Loopstra Nixon COVID-19 relief Task Force Bulletin: March 27 & 30 Update Federal Government Temporary Wage Subsidy

Current as at March 30, 2020 1:00 p.m.

Today, the Canadian federal government announced amendments to the previously announced temporary wage subsidy program (the program) for businesses  of all sizes. This bulletin summarizes the changes to the program:

Previous Program (Announced on March 18, 2020):

  •  Eligible employers include:
    • (a) non-profit organizations, registered charities, and Canadian-controlled private corporations (CCPCS);
    • (b) have an existing business number and payroll program account as of march 18, 2020; and
    • (c) pay salary, wages, bonuses, or other renumeration to an employee.
Note: CCPCS are not eligible if their taxable capital employed in Canada exceeded $15 million in the preceding taxation years
  •  The previous program allowed employers to recover 10% of employees salary up to a maximum of $25,000 per employer and a maximum of $1,375 per employee during the 3-month period covered under the program.

Updates to the program (announced on march 27, 2020, and further updated on march 30, 2020):

  • The updated program is expected to be backdated to march 15, 2020 (from the previous march 18, 2020).
  •  During the period of march 15, 2020 to June 20, 2020, the subsidy is increased to 75% (from the previous 10%) of the renumeration paid to employees, whether or not the employees are working, by:
    • Increasing the subsidy to a maximum of $847 per week per employee (representing the first $58,700 of salary per employee), equivalent to $11,858 over a covered period of 14 weeks (which is an increase from the previous $1,375 per employee during the program period); and
    • Lifting the maximum total benefit per employer (compared to a cap of $25,000 per employer in the previous program).
  •  In order to qualify:
  • Employers must pay the remaining 25% portion of the wages (or face consequences in the future);
  • Employers must demonstrate that there is a decline of revenue of at least 30% due to the impacts of covid-19; and
  • Employers are encouraged to hire back employees who have been terminated as a result of covid-19.

How eligible employers will receive the subsidy under the program:

  • To claim the subsidy:
    • Employers must calculate their subsidy, then reduce their current remittance of federal, provincial, or territorial income that the employer would otherwise pay to the CRA by the amount of the subsidy; and
    • If the incomes taxes deducted are not sufficient to offset the value of the subsidy in a specific period, an employer can reduce future remittances after June 20, 2020 to benefit from the subsidy.
  • If an employer is eligible for the subsidy, but chooses to not reduce payroll remittances during the year and calculate the subsidy on renumeration paid between march 15, 2020 and June 20, 2020, then an eligible employer may request the full subsidy to be paid at the end of year or to be transferred to the next years remittance.

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