As we all adjust to the new “normal” stemming from the COVID-19 crisis, we understand that many of our clients are faced with tough decisions regarding budgets and staffing.
COVID-19 wage subsidy program
In light of the current circumstances, we want to make sure you are all aware of the Canadian Government’s COVID-19 wage subsidy program. In the program, employers can claim 10% of an employee’s taxable income, to a maximum of $1,375/employee and $25,000/company, for wages paid between March 18 and June 20, 2020.
The goal of the program is to help small businesses retain their staff members who might otherwise need to be laid off during the economic slowdown, making it easier to return to normal operations once the crisis passes. For more information about the program, visit the FAQ page on the CRA website.
A PayDirt solution
Should you choose to use the wage subsidy program, Stief Group has developed a way for PayDirt to calculate the wage subsidy that can help your team incorporate the program.
This solution involves two actions:
- Calculating the subsidy as deductions to source deduction remittances, with the offset being your normal wage expense account
- Creating a favourite report in the PayDirt Reports section so you can track the YTD amount of the subsidy for your company, and by employee
This setup should take a maximum of 1 to 2 hours for most payroll systems. We can connect with those who want to enable this functionality remotely, preferably as soon as possible. The sooner this feature is installed, the sooner you are conserving cashflow.
The decision of whether you will in enroll in the wage subsidy program is between you, your accounting team, and/or your tax advisor.
Read on to learn more about options for your specific circumstances or region.
How to make a claim
You are able to make the wage subsidy claim on your next source deduction filing, but it can also be done manually after the fact based on total taxable earnings during the subsidy period. All subsidy claims will be considered as income to the organization in the fiscal year being reported and claimed.
This 10% wage subsidy is part of the 75% wage rebate, but your eligibility is not affected by the eligibility of the 75% wage rebate. If you have any specific questions relating to your eligibility, please consider contacting your accountant or tax advisor. And please be aware that the subsidy programs continue to be changing with news releases but at this time, this subsidy program is in effect and we suggest that you consider opting in as a benefit to preserve cash flow.
Below are a few specific scenarios that may affect specific Stief Group clients:
For our Ontario clients:
Ontario Employer Health Tax exemption
On March 25, 2020, the Ontario government announced relief measures to help support Ontario businesses when they need it most. These include increasing the Employer Health Tax exemption for 2020 from $490,000 to $1 million and a five‑month relief period for Ontario businesses who are unable to file or remit their provincial taxes on time due to the special circumstances caused by COVID‑19 in Ontario. Click here to learn more.
Ontario Workplace Safety and Insurance Board payment deferral
In addition to the EHT exemption noted above, the Workplace Safety and Insurance Board (WSIB) has made $1.9 billion available to allow employers to defer payments for up to six months. Click here to learn more.
For our British Columbia clients:
BC Employer Health Tax deadline deferral
Effective immediately, British Columbia is extending filing and payment deadlines for the BC Health Tax until September 30, 2020: Employer health tax. Click here to learn more.
For our Manitoba clients:
Manitoba Payroll Levy (Health and Post-Secondary Education Tax)
The province will extend the April and May filing deadlines for small and medium-sized businesses with monthly remittances of no more than $10,000. Businesses will have up to two additional months to remit retail sales taxes and the Health and Post Secondary Education Tax Levy, commonly called the payroll tax. Click here to learn more.
Please contact us to set up wage subsidy processing and reporting in PayDirt, or with any other questions or concerns that you have.