Additional COVID-19 Wage Subsidy Update

Additional information was released late last week by the government which we’ve summarized below:

• Who is eligible? – Canadian-controlled private corporation (CCPC) who’s taxable capital from last year does not exceed $15 million, non-profit organization, or a registered charity. You must have an existing business number and payroll account with CRA as of March 18, 2020 and have paid salary, wages, bonuses, or other remuneration to employees.

  If you do not pay salary, wages, bonuses, or other remuneration to an employee between March 18, 2020, and June 20, 2020, you cannot receive the subsidy, even if you are an eligible employer.

• How can I access the subsidy? – The subsidy is accessed by reducing your income tax remittances on payroll.
• Which wages can be subsidized? – 10% of taxable remuneration paid between March 18, 2020 to June 20, 2020 are eligible, up to a maximum of $1375 per employee, or maximum of $25,000 per employer, whichever is lesser.

  Associated CCPCs will not be required to share the maximum subsidy of $25,000 per employer.

• How is it calculated? – Per number of employees paid in the eligible period, up 10% of the total payroll or the maximums stated above.

  For example:
  If you have 5 employees and a total payroll of $34,600:
  Eligible remuneration: 10% x $34,600 = $3460
  Per employee maximum: 5 employees x $1375 = $6875
  The maximum subsidy would be the lesser of the two, $3460.

  If you have 35 employees and a total payroll of $255,000:
  Eligible remuneration: 10% x $255,000 = $25,500
  Per employee maximum: 35 employees x $1375 = $48,125
  Both the 10% of payroll and per employee maximum exceeds
  the employer maximum of $25,000, therefore the maximum
  subsidy is $25,000.

• Do I also deduct less taxes for my employees? – No. Canada Pension Plan (CPP), Employment Insurance (EI) and income taxes are to still be calculated and deducted from the employee’s pay.
• What if the income tax I’ve deducted is less than the maximum subsidy? – If the income taxes you have deducted in the period is less than the maximum subsidy amount, you can reduce future remittances until the subsidy maximum is reached.

  Do not apply the subsidy towards any CPP or EI remittances.

• Do I have to apply the remittance adjustment (subsidy) at the time I process payroll? – No. The subsidy must be calculated based on the remuneration paid during the eligible period, but the subsidy can be applied to a remittance beyond June 20, 2020.
  If you are an eligible employer, but choose not to reduce your payroll remittances during the year, calculate the temporary wage subsidy on remuneration paid between March 18, 2020, and June 20, 2020, and then ask Canada Revenue Agency (CRA) for the subsidy to be paid to you at the end of the year, or transferred to the next year’s remittance.
• What other things do I need to know?
  – The subsidy is considered taxable income, and businesses who receive the subsidy have to report the total amount as income in the year in which the subsidy is received.
  – Records of remuneration paid during the eligible period and remittance adjustments applied as the subsidy may be requested by CRA. We are able to provide reports from
  our system to support documentation for your subsidy calculation.

The full details released by CRA can be found at this link.

Our plan to help
Members of our support team continue to research and reach out to CRA to ensure we have the most accurate information. Meanwhile, our development team has started working on adjustments to our system to automate the calculation of the subsidy and the reduction of remittances for payrolls that are affected based on the information released.

For any change in our system, in particular the payroll engine, it does take time to code and test for compliance and accuracy. Our hope is to complete the development within the next two weeks. Know that we understand the importance and urgency of implementing this subsidy for our customers, and are committed to assisting with all retroactive remittance adjustments once the infrastructure is in place.

Thank you for your understanding. We will continue to send you updates as we progress or as additional government information is released.

Stay well,

The Includables