Frequently Asked Questions – Temporary Wage Subsidy for Employers 30 March 2020 CRA Webpage

1. Overview of wage-subsidy COVID-19 response

The Temporary Wage Subsidy for Employers is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the … CRA … .

2. Eligible employers

You are an eligible employer if you are a(n):

• individual (excluding trusts),
• partnership (see note below),
• non-profit organization,
• registered charity, or
• Canadian-controlled private corporation (including a cooperative corporation) eligible for the small business deduction;

• 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 eligible employee.:

… Partnerships are only eligible for the subsidy if their members consist exclusively of individuals (excluding trusts), registered charities, or Canadian-controlled private corporations (CCPCs) eligible for the small business deduction.

3. Computing the subsidy

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.

… Associated CCPCs will not be required to share the maximum subsidy of $25,000 per employer.

5. Receipt of subsidy

Once you have calculated your subsidy, you can reduce your current remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy. …

6. Commencement of reduction

You can start reducing remittances of federal, provincial, or territorial income tax in the first remittance period that includes remuneration paid between March 18, 2020, and June 20, 2020.

7. Carryforward

If the income taxes you deduct are not sufficient to offset the value of the subsidy in a specific period, you can reduce future remittances to benefit from the subsidy. This includes reducing remittances that may fall outside of the application period for the wage subsidy (after June 19, 2020). …

8. Alternative of claiming annual refund rather than current remittance set-off

If you are an eligible employer, but choose not to reduce your payroll remittances during the year, calculate the temporary wage subsidy on remuneration paid between March 18, 2020, and June 20, 2020. You can then ask for the subsidy to be paid to you at the end of the year, or transferred to the next year’s remittance.

10. S. 12(1)(x) inclusion

... If you receive the subsidy, you have to report the total amount as income in the year in which the subsidy is received.

• The subsidy equals 10% of the remuneration paid between March 18, 2020, and June 20, 2020, to a maximum of $1,375 per employee and of $25,000 per employer (with associated CCPCs not being required to share the $25,000 maximum).
• The subsidy would normally be received by way of set-off against the federal and provincial income tax source deductions otherwise remittable for the related remittance period, but the unused set-off can be carried forward for set-off in future remittance periods (e.g., after the expiration of the program effective June 20) or, if the employer so prefers, it can instead wait until year end and apply for a refund then.
• There is no effect on employee source deductions (this is an employer subsidy).
• The subsidy is included in income (presumably under ss. 12(1)(x)(ii) and (iv)(B).)