Updated: COVID-19 Business Support

Updated: COVID-19 Business Support

Wage Subsidy: A Dual System

Being a provider of accounting and tax prep services these days provides no shortage of announcements, changes and of course, questions. Here are some answers as of “press time”, but a disclaimer, “in this fluid situation we’re living in, things will likely change, and may have already changed”.

And last week proved this disclaimer valid when the government gave new details the day after press time.

Before describing the mechanics of the wage subsidy programs, a word to the unincorporated proprietor, these programs are not designed to support you. Instead there is the Canada Emergency Response Benefit (CERB), and to the government’s credit, CERB’s rollout has been relatively smooth other than jammed on-line portals.

Now to the latest detail regarding the wage subsidy programs, and to be clear, this is not about employees making direct application for financial support. This is about big and small Canadian corporations, and registered charities and not-for-profits, being supported to aid in retaining their employees.

The wage subsidy programs are operating as a dual system, and given the diverse magnitude of businesses, the dual system is not a bad idea. Unfortunately the introduction of the “two prongs” was made in an apparent afterthought manner. That is to say, first it was a 10% subsidy. Then it was a 75% subsidy. And as it goes now, it’s actually both subsidy rates working in parallel. As an FYI, any subsidy received will be taxable income to the business.

Claiming the 75% Canada Emergency Wage Subsidy, to qualify there must be proof that revenue has dropped by at least 30% for the month as compared to the same month in 2019, and for newly opened businesses, January or February 2020 are used for comparison.

If revenue has dropped at least 30%, only 15% drop for March, the Canada Emergency Subsidy can be claimed. It’s based on 75% of each employee’s weekly gross pay, and that gross pay is based on the lesser of their pre-crisis remuneration or current remuneration, up to a maximum of $847/wk per employee. An exception to this is for non-arms length employees on payroll such as the owner of the corporation who must use their pre-crisis remuneration to a max of $847/wk.

Adding the subsidy for each employee arrives at the total eligible subsidy amount the business claims for that month. The claim is made on-line, but payments won’t begin to flow until mid May. The program period for eligible employee remuneration runs March 15 to June 6.

If the 30% reduction in revenue cannot be proven, it may be possible to claim the 10% Temporary Wage Subsidy Program.

The Temporary Wage Subsidy is based on 10% of each employee’s monthly gross pay, although it’s still unclear how non-arms length employees are included, if at all.

The subsidy is subject to a maximum of $1375 per employee for the program period, to a total maximum of $25,000 for the business.

Adding the subsidy for each employee arrives at the total eligible subsidy for that month. The subsidy is claimed when paying source deductions for the month by subtracting the eligible subsidy from the “tax withheld” amount. CPP and EI remittance amounts remain untouched.

Apparently , if the subsidy happens to exceed the “tax withheld” amount, that balance can be carried forward and claimed against future Source Deduction Remittances, including months after the end of the program.

The program period for eligible employee remuneration runs March 18 to June 20. Yes, these are slightly different dates than those dates for the 75% wage subsidy. Why? … who knows.

It appears this program is operational so a claim can likely be made for March, remembering that only part of March’s payroll is eligible.

Regarding source deduction remittance payment, although the government has deferred business payments for tax and GST, the payment of source deduction remittances is not deferred.

Additional to the two wage subsidy programs, the government has created the Canada Emergency Business Account for businesses with payrolls of $50,000 to $1 million. These businesses can access up to a $40,000 loan interest free for one year, repayable by December 2022, and if repaid on time, 25% of the loan will be forgiven by the government. Application and administration is through the financial institutions.

Finally, on the personal front, delaying the filing of your tax return may not be wise since the government has stated to “file by June 1 to make sure your benefits and credits are not interrupted.”

Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.trailtimes.ca.

CoronavirusOpiniontaxes

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Zaudanawng “Jay-Dan” Maran in his Creston home. Hanging on the wall behind him is a logo of Kachin’s Manaw festival. Photo: Aaron Hemens
From Myanmar to Creston: The story of a refugee

In October 2007, Zaudanawng “Jay-Dan” Maran and his friends encountered a woman being sexually assaulted by two Myanmar soldiers.

