10% Temporary Wage Subsidy for Employers (TWS)

What is it?

  • The Temporary Wage Subsidy for Employers is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA)
  • The subsidy is equal to 10% of the remuneration an employer pays from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer

Who is eligible?

  • Individuals (excluding trusts), certain partnerships, non-profit organizations, registered charities, or Canadian-controlled private corporations) who pay salary, wages, or taxable benefits to employees.
  • Employers are only eligible if they had a payroll program account with the CRA on March 18, 2020.

How to apply?

  • You do not need to apply for the subsidy, Eligible employers can reduce payroll remittances of federal, provincial, or territorial income tax by the amount of the subsidy. This measure is only applicable to remittances made to the CRA.
  • Although the TWS is based on remuneration paid to employees between March 18 and June 19, there is no deadline for claiming the TWS (through reduced income tax remittances.) In other words, if the amount of the TWS exceeds the income tax that the employer would normally have to remit up to June 19, 2020, the employer can continue to reduce subsequent income tax remittances to claim remaining TWS after this date.
  • Employers must continue to deduct all source deductions, including income taxes, CPP contributions and EI premiums from employees’ pay. The employer can only reduce remittances of federal, provincial income taxes and cannot reduce any remittances of CPP/QPP contributions or EI premiums.
  • The employer should keep all information necessary to support its manual calculation of the TWS, including records of all remuneration for the relevant period, as well as tax deductions and the number of employees.
  • Employers who choose not to reduce current payroll remittances can transfer the TWS to a future 2020 remittance or can request to have it paid at the end of 2020.

Reference: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html