COVID-19 Wage Subsidy
On March 18, 2020, the Government of Canada announced that eligible small businesses (including corporations who are eligible for the small business tax deduction, non-profit organizations, and charities) will receive a 10% wage subsidy for the next 90 days, up to a maximum of $1,375 per employee and $25,000 per employer. Businesses can immediately benefit from this support by reducing their remittances of income tax withheld on their employees’ remuneration.
You are an eligible employer if you:
- are a non-profit organization, registered charity, or a Canadian-controlled private corporation (CCPC);
- have an existing business number and payroll program account with the CRA on March 18, 2020; and
- pay salary, wages, bonuses, or other remuneration to an employee.
Note: CCPCs are only eligible for the subsidy if their taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, is less than $15 million.
The Temporary Wage Subsidy for Employers is limited to the eligible employers listed above.
Tax Payment Deferral
All businesses will be permitted to defer, until after August 31, 2020, the payment of any income tax amounts that become owing in between March 18 and September 1, 2020. This relief applies to tax balances due, as well as installments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
The CRA will not contact any small or medium sized businesses to initiate any post-assessment GST/HST or Income Tax audits for four weeks after March 18. For the vast majority of businesses, the CRA will temporarily suspend audit interaction with taxpayers and representatives.
For more information, click here.
Work-Sharing Program Enhancements
The work-sharing program is an adjustment program administered through Service Canada, designed to help employers avoid layoffs during times of temporary economic difficulty. It allows employers to schedule reduced work weeks for their employees who can then access EI for an income supplement.
Due to COVID-19, the length of time that employers are permitted to use the work-sharing program has been increased to 76 weeks, from the usual limit of 38 weeks. The mandatory waiting period has also been waived.
For more information on work sharing arrangements, click here.
Supplementary Unemployment Benefit Plans (SUB Plans)
An employer may establish a SUB Plan, subject to certain requirements, to top up employees’ EI benefits during a period of unemployment during a temporary layoff caused by e.g. sickness due to COVID-19.
A SUB Plan needs to be registered with Service Canada and must meet certain requirements in order not to be treated as income that would reduce the worker’s EI benefits. Among other things, the SUB Plan must:
- Identify the group of employees covered and duration of the plan;
- Cover a period of unemployment caused by temporary work stoppage, training, or illness/injury/quarantine;
- Require employees to apply for and receive EI benefits in order to receive payments under the plan;
- Require that the combined weekly payments from the SUB Plan and the portion of the EI weekly benefit rate not exceed 95% of the employee’s normal weekly earnings; and,
- Be entirely financed by the employer.
If a SUB Plan meets all the requirements for registration with Service Canada, it will be registered as of the date on which it was submitted to Service Canada.
As of March 19, 2020, there have not been any changes to the SUB Plan regulations due to COVID-19. The full list of SUB Plan requirements and more information on the SUB Plan can be found here.
The Canada Emergency Wage Subsidy will apply to companies to both big and small. The wage subsidy program is designed to help businesses who employ ten people or a thousand people.
- For workers: if you work for a company that has been impacted by COVID-19 the government will cover up to 75% of your salary on the first $58,700 that they earn which mean $847/ week. This program will be retro active to March 15th.
- Ministry of Finance and Minister of Small Business, Export Promotion and International Trade will be releasing details soon.
- The number of employees a company has is not part of the eligibility requirement to receive a wage subsidy.