Last updated: Oct. 8, 2021
Originally published March 27, 2020.
The following is archived material. Please refer to the federal government for more information.
The federal government introduced a temporary wage subsidy to help businesses keep their employees during the COVID-19 outbreak.
The wage subsidy program reduces the amount of payroll deductions some employers are required to remit to the CRA for the next 3 months.
The subsidy is part of an economic aid package introduced to help Canadian businesses cope with COVID-19.
We provide an overview below of who is eligible and how the subsidy will be implemented.
What is the Temporary Wage Subsidy?
The subsidy is equal to 10% of remuneration paid between March 18, 2020 and June 19, 2020, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
Watch our video for a summary:
Does my business qualify?
An “eligible employer” for the wage subsidy is defined as a person or partnership who employs more than one employee in Canada, is registered with the Canada Revenue Agency (CRA) for payroll remittance purposes, and meets one of the following requirements:
• A Canadian-controlled private corporation (CCPC) that qualifies for the small-business deduction
• An individual (i.e., proprietorship and not a trust)
• A partnership provided that all members are either CCPCs described above, individuals (other than trusts), or registered charities
• A non-profit organization
• A registered charity
How much is the Subsidy?
The wage subsidy is equal to 10% of the remuneration you pay between March 18, 2020 and June 19, 2020 up to $1,375 per employee to a maximum of $25,000 per employer. To calculate the maximum subsidy, multiply the number of employees by $1,375. If you have 5 employees, 5 x $1,375 = $6875.
How does the Temporary Wage Subsidy work?
You won’t receive a cheque from the government. The subsidy reduces the amount of tax you remit to the government in payroll deductions.
How do I calculate the Subsidy?
The calculation is relatively simple. Multiply the total number of employees by their monthly salaries and deduct 10%. For example, if you have 3 employees each earning $4,000 per month for a total monthly payroll of $12,000, your deduction would be (3 x $4,000) × .10 = $1,200.
You would deduct $1,200 from your regular payroll remittance to the CRA.
How do I apply?
No application is required. Include the reduce amount in your regular remittance.
Note: You can’t reduce remittance of Canada Pension Plan contributions or Employment Insurance premiums.
Keep your records
Employers are responsible for calculating the subsidy and must keep relevant information to support your calculation.
This includes:
- Total remuneration paid between March 18, 2020, and June 19, 2020
- Federal, provincial, or territorial income tax deducted from the remuneration
- Number of employees paid in that period
Contact FBC
Have questions about this or other COVID-19 programs for Canadian businesses? Unlimited consultation related to tax matters is a key benefit of FBC Membership. We’re offering a free consult where we get to know your business and determine next steps on saving you time and money. Request a consultation online.
You can also visit our COVID-19 Resource Centre for the latest information for Canadian business owners
Disclaimer: The material above is provided for educational and informational purposes only.