COVID-19: Details on the Wage Subsidy ($25,000) Offered by The Federal Government to Support Small Businesses

If your business qualifies for the Small Business Deduction (i.e. Taxable Capital calculated on an associated group basis of less than 15MM) as a Canadian Controlled Private Corporation (CCPC), you can now take advantage of a significant wage subsidy offering up to $1,375 per employee. 

The Fairtax team is monitoring updates issued by federal and provincial governments as they begin to roll out business support programming in this time of economic strain. One of the ways the federal government is supporting Canadian businesses is by introducing a three-month measure that will allow employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).

Key Details

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.

How to Calculate

  • The subsidy must be calculated manually.
  • The subsidy is equal to 10% of the remuneration you pay between March 18, 2020, and June 20, 2020, up to $1,375 per employee and to a maximum of $25,000 total per employer.
  • For example, if you have 5 employees, the maximum subsidy you can receive is $6,875 ($1,375 x 5 employees), even though the per employer maximum is $25,000.

How to Access

  • At the conclusion of each month, manually calculate your subsidy. You then reduce your remittance of federal, provincial, or territorial income tax for this period by the amount of the subsidy.
  • Important: You cannot reduce your remittance of Canada Pension Plan contributions or Employment Insurance premiums.
  • For example, if you calculated a subsidy of $2,050, you would reduce your current remittance of federal, provincial, or territorial income tax by $2,050. You could continue reducing future income tax remittances, up to the maximum of $25,000, for all remuneration paid before June 20, 2020.

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