On March 25, 2020, with the passage of Bill-C-13, the federal government introduced its new Temporary Wage Subsidy (TWS) for eligible employers from March 18, 2020 to June 19, 2020. The subsidy equals 10 per cent of remuneration paid during that period, and it is capped at $1,375 per employee and $25,000 per employer. \nDuring this three-month period, eligible employers can access the subsidy by reducing the payroll deductions they remit to the Canada Revenue Agency (CRA), among other ways.\nFinance Canada released a Notice of Ways and Means Motion on March 25, 2020, providing welcome clarity on how the subsidy will work. In particular, Finance Canada made it clear that individuals and partnerships can qualify. On April 1, 2020 the federal government confirmed that the TWS is still available for eligible employers who don’t qualify for the newly introduced 75 per cent Canada Emergency Wage Subsidy (CEWS). For eligible employers who qualify for both subsidies, any benefit from the TWS would generally reduce the amount available to be claimed under the CEWS. Given that it will take time for the CEWS to be implemented, employers eligible for the TWS will presumably want to continue making TWS claims to improve cash flow. \nWho’s eligible for the subsidy?\nThe temporary wage subsidy is available to eligible employers who have one or more eligible employees and had a Business Number and a Payroll Program account on March 18, 2020.\n“Eligible employers” are limited to: \n\n Canadian Controlled Private Corporations (CCPCs) that meet conditions described below\n individuals\n partnerships if all members are qualifying CCPCs, individuals, other qualifying partnerships or charities\n non-profit organizations \n registered charities\n\nTo qualify, CCPCs must have had a business limit for small business deduction purposes in their prior taxation year. If not, a CCPC is still eligible if its lack of business limit resulted only from the adjusted aggregate investment income reduction. \nFor new corporations, this test uses the assumption that the tax year ended immediately before March 18, 2020.\nIf the CCPC is part of an associated group, it qualifies for the subsidy as long as it was allocated a portion of the business limit in the prior taxation year. The group does not have to share the $25,000 limit. \nHowever, if a member of the associated group was not allocated a portion of the business limit, it does not seem to be eligible for the subsidy, even if the corporation has active income. CPA Canada has brought this issue to the government’s attention. \nFinally, the subsidy is only available to a CCPC if its taxable capital employed in Canada for the preceding tax year, calculated on an individual or associated group basis, is less than $15 million. \nHow can eligible employers access the subsidy?\nEligible employers that pay remuneration to employees during the eligible period are permitted to reduce remittances of federal, provincial or territorial income tax by the amount of the subsidy.\nIf they do not, they can ask for a subsidy payment at the end of the year or transfer the unused subsidy amount to their next year’s remittance. \nThe CRA says eligible employers need to keep documentation to support their subsidy calculation, including: \n\n the total remuneration paid between March 18, 2020, and June 20, 2020\n the amount of federal, provincial or territorial income tax deducted from that remuneration\n the number of employees paid in that period\n\nVisit the CRA for more details. \nWe will continue to monitor the subsidy’s roll-out and keep you posted as developments arise.\nNOTE: The commentary function of this page has been temporarily closed. Unfortunately, because of the volume of feedback regarding recently announced COVID-19 tax measures, we do not have the capacity to respond to individual inquiries. We strongly encourage you to visit our Federal Government COVID-19 Tax Updates page for information.