the economic response plan to counter Canadians’ financial hardships due to COVID-19.
The Canada Revenue Agency has now released a more detailed breakdown of who is eligible and how the subsidy will be implemented.
Here’s what you need to know.
What is the wage subsidy?
Ottawa’s proposed wage subsidy was announced last week and is set to be in place for three months.
It will be equal to 10 per cent of total remuneration paid between March 18, 2020, and June 20, 2020, up to a maximum of $1,375 per worker and $25,000 per employer.
Does my business qualify?
The wage subsidy is limited to eligible small businesses. The CRA says that includes the following:
- Non-profit organizations.
- Registered charities.
- Canadian-controlled private corporations with less than $15 million in taxable capital employed in Canada, a measure also used to calculate the existing small business deduction.
If a business is eligible, but not paying employees during the applicable period because it is closed, it does not qualify.
How will the subsidy work?
The subsidy will be available immediately, but rather than receiving a cheque from the government, the employer will reduce how much they remit in payroll deductions to the CRA. In other words, pay less.
Employers can only reduce remittance of federal, provincial or territorial income tax — not Canada Pension Plan contributions or Employment Insurance premiums.
Who does the math?
Businesses must manually calcul