The trial of Harry Richardson began Monday at the Nelson courthouse. File photo
Trial of man accused of shooting RCMP officer near Argenta in 2019 begins

Harry Richardson is facing five charges in a Nelson courtroom

Gerald Cordeiro of Kalesnikoff Lumber Ltd. says the company is looking for a non-profit organization to take over and run its proposed agroforestry project. Photo: Bill Metcalfe
Logging company proposes agroforestry project for Nelson area

Kalesnikoff Lumber is floating the idea of growing trees in conjunction with food crops

Photo: Trail Times
First responders called to accident scene near Genelle

Vehicle occupants were in the care of BC Ambulance attendants

People skate on a lake in a city park in Montreal, Sunday, January 10, 2021. THE CANADIAN PRESS/Graham Hughes
The end of hugs: How COVID-19 has changed daily life a year after Canada’s 1st case

Today marks the one year anniversary of COVID-19 landing in Canada

Crews with Discovery Channel film as an Aggressive Towing driver moves a Grumman S2F Tracker aircraft around a 90-degree turn from its compound and onto the road on Saturday, Jan. 23, 2021. It was the “most difficult” part of the move for the airplane, one organizer said. (Jenna Hauck/ Chilliwack Progress)
VIDEO: Vintage military plane gets towed from Chilliwack to Greater Victoria

Grumman CP-121 Tracker’s eventual home the British Columbia Aviation Museum on Vancouver Island

Provincial health officer Dr. Bonnie Henry talk about the next steps in B.C.’s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. Two more cases of the COVID-19 strain first identified in South Africa have been diagnosed in British Columbia, bringing the total to three as of Jan. 16.THE CANADIAN PRESS/Chad Hipolito
B.C. now has three cases of South African COVID-19 variant, six of U.K. strain

Both variants are thought to spread faster than earlier strains

Rodney and Ekaterina Baker in an undated photo from social media. The couple has been ticketed and charged under the Yukon’s <em>Civil Emergency Measures Act</em> for breaking isolation requirements in order to sneak into a vaccine clinic and receive Moderna vaccine doses in Beaver Creek. (Facebook/Submitted)
Great Canadian Gaming CEO resigns after being accused of sneaking into Yukon for vaccine

Rod Baker and Ekaterina Baker were charged with two CEMA violations each

Police discovered a makeshift nightclub in a Vancouver apartment on Jan. 23, 2021, and say it wasn’t the first time this month officers have been called to the unit over social gathering concerns. (Phil McLachlan - Capital News)
Doorman of makeshift ‘booze-can’ in Vancouver apartment fined; police look to court order

This marks the fourth complaint about social gatherings inside the apartment in January

A Kelowna couple welcomed their Nooner baby in December. (Flytographer)
Kelowna couple welcomes baby girl from Hotel Zed Nooner campaign

Nicole and Alex will now have 18 years of free stays at the hotel

Kyrell Sopotyk was drafted by the Kamloops Blazers in 2016 and played two seasons with the Western Hockey League club. (Photograph By ALLEN DOUGLAS/KTW)
Kamloops Blazer paralyzed in snowboarding accident sparks fundraiser for family

As of Jan. 24, more than $68,000 had been raised to help Kamloops Blazers’ forward Kyrell Sopotyk

(Pixhere photo)
B.C. dentists argue for COVID-19 vaccine priority after ‘disappointing’ exclusion from plan

Vaccines are essential for dentists as patients cannot wear masks during treatment, argues BCDA

Red Mountain
Kootenay town seeks clarification on ‘Locals only’ messaging

Rossland mayor encourages people to restrict travel and enjoy what your home has to offer

The fine for changing lanes or merging over a solid line costs drivers $109 and two penalty points in B.C. (Screenshot via Google Street View)
B.C. drivers caught crossing, merging over solid white lines face hefty fine

Ticket for $109, two penalty points issued under Motor Vehicle Act for crossing solid lines

Most Read