Frequently Asked Questions – Temporary Wage Subsidy for Employers

On this page

1. What is the Temporary Wage Subsidy for Employers?

The 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).

2. Which employers are eligible?

You are an eligible employer if you:

An eligible employee is 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.

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

For more information on whether your CCPC is eligible for the small business deduction, see Small Business Deduction in the T2 Corporation Income Tax Guide.

3. 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 and to a maximum of $25,000 total per employer.

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

4. 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.

Example 1

You have 5 eligible employees earning monthly salaries of $4,100 for a total monthly payroll of $20,500. Your wage subsidy for the month will be 10% of $20,500, or $2,050.

For the three-month period, if all your payroll information remains the same in each month, you will pay $61,500 of remuneration. Therefore, 10% of the remuneration you pay in the three-month period is $6,150.

Since this amount is below the maximum allowable amount of $6,875 ($1,375 x 5 employees), your total wage subsidy for the three-month period will be $6,150.

Example 2

You have 8 eligible employees earning monthly salaries of $4,750 for a total monthly payroll of $38,000. Your wage subsidy for the month will be 10% of $38,000, or $3,800.

For the three-month period, if all your payroll information remains the same in each month, you will pay $114,000 of remuneration. Therefore, 10% of the remuneration you pay in the three-month period is $11,400.

Since this amount is above the maximum allowable amount of $11,000 ($1,375 x 8 employees), your total wage subsidy for the three-month period will be capped at $11,000.

Example 3

You have 5 eligible employees earning monthly salaries of $4,100 for a total monthly payroll of $20,500. Your wage subsidy for the month will be 10% of $20,500, or $2,050.

In the second month, you have 7 eligible employees earning monthly salaries of $4,100 for a total monthly payroll of $28,700. Your wage subsidy for the second month will be 10% of $28,700, or $2,870.

In the third month, you also have 7 eligible employees earning monthly salaries of $4,100 for a total monthly payroll of $28,700. Your wage subsidy for the third month will be 10% of $28,700, or $2,870.

For the three-month period, you will pay $77,900 of remuneration. Therefore, 10% of the remuneration you pay in the three-month period is $7,790.

Since this amount is below the maximum allowable amount of $9,625 ($1,375 x 7 employees), your total wage subsidy for the three-month period will be $7,790.

5. 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. 

Important

You cannot reduce your remittance of CPP contributions or EI premiums. You must continue remitting the CPP contributions and EI premiums that you deducted from your employees, as well as your share of CPP contributions and EI premiums, to the CRA.

For example, if you deducted $2,500 of income tax from your employees’ pay and calculated a subsidy of $2,050, you would reduce your current payroll remittance of federal, provincial, or territorial income tax by $2,050. You would remit $450 of income tax to the CRA. The remaining $2,050 that you keep would represent your subsidy.

You could continue reducing the income tax on future payroll remittances, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer, for all remuneration paid on or before June 19, 2020.

6. 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.

For example, if you are a regular remitter, you can reduce your payroll remittance that is due to the CRA on April 15, 2020.

7. 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).

For example, if you calculated a subsidy of $2,050 on remuneration paid from March 18, 2020 to June 19, 2020, but only deducted $1,050 of federal, provincial, or territorial income tax from your employees, you can reduce a future payroll remittance by $1,000, even if that remittance is in respect to remuneration paid after June 19, 2020.

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

If you are an eligible employer, but choose not to reduce your payroll remittances during the year, you can still calculate the Temporary Wage Subsidy 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.

9. 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 CRA is currently updating reporting requirements. More information on how to report this subsidy will be released in the near future.

10. 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.

11. 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.

12. What about payroll remittances made to Revenu Québec

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

13. 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 Temporary Wage Subsidy 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.

Report a problem or mistake on this page
Please select all that apply:

Thank you for your help!

You will not receive a reply. For enquiries, contact us.

Date modified: