The Canadian Federal government has announced a 75% wage subsidy designed to help businesses retain (and even rehire) staff during the lockdown.

 

The video was recorded on 10 April. Here’s what’s changed since then (updated 15 May):

  • Payroll account must have been created before March 15
  • For employees that are on leave for the entire week the employer may include in the rebate the amount of employer’s contribution to CPP and EI (subject to the same $847/week limit)
  • Once you have qualified for one period, you automatically qualify for the following period (e.g., if you qualified for March then you get April, but need to re-qualify for May based on April or May revenue)
  • Penalty of 25% of the amount claimed (in addition to repaying the amount claimed) if you attempt to inflate your claim
  • Application is for any wages paid IN RELATION to the weeks in question – you don’t have to have paid them in that week.  This means you can claim for re-hired staff paid after the fact – as long as you have paid them by the time you make the application.
  • This programme has been extended through to the end of August.  Remember that you need to qualify each month, so as things improve you may lose the subsidy (you get one free month after you cease qualifying).

Here’s the outline from the video (* updated)

  • Eligibility Criteria
    • Must have had a 15% drop in revenue for March or 30% for April to August (each month)
      • Compared against same month last year
      • Or against average of Jan/Feb 2020 (but if you choose this option you must apply it for all subsequent applications)
    • Choose Accrual or Cash basis (consistently)
    • Revenue excludes non-arms length, extraordinary and capital income
    • * Payroll account must have been created before March 15
  • Benefits
    • 75% of wages paid to a max of $847/week per employee
    • Or 75% of pre-crisis wages paid to a max of $847/week per employee
    • No need to top up staff wages as long as you are paying them the full amount you receive
    • * For employees that are on leave for the entire week the employer may include in the rebate the amount of employer’s contribution to CPP and EI (subject to the same $847/week limit)
  • Application
    • CRA My Business Account
    • Apply by month
      • Period 1: March 15 to April 11 (tested against March 2020 revenue @ 15%)
      • Period 2: April 12 to May 9 (April revenue @ 30%)
      • Period 3: May 10-June 6 (May Revenue @ 30%)
      • * Period 4: June 7-July 4 (June Revenue @ 30%)
      • * Period 5: July 5-Aug 1 (July Revenue @ 30)
      • * Period 6: Aug 2-Aug 29 (August Revenue @ 30%)
      • * Once you have qualified for one period, you automatically qualify for the following period (but not necessarily the one after that – you must re-validated each cycle to see)
  • Other conditions
    • Non-arms length employees (owners & family) max is the lowest weekly amount paid between Jan 1 and June 30, and must have been on payroll prior to March 15
    • Reduced by any amount claimed in the 10% Wage Subsidy (* you must deduct what you are eligible to claim, even if you don’t/can’t claim it.  Therefore it is important to claim this on your monthly remittance, despite what I said in the video)
  • Issues
    • Sole Proprietors (non-incorporated businesses) can’t pay themselves on payroll and therefore are ineligible for this subsidy – they may have to rely on the CERB instead
    • You may qualify for one period but not for others – creates uncertainly (* if you qualify for the first period you automatically qualify for the second, but will have to re-qualify for the third)
    • Can’t claim for contractors
    • Some staff will be better off on CERB than on the 75% Wage Subsidy
    • * Penalty of 25% of the amount claimed (in addition to repaying the amount claimed) if you attempt to inflate your claim
  • Recommendations
    • Test your income every month
    • Look at your final payroll in period 4 – maybe make this payment early!
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