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Latest Updates to Wage Subsidies
Nicole Barnett • Apr 26, 2020
For Businesses: Temporary Wage Subsidy Update
Yesterday, the federal government released new information about the proposed 75% temporary wage subsidy. Full details are not available, but here's what we know so far:
- 12 week program available between March 15th and June 6th
- The federal government will subsidize 75% of employee pre-crisis weekly remuneration to a maximum benefit of $847/week
- There is no overall limit on the total subsidy claimed by any employer
- Employers must make every effort to pay the remaining 25% of the wages to maintain pre-crisis wages
Eligible business:
- Corporations, proprietorships, partnerships, non-profits and charitable organizations
- Must have a decrease in revenue of at least 30% from the same month in the prior year. Revenue is defined as being from business carried on in Canada from arm's length sources. More details to come.
This previously announced 10% wage subsidy is also still available to qualifying businesses; however, any benefit received under the 10% subsidy would reduce the benefit of the 75% subsidy.
The application process is not open yet but is expected to be through CRA's My Business Account. We recommend that you register for a My Business Account as soon as possible if you don't already have one.
Start here: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html
More details on the program are available here: https://www.canada.ca/en/department-finance/news/2020/04/the-canada-emergency-wage-subsidy.html
This program is still in the "proposed" stage and new legislation needs to be approved before the details are finalized. If everything is approved, funds are expected to start flowing within 6 weeks.
As always, we will keep you updated on any changes as we learn about them.
For Individuals: Canada Emergency Response Benefit Update
The CERB benefit pay individuals $500/week for up to 16 weeks if you:
- Are a Canadian resident at least 15 years old
- Have stopped working as a result of Covid-19 or are eligible for EI regular or sickness benefits
- Earned income of at least $5,000 in 2019 or in the 12 months prior to application date
- Expect to have no employment or self-employment income for at least 14 days in the initial 4 week period and expect no income in subsequent benefit periods.
More details here: https://www.canada.ca/en/services/benefits/ei/cerb-application.html?utm_campaign=not-applicable&utm_medium=vanity-url&utm_source=canada-ca_coronavirus-cerb
Application is available starting on April 6th through CRA My Account, using the following schedule:
- April 6th - Birth months of January, February and March
- April 7th - Birth months of April, May and June
- April 8th - Birth months of July, August and September
- April 9th - Birth months of October, November and December
- Open for anyone after those dates
How to apply: https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html
Keep in mind that you will need to re-apply for this benefit every 4 weeks.
We recommend that you register for a CRA My Account as soon as possible if you don't already have one. Once you have an account, sign up for direct deposit to ensure you get the benefit payments as quickly as possible.
Detailed Instructions for Registering for a CRA My Account
If you already have a CRA My Account set up, make sure you:
- Login and update contact info
- Sign up for direct deposit to ensure you get benefit payments as quickly as possible
To register online:
Follow the steps to register
- When you get to the CRA security code step, you have two options:
- CRA will send you a security code in the mail, which can take 1-2 weeks, or
- Call CRA at 1-800-959-8281 to get the security code by email (or over the phone)
- Select "My Account" from the phone menu
- Select "Receive security code by email"
- When the CRA agent answers, be ready to provide them with your SIN and some information from your prior year tax return/notice of assessment.
- Sign up for direct deposit once your account is set up
The application portal for the CERB $2,000/month funding is available starting today through CRA My Account. Use the following schedule to apply: April 6th - Birth months of January, February and March April 7th - Birth months of April, May and June April 8th - Birth months of July, August and September April 9th - Birth months of October, November and December Open for anyone after those dates Where to apply: https://www.canada.ca/en/services/benefits/ei/cerb-application.html Two important points: CRA has clarified that business owners who are compensated through dividends rather than wages are eligible for the CERB if their 2019 income is $5,000 or more. CERB vs EI If you have applied for EI since March 15th, your application will automatically be transferred to the CERB process, so there is no need to apply for CERB . At the end of the 4 month CERB program, you could resume receiving EI if eligible and the CERB payments will not use up any of the EI-eligible weeks. For anyone who applied to EI prior to March 15th and received benefits, you will stay in the EI program and continue receiving the EI payments. A good summary here: https://globalnews.ca/news/6770564/coronavirus-ei-beneficiaries-federal-emergency-benefit/ More answers to common questions are available here: https://www.canada.ca/en/services/benefits/ei/cerb-application/questions.html
Details are here: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html Highlights: A 10% wage subsidy is available for any wages paid between March 18th and June 20th, to a maximum of $1,375 per employee and $25,000 per employer To calculate: If you have 5 employees earning monthly salaries of $4,100 for a total monthly payroll of $20,500, the subsidy would be 10% of $20,500, or $2,050. To claim the subsidy: Reduce your payroll remittances by the amount of the calculated subsidy in the first remittance period that includes wages paid between March 18th and June 20th. So, for a regular remitter, the remittances due April 15 will be reduced by the amount of the subsidy. The subsidy does not need to be used to reduce remittances immediately. You can pay full remittances now and then request the calculated subsidy be paid out to you at the end of the year or applied to next year's remittances. To report the subsidy: CRA has not yet released info on how to report the subsidy calculation or amount. This is expected in the near future. The subsidy will be considered taxable income to your business in the year it is received. The team at Insight LLP is committed to helping our business clients access and understand the latest information on the ever-changing Covid-19 situation. Please contact us directly with any questions specific to your business needs at 403-524-4878 or via email.The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.
Private sector employers will have immediate financial relief by deferring WCB premiums until early 2021, effectively for one year. Employers who have already paid their WCB premium payment for 2020 are eligible for a rebate or credit. For small and medium businesses, the government will cover 50 per cent of the premium when it is due. Large employers will also receive a break by having their 2020 WCB premium payments deferred until 2021, at which time their premiums will be due. Info from: https://www.alberta.ca/release.cfm?xID=699045A66118C-FA03-F4F5-959455E3316B8564
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