COVID 19 Canada Emergency Wage Subsidy vs Temporary Wage Subsidy

CANADA EMERGENCY WAGE SUBSIDY

This would provide a 75-per-cent wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020.

Eligible Employers

Eligible employers would include individuals, taxable corporations, and partnerships consisting of eligible employers as well as non‑profit organizations and registered charities.

This subsidy would be available to eligible employers that see a drop of at least 30 percent of their revenue (including donations received for NPOs and Charities) for the eligible periods.

Amount of Subsidy

The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020, would be the greater of:

• 75 percent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
• The amount of remuneration paid, up to a maximum benefit of $847 per week or 75 percent of the employee’s pre-crisis weekly remuneration, whichever is less.

NOTE

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 percent of the employee’s pre-crisis weekly remuneration.

ELIGIBLE PERIOD       CLAIMING PERIOD                  REVENUE PERIOD

Period 1                     March 15 – April 11             Month of March 2020 vs 2019

Period 2                     April 12 – May 9                   Month of April 2020 vs 2019

Period 3                     May 10 – June 6                  Month of May 2020 vs 2019

How to Apply

• The Canada Revenue Agency’s My Business Account portal

https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html

• A web-based application. (As soon as it is available we will post the link.)
• When applying for the subsidy, employers would be required to attest to the decline in revenue

Accounting / tax treatment

The wage subsidy received by an employer would be considered government assistance and be included in the employer’s taxable income.

Assistance received under either wage subsidy would reduce the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration.

Employers are required to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees.

TEMPORARY WAGE SUBSIDY

See my blog on March 22, 2020

https://entaccountants.com/clients/blog/covid-19-how-to-claim-the-employer-10-wage-subsidy