Temporary Wage Subsidy for Employers – Expanded Definition of ‘Eligible Employer’
As you may be aware, on March 25, 2020 the Federal Government passed the legislation required to implement measures recently announced. Contained in this legislation is an expanded definition of ‘Eligible Employer’ for the purposes of the Temporary Wage Subsidy for Employers that we informed you about last week. The definition of ‘Eligible Employer’ now includes individuals and partnerships whose members include individuals, Canadian-controlled private corporations (CCPC) or charities.
To claim the subsidy, the taxpayer must have an existing business number and payroll account with the CRA as of March 18, 2020 and pay salary, wages, bonuses or other remuneration to an employee. The subsidy is equal to 10% of remuneration paid between March 18, 2020 and June 20, 2020, up to $1,375 per employee to a maximum of $25,000 per employer. A CCPC with taxable capital employed in Canada for the preceding taxation year greater than $15M (calculated on an associated group basis) will not be eligible for the subsidy. Please also note that this $25,000 wage subsidy does not have to be shared between associated corporations.
The subsidy is claimed by the employer by reducing the current remittance of federal, provincial or territorial income tax that is sent to the CRA. The subsidy cannot reduce Canada Pension Plan contributions or Employment Insurance premiums. Employers can claim the subsidy on the first remittance period that includes remuneration paid after March 18, 2020.
The subsidy will be included in the employer’s income for the tax year in which it is claimed. In addition, any employer who claims the subsidy must keep the following information:
- Total remuneration paid between March 18, 2020 and June 20, 2020;
- Federal, provincial, or territorial income tax that was deducted from that remuneration; and
- Number of employees paid in that period.
If you have any questions, please contact your Lipton advisor.
