Overview

1. What is the 10% Temporary Wage Subsidy for Employers?

The 10% 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 Canada Revenue Agency (CRA).

Note: The Canada Emergency Wage Subsidy, which provides a 75% wage subsidy to eligible employers, is a separate program. For more information on that program, see Canada Emergency Wage Subsidy.

Eligibility

2. Which employers are eligible?

You are an eligible employer if you:

• are a(n):
  • individual (excluding trusts),
  • partnership*,
  • non-profit organization,
  • registered charity, or
  • Canadian-controlled private corporation (including a cooperative corporation)**;
• 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, other partnerships eligible for the subsidy, or eligible Canadian-controlled private corporations (CCPCs).

**CCPCs are only eligible for the subsidy if they would have had a business limit for their last taxation year that ended before March 18, 2020, greater than nil (determined without reference to the passive income business limit reduction). For more information on whether your CCPC would have a business limit, see Small Business Deduction in the T2 Corporation Income Tax Guide.

For more information on whether your corporation is a CCPC, see Type of Corporation.

***An eligible employee is an individual who is employed in Canada.

3. What if I pay tax-exempt remuneration?

If you pay tax-exempt salary, wages, bonuses, or other remuneration to an eligible employee, you can still calculate the 10% Temporary Wage Subsidy for Employers on remuneration paid from March 18, 2020 to June 19, 2020. At the end of the year, the CRA will pay the amount to you.

4. What if my business is closed?

If you did not pay salary, wages, bonuses, or other remuneration to an eligible employee from March 18, 2020 to June 19, 2020, you cannot receive the subsidy, even if you are an eligible employer.

Calculating your subsidy

5. How much is the subsidy?

The subsidy is equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee to a maximum of $25,000 total per employer.

You may elect for the subsidy to be equal to a lower percentage of the remuneration you pay in order to only take advantage of the Canada Emergency Wage Subsidy. For more information, see question 12.

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

6. How do I calculate the subsidy?

The subsidy must be calculated manually, either by you or whoever is responsible for making your payroll remittances. The CRA will not automatically calculate the allowable subsidy.

Note: Your subsidy calculation is based on the total number of eligible employees employed at any time during the three-month period. See the examples below for more information.

Reducing your payroll remittances

7. How will I receive the subsidy?

You do not need to apply for the subsidy.

You will continue deducting income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from salary, wages, bonuses, or other remuneration paid to your employees, as you currently do.

The subsidy is calculated when you remit these amounts to the CRA.

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

8. When can I start reducing payroll remittances?

You can start reducing payroll remittances of federal, provincial, or territorial income tax in the first remittance period that includes remuneration paid from March 18, 2020 to June 19, 2020.

Note: Payroll remittances are not subject to deferral as part of the tax measures to help support those affected by the COVID-19 outbreak. You must continue remitting payroll deductions by your remittance due date.

9. Where subsidies exceed payroll remittances

If the income taxes you deduct are not sufficient to offset the value of the subsidy in a specific period, you can reduce future payroll 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).

10. What if I don’t reduce payroll remittances during the year?

If you are an eligible employer, but you do not reduce your payroll remittances during the year, you can still calculate the 10% Temporary Wage Subsidy for Employers on remuneration paid from March 18, 2020 to June 19, 2020. At the end of the year, the CRA will pay the amount to you or transfer it to your next year’s remittance.

11. What about payroll remittances made to Revenu Québec

The 10% Temporary Wage Subsidy for Employers allows eligible employers to reduce payroll remittances made to the CRA only.

12. How does the 10% Temporary Wage Subsidy for Employers interact with the Canada Emergency Wage Subsidy?

The Canada Emergency Wage Subsidy (CEWS) provides a subsidy equal to 75% of the eligible remuneration paid by an eligible employer, up to a maximum of $847 per week for each eligible employee. For more information on the CEWS, see Canada Emergency Wage Subsidy .

You may be eligible for both the 10% Temporary Wage Subsidy for Employers and the CEWS. Employers who are eligible for both subsidies can only claim a maximum cumulative subsidy of 75% of the eligible remuneration that they pay. Therefore, if you are eligible for both subsidies, you must reduce your CEWS claim by any amount that you reduce your remittances by, under the 10% Temporary Wage Subsidy for Employers in the same period.

However, if you only want to claim the CEWS for a specific period, you may elect for the 10% Temporary Wage Subsidy for Employers to be equal to a lower percentage of the remuneration you pay, between 0% and 10%, for that period.

Note: If you elect for the 10% Temporary Wage Subsidy for Employers to be equal to a lower percentage of the remuneration you pay, you must indicate the election on your self-identification form. For more information, see question 14.

Keeping Records, Reporting , and Year-end Requirements

13. What books and records do I need to support the subsidy?

You will need to keep information to support your subsidy calculation. This includes:

• the total remuneration paid from March 18, 2020 to June 19, 2020;
• the federal, provincial, or territorial income tax that was deducted from that remuneration; and
• the number of eligible employees employed in that period.

14. Do I need to report anything to the CRA?

After the eligibility period ends on June 19, 2020, eligible employers will be required to complete a self-identification form for each payroll program account where remittances were reduced by an amount of the subsidy. The CRA will use this information to reconcile the subsidy with your payroll program account.

Eligible employers who did not reduce their remittances must also complete this form to allow the CRA to credit your payroll program account by the amount of the subsidy that you are eligible for.

If you elected for the 10% Temporary Wage Subsidy for Employers to be equal to a lower percentage of the remuneration you paid, you must indicate on your self-identification form that you reduced your remittances by a lower amount than what you were entitled to. If you fail to do so, you will be credited for the entire 10% subsidy and your CEWS claim may be reduced and recovered if necessary.

If you have a credit in your payroll program account after the subsidy is applied and your account is reconciled, the CRA will pay the amount to you or transfer it to your next year’s remittance.

The self-identification form will be posted on this page when it becomes available.

15. What if I reduce my remittances but the CRA determines that I’m not eligible for the subsidy?

If you reduced your payroll remittances, but it is later determined that you were not eligible for the subsidy, the CRA will assess you for the income tax that you deducted from your employees’ pay but did not remit. This assessment may include penalties and interest.

16. Is the subsidy considered taxable income?

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