The Federal government has released further details relating to the “Canada Emergency Wage Subsidy” available to eligible employers, on eligible remuneration paid between March 15, 2020 and June 6, 2020. The details are as follows:
Individuals, taxable corporations, partnerships (consisting of eligible employers), and non-profit organizations/registered charities;
Specifically excluded are public bodies including municipalities/local governments, Crown corporations, public universities, colleges, schools and hospitals;
Will not be determined by the number of people a business employs, i.e., there is no maximum subsidy that an eligible employer may receive;
A business must be able to illustrate that revenues have dropped by at least 30% as a result of the pandemic. Eligibility will be determined by comparing year-over-year monthly revenues, i.e., comparing March 2020 gross revenue (from unrelated sources) to March 2019 gross revenue; and
Federal government warns that abuse of the federal financial aid will have serious consequences – including fines or even imprisonment.
Amount of Subsidy:
Up to 75% of an employee’s salary, on the first $58,700, up to a maximum of $847/week per employee, specifically the greater of:
75% of the amount of remuneration actually paid, up to the weekly maximum above, and
The amount of remuneration paid, up to a maximum benefit of $847/week or 75% of the employee’s pre-crisis weekly remuneration;
Employers are asked to re-hire employees whom have been previously laid off as a result of the pandemic;
Employers are asked to top-up employees payroll with the remaining 25%, i.e., to restore employees to pre-crisis earnings; and
Employers will be required to repay the subsidy where it is later determined that they did not meet the eligibility criteria.
Special Rule for Owner-Managed Businesses:
For employees who “do not deal at arm’s length” with their employer, the maximum benefit will be $847 per week or 75% of the employee’s pre-crisis weekly remuneration, i.e., the non-arm’s length employee cannot be paid an unreasonable salary in order to capitalize on the employer’s subsidy.
Applying for the Subsidy:
Eligible employers will be able to apply through the Canada Revenue Agency’s My Business Account portal; or
A web-based application will be made available.
Interaction With the 10% Wage Subsidy:
The new 75% Canada Emergency Wage Subsidy is separate and aside from the previously announced 10% wage subsidy, whereby qualifying businesses will obtain the subsidy via deductions from their monthly payroll remittances; and
Any amount received under the 10% wage subsidy for remuneration paid in a period would reduce the amount available to be claimed under the Canada Emergency Wage Subsidy.
Any amounts received under this program will be included in annual income and taxable to the recipient.
Further details regarding the calculation of “pre-crisis remuneration”, as well as the related application process, are expected to be released in the coming days. We will continue to provide timely updates as this information becomes available, and are here to guide you through this unfamiliar territory.
The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.