CRA has produced a temporary wage subsidy on income taxes withheld on payroll not CPP and EI. The subsidy can only be used by Canadian Controlled Private Corporations.   This is only for existing payroll account not new accounts set up.  CRA is applying a subsidy for wages paid to employees between March 18, 2020 and June 20, 2020.   It is very date specific as to the actual payroll date.   For example, if you paid your employees on March 15, 2020 you would not qualify.  Also, if your payroll is after June  20, 2020 then that pay would not qualify. This is only for pay periods that fall between these dates to qualify. 

CRA is providing a subsidy up to $25,000.  It is based on 10% of the gross wages in the period between March 18, 2020 and June 20, 2020.   The maximum subsidy per employee in the foregoing period is $1,375.00.   You still need to deduct the income taxes when you pay employees.   Your deduction for employees has nothing to do with the subsidy.

Example

If you have 5 employees earning  $4,100 for a total monthly payroll of  $20,500, the subsidy would be 10% of  $20,500.

The subsidy would thus be ( $20,500 x 10%)  $2,050.  Therefore, $2,050 can be reduced from source deductions for the following month.   If you are a regular remitter and your next source deduction is due April 15, 2020 this example would allow you to reduce your source deductions by $2,050.  The amount of subsidy should be reflected in income.   Keep in mind that you can’t reduce the source deductions based on payroll made to employees on March 17 or prior.   If you have an accounting package the journal entry will be debit source deductions payable and credit a new account called subsidy revenue.

If you have not used up the total subsidy up until the June  20th payroll,  you can still utilize it outside the period. Please bear in mind that this does not affect associated companies.

Canada Emergency Response Benefit

This is designed for Canadians that are not eligible for EI, and if you’ve lost 100% of your income.

For 14 days you can apply for the Canada Emergency Response Benefit (CERB) as a temporary income support. CERB will provide you with $500 per week for up to 16 weeks. If you qualify for employment insurance, you cannot apply for CERB.

In order to qualify you must be at least 15 years old and have stopped working because of COVID-19. You must have had income in 2019 of at least $5,000 or 12 months prior to the application.  You have to be without employment income or self-employment income for 14 days.  For subsequent benefits you must have no income. 

The maximum benefit is $500 per week x 16 weeks totalling $8,000.

The benefit period is available from March 15, 2020 to October 3, 2020.

You must apply on or before December 2, 2020. Starting April 6, 2020 there will be a portal to apply.

Tax deadlines

The deadline for filing your personal income return is June 1, 2020.   The deadline to pay your taxes is September  1, 2020. The deadline for payment of corporate taxes coming due after March 18, 2020 and before September  1, 2020 must be paid prior to September  1, 2020.   For example,  if you have a December 31, 2019 year your taxes are due by

March 31, 2020 if you are a CCPC and your year end is due June  30, 2020.  Therefore,  you tax payment deadline is now September  1, 2020.   This does not excuse you from filing.   If you have a non CCPC with a January 31 year end and you are a non CCPC your taxes would normally be due on March 31, 2020.  Since March 31 falls after March 18, 2020 then the taxes are due September  1, 2020 but the year end is due July 31, 2020. At this point there are no extensions for filing corporation tax returns and there is no relief for filing and payment of GST/HST returns.