Temporary Wage Subsidy:
Further to the Federal Government’s announcement yesterday regarding initiatives to support Canadians and Businesses during the COVID-19 situation we are providing additional information on the Temporary Wage Subsidy. This recently announced subsidy will be legislated in the near future. Once legislated, the Federal Government will provide direction on how employers can access the subsidy.
The Government announced the Temporary Wage Subsidy for small businesses to support revenue losses and to help prevent lay-offs. The definition of small business includes corporations eligible for the small business deduction i.e. Canadian-controlled private corporations (CCPCs). The subsidy is also available for non-profit organizations and charities.
The subsidy will be equal to 10% of the remuneration paid during the period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. The subsidy is aimed to reduce the employer remittances of income tax withheld on their employees’ remuneration. We don’t anticipate that the subsidy will create a significant positive cash flow to the employers.
The subsidy will be implemented immediately, subject to the supporting legislation. At the time of writing, the Government has not tabled the supporting legislation in parliament.
Financial Relief from Canada’s Largest Banks:
Canada’s six largest banks are showing their commitment to work with personal and small business customers to help them manage through challenges they are facing due to COVID-19. These challenges include things such as pay disruption due to COVID-19, childcare disruption due to school closures, or those facing illness from COVID-19. Effective immediately, Bank of Montreal, CIBC, National Bank of Canada, RBC Royal Bank, Scotiabank and TD Bank have announced support that will include, on a case-by-case basis, up to a six-month payment deferral for mortgages, and the opportunity for relief on other credit products.
Individual Canadians or business owners facing hardship are encouraged to contact their bank directly to discuss options that could be available to them.
If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.
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