Covid-19: Temporary Wage Subsidy for Employers

To support businesses that are facing income losses and to help prevent layoffs, the federal government is proposing a temporary wage subsidy for three months for eligible small-business employers. The subsidy will be equal to 10% of the compensation paid during this period, up to a maximum of $1,375 per employee and $25,000 per employer. Businesses will be able to take immediate advantage of this support measure by reducing their income tax remittances withheld from their employees' wages.

Eligible Employers

An eligible employer is an individual, a corporation or partnership who:

  1. employs one or more eligible employees, that is, an individual who is employed in Canada;
  2. has, as of March 18, 2020, a federal business number to make payroll deductions;
  3. meets one of the following conditions:
    1.  it is a Canadian-controlled private corporation that would be eligible for the small-business deduction;
    2.  is an individual other than a trust;
    3.  is a partnership, of which all partners are described in one of the subparagraphs 3.1) to 3.3) or 3.5);
    4.  is a non-profit organization;
    5.  is a registered charity.

How much is the subsidy?

The subsidy is equal to 10% of the compensation paid between March 18 and June 20, 2020. There are two limit amounts to be observed, namely:

  1. $1,375 per employee;
  2. $25,000 per employer.

Associated companies will not be required to share the $25,000 limit.

How will I receive the subsidy

When you submit your income tax remittances withheld from employees' wages to the federal government, you can deduct from your remittances the subsidy amount that you calculated beforehand.

For further information:

https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html

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