We are receiving questions regarding the Wage Subsidy Program and thought we would share the most common ones.
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.
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.
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.
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.
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.
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.