CRA has released new information on temporary wage subsidy for businesses that was proposed by the federal government last week. It’s a part of the economic response plan to counter Canadians’ financial hardship due to COVID-19.

How does the subsidy work?

  • Employers will be able to temporarily reduce the federal, provincial or territorial income tax amount they need to remit to CRA for payroll deductions.
  • CPP & EI deductions must be remitted in full and cannot be reduced
  • As per CRA, the subsidy will be equal to 10% of total remuneration paid between March 18, 2020 and June 20, 2020 up to maximum of $1,375 per employee and maximum of $25,000 per employer.
  • For example, if you have 5 employees earning monthly salaries of $4,100 for a total monthly payroll of $20,500, the subsidy would be 10% of $20,500, or $2,050.
  • A good record of all the payroll information must be kept by the employer which was used to determine the subsidy.

Who is eligible for the wage subsidy?

The subsidy is limited to small businesses which includes the following:

  • Canadian-Controlled Private Corporation (CCPC)
  • Non-profit organization
  • Registered charities

The small businesses must be paying salaries to it’s employees during the applicable period mentioned above to qualify.

CRA has released answers to frequently asked questions. Please click HERE for more details.