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Bill C-13 Passed Today - Government Subsidy & Benefit Updates

Dear Valued Clients,

Our Federal Government passed legislation today with speedy approvals and we are sharing the updates with you.

Temporary Wage Subsidy For Small Businesses

Small businesses, including non-profits and charities who are considering laying off workers due to lost sales/revenue, are now eligible for a Temporary Wage Subsidy. The definition of “Eligible Employer” for the Temporary Wage Subsidy changed today, and an eligible employer now includes individuals and partnerships whose members include individuals, Canadian-Controlled Private Corporations (CCPC) or charities, not just big corporations.

Here is information for you to know how to access this subsidy:

  1. The taxpayer must have an existing business number and payroll program account with the CRA as of March 18, 2020, and pay salary, wages, bonuses and/or other remuneration to an employee.
  2. The subsidy will be equal to 10% of remuneration paid between March 18, 2020 and June 20, 2020, up to $1,375 per employee to a maximum of $25,000 per employer.
  3. CCPC with taxable capital employed in Canada for the preceding tax year greater than $15M will not be eligible for the subsidy. This is calculated on an associated group basis.
  4. The amount of the subsidy must be manually calculated by the employer and claimed by reducing the current remittance of federal, provincial, or territorial income tax that is sent to the CRA.
  5. This subsidy cannot be used to reduce Canada Pension Plan (CPP) contributions or Employment Insurance (EI) premiums.
  6. For most employers, this subsidy can be claimed on the first remittance period that includes remuneration paid after March 18, 2020. For most, that will be for the remittance due on April 15, 2020.

The subsidy is considered government assistance and will be included in the employer’s income for the tax year in which it is received. The subsidy will not affect your employees, as their T4 slip will report the gross amounts of federal, provincial or territorial taxes.

The following information to support subsidy calculations must be retained by the employer:

  1. Total remuneration paid between March 18, 2020 and June 20, 2020; and
  2. The federal, provincial, or territorial income tax that was deducted from that remuneration; and
  3. The number of employees paid in that period.

For more information, please visit:

https://www.canada.ca/en/revenue-agency/campaigns/...ed- questions-wage-subsidy-small-businesses.html

Canada Emergency Response Benefit (CERB)

The Emergency Care Benefit and the Emergency Support Benefit have been merged into one package and renamed as the Canada Emergency Response Benefit (CERB). This aid program is designed for workers who cannot work because of circumstances surrounding COVID-19. This program is also designed to help employers retain their employees who are affected by insufficient work and reduced hours due to this pandemic.

This is a taxable benefit of $2,000 per month for up to 4 months for individuals who meet the following criteria:

  1. Workers who need to stop working due to COVID-19 and do not have access to paid leave or other income support.
  2. Workers who are sick, quarantined or those who need to look after someone else who is sick with COVID-19.
  3. Working parents who must stay home without pay to care for children that are sick or with children who are at home as a result of daycare and/or school closures.
  4. Workers who are still employed but are unpaid because of insufficient work situations.
  5. Wage earners, self-employed individuals or contract workers who would not otherwise be eligible for Employment Insurance (EI).

An application portal will be launched to access the CERB in early April 2020. At that time, an automated telephone line will also be made available to receive applications.

Individuals will begin receiving their CERB payments within 10 days of application. They will be paid every 4 weeks from March 15, 2020 until October 3, 2020. After the expiry of the CERB, eligible individuals can apply for EI Benefits should they remain unemployed. If individuals would not have to apply for EI again if they have already applied for the benefit which was not yet processed.

Please note that employees who are currently receiving regular EI or Sickness Benefits will continue to receive those same benefits. They cannot apply for the Canada Emergency Response Benefit at this time. Should their EI or sickness benefits cease before October 3, 2020, they can then apply for the CERB if they are unable to return to work due to COVID-19.

For more details, please visit:

https://www.canada.ca/en/department-finance/economic-response-plan/covid19- individuals.html#unable_work_new_canada_emergency_response_benefit

This newsletter and the details provided are solely shared for informational purposes and does not constitute legal advice or opinion. Please do not hesitate to reach out to your manager with any questions.


Pramen Prasad CPA, CA, CMA Managing Partner
Prasad & Company LLP

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