On March 24, 2020, the Canadian Government introduced Bill C-13 An Act Respecting Certain Measures in Response of COVID-19. Bill C-13 received Royal Assent on March 25, 2020.
Bill C-13 includes the previously announced Temporary Wage Subsidy for Employers, and along with the previously released frequently asked questions provided by the CRA, there is additional clarity on which entities can benefit from these measures.
The Temporary Wage Subsidy for Employers is a 3 month measure that allows eligible employers to reduce the amount of payroll deductions that are to be remitted to the CRA. The subsidy does not reduce the amount withheld from employees, but it does reduce the amount that needs to be remitted to the CRA by the employer. The amount of the subsidy will be taxable income to the employer.
The subsidy is equal to 10% of the remuneration paid to employees employed in Canada between March 18, 2020 and June 20,2020 to maximum of $1,375 per employee and $25,000 per eligible employer.
An eligible employer means a:
- Canadian controlled private corporations that had a business limit for the purpose of calculating the small business deduction in it preceding taxation year.
- An individual,
- A registered charity,
- A partnership, all of the members of which would meet one of the conditions 1 to 4, or
- A non-profit organization
To be an eligible employer, it is necessary to have an existing business number and payroll program account with the CRA on March 18, 2020 and employ one or more individuals who are employed in Canada.
For Canadian controlled private corporations, the taxable capital of the corporation and all associated corporations for the most recent taxation year must be less than $15,000,000. However, for the purpose of this subsidy, the reduction to the business limit for passive income in excess of $50,000 is not considered. In addition, each corporation in an associated group is eligible for the full $25,000 subsidy provided they had a business limit in its most recent taxation year and had an existing business number and payroll program account with the CRA on March 18, 2020.
Eligible employers can start reducing payroll remittances to the CRA in the first period that includes remuneration paid between March 18, 2020 and June 19,2020.
Please contact your KMSS advisor if you need help determining whether your business qualifies or for assistance with calculating and reducing remittances.