Tax Measures Under Canada’s COVID-19 Economic Response Plan

  • have an existing business number and payroll program account with the Canada Revenue Agency (the “CRA”) as of March 18, 2020; and
  • pay salary, wages, bonuses, or other remuneration to at least one individual employed in Canada during the applicable period.

The new regulations[13] released by the Government of Canada on May 15, 2020, in connection with this 10% wage subsidy provide that the prescribed rate at which the amount of the rebate is to be calculated represents by default 10% of remuneration paid by eligible employers to eligible employees during the applicable period, but eligible employers may elect a lower percentage. Under the new regulations, the maximum “prescribed amounts” are $1,375 per eligible employee and $25,000 per eligible employer. This is consistent with previous statements made by the Government. Assistance received under the wage subsidy reduces the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration.

The Department of Finance has further indicated that associated CCPCs would not be required to share the maximum subsidy of $25,000 per employer. Additionally, since the subsidy operates by allowing an eligible employer to reduce their payroll remittances, the Department of Finance suggested that if the amount of the subsidy exceeded an eligible employer’s payroll remittances for the applicable period, the employer would be allowed to continue to reduce remittances beyond June 20, 2020, or request the unclaimed amount be paid out to the eligible employer or credited against the eligible employer’s 2021 payroll remittances.

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