I just wanted to reach out to you to provide some updates on the Government of Canada’s COVID-19 Economic Response Plan. Specifically I want to share some information about the new Wage Subsidies that are available.
There are two Wage Subsidies programs available:
- The Canada Emergency Wage Subsidy which would cover 75 per cent of salaries for qualifying businesses, for up to 3 months, retroactive to March 15, 2020. This subsidy would be available to eligible employers that see a drop of at least 30 per cent of their revenue.
- Organizations that do not qualify for the Canada Emergency Wage Subsidy may qualify for the previously announced Wage Subsidy of 10 per cent of remuneration paid from March 18 to before June 20, 2020.
The benefit of the Wage Subsidy of 10 percent is realized by reducing your payroll contribution, while the benefit of The Canada Emergency Wage Subsidy is paid by cheque or direct deposit. For this subsidy employers will have to apply for each month they believe they are eligible for.
If you have been affected by COVID-19 and wish to make use of either of these benefits, it important to note that the Government of Canada has put in place some rules for non- arm’s length employees (I.e. family members). Specifically, the Government of Canada has stated in one of their FAQ’s:
“A special rule will apply to employees that do not deal at arm’s length with the employer. The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration.”
Our current interpretation of this is that your pre-crisis weekly remuneration will be calculated as the annual salary divided by 52 weeks. However, we have not been able to confirm this with CRA as of yet as no legislation for this program currently exists.
To help ensure that as many of our clients as possible are poised to qualify for these programs, we are recommending some changes to the normal payroll remittance process. We are recommending that clients that are currently making annual source deduction contributions, move to monthly payroll remittances and make contributions based on either one twelfth of their annual payroll remittance or one twelfth of the maximum benefit of $58,700/employee for the 75% wage subsidy or $55,000/employee for the 10% wage subsidy.
We recognize that this is a very fluid situation and are doing our best to keep our valued community as informed as possible. If you are looking for real time up to date info on this subject please join our CPA4IT Self Employed Support Network Facebook Group
We will be monitoring this group and posting regular updates including how to access many of the new Support programs that CRA is offering to self employed individuals.
We’re proud to be a part of and to serve this community. Please take care of yourselves and each other.