Temporary Wage Subsidy for Employers
The Prime Minister announced a significant increase to the previously announced 10% wage subsidy for small businesses. To help small and medium-sized businesses keep employees on the payroll, the federal government is increasing the wage subsidy from 10% to 75% for qualifying businesses. The temporary wage subsidy will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency. Employers are eligible if they:
- Are a non-profit organization, registered charity, or a Canadian-controlled private corporation (Canadian-controlled private corporations are only eligible if their taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, is less than $15 million);
- Have an existing business number and payroll program account with the CRA on March 18, 2020; and
- Pay salary, wages, bonuses, or other remuneration to an employee.
These eligibility requirements are based on the previously announced 10% subsidy and may be subject to change with respect to the increased subsidy. The temporary subsidy will be available for three months and will be backdated to March 15, 2020. More information on eligibility requirements and subsidy calculation is expected soon.
Canada Emergency Business Account
The Prime Minister also announced the Canada Emergency Business Account to help businesses struggling with cash flow. In accordance with this support, banks will soon offer $40,000 loans to small businesses and not-for-profits struggling with cash flow. These loans will be guaranteed by the government to qualifying businesses and will be interest-free for the first year. To qualify, businesses must demonstrate that they paid between $50,000 to $1 million in total payroll in 2019. If the balance of the loan is repaid on or before December 31, 2022, 25% of the loan, or up to $10,000, will be forgivable. Further information on this support is expected in the coming days.