December 01, 2020
While COVID-19 continues to impact the world, many businesses and people are looking for support to help them through the crisis. As the situation continues to change, it can be difficult to keep track of all the programs and decide which one is most appropriate for you. This infographic will help guide you through the various programs.
Support for businesses – Federal
- Subsidy will be equal to a maximum of 10% of remuneration paid during the eligible period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
- Allows eligible employers to reduce payroll deductions (income tax amounts only) required to be remitted to CRA. It is not a payment to employers
- Assistance received will be taxable to the recipient employer and will reduce the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration.
- On July 31, 2020, the CRA released Form PD27, 10% Temporary Wage Subsidy Self-Identification Form for Employers. The CRA will use the information from an employer’s PD27 to reconcile the subsidy on their payroll program (RP) accounts. This will ensure that employers do not receive a discrepancy notice at the end of the year.
- If eligible for both the 75% CEWS and the 10% TWS, the amount paid under the 75% CEWS amount must be reduced by an amount credited under the 10% TWS in respect of remuneration paid in the same time period.
Who should apply?
- Employers looking to increase cash flow by reducing the amount of income tax they must remit to the government for payroll.
- An eligible employer can be an eligible CCPC, an individual (other than a trust), a partnership (all of the members of which are individuals, eligible CCPCs, registered charities or other eligible partnerships), a not-for-profit, or a registered charity.
- Businesses must have had an existing business number and payroll account with the CRA on March 18, 2020. This means that it will not be possible for a new corporation to be established, or an existing corporation to apply for a payroll account after March 18, 2020 to take advantage of this subsidy.
- The eligibility of a CCPC to claim the 10% TWS is directly linked to the business limit claimed in the previous year. A CCPC must have a business limit of more than nil for the last taxation year that ended before March 18, 2020. If the CCPC does not have a taxation year that ended before March 18, 2020, this condition is to be applied as if its taxation year ended immediately before March 18, 2020.
- The eligibility of a CCPC will depend on whether the taxable capital of an associated group of which it is a member is less than $15 million, and whether the CCPC had a small business limit in the previous year. Associated CCPCs will not be required to share the maximum 10% TWS of $25,000 per employer.
- The eligible period begins on March 18, 2020 and ends on June 19, 2020.
- With the release of the regulations to support the TWS on May 15, 2020, and clarifying comments in the updated FAQs for the CEWS on May 19, 2020, one key aspect of the TWS program was changed. It is now possible for employers to elect the wage subsidy rate to be 10% or a lower percentage.