COVID-19 Tip #3: Temporary 10% Wage Subsidy
Note: The following information is based on the guidance provided by the federal government. For further details see the government’s Frequently Asked Questions.
How much is the Canada Temporary Wage Subsidy (CTWS)?
10% of the wages normally earned by an employee.
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 and to a maximum of $25,000 total per employer.
Who is eligible?
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 individual who is employed in Canada.
Note: 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.
How does the subsidy work?
The subsidy is applied to reduce the payroll remittances that you would normally make. You must calculate all of your usual payroll remittances (income tax, CPP, EI). You then calculate the subsidy that you are entitled to and reduce your CRA payroll remittance by the amount of the subsidy you are entitled to (note that this only allows you to reduce remittances to CRA – it does not apply to Quebec remittances).
If your subsidy is more than the income taxes you deduct in a specific period, you can reduce future payroll remittances to benefit from the subsidy. This includes reducing remittances that after June 19, 2020.
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.
How do I apply?
You do not need to apply for the subsidy.
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.