Wage subsidy rules and expanded eligibility
Regulations Amending the Income Tax Regulations (COVID-19 — Deemed Remittance): SOR/2020-106
These final regulations prescribe the Temporary 10 per cent Wage Subsidy (TWS) amounts — 10% of remuneration (or a lower elected percentage), capped at $1,375 per eligible employee and $25,000 per employer for the TWS period of March 18 to June 19, 2020. They also expand eligibility for the Canada Emergency Wage Subsidy (CEWS) to include registered journalism organizations, registered amateur athletic associations, private schools and colleges, certain tax-exempt corporations owned by Indigenous governments, and some partnership structures; the CEWS qualifying period in the Act begins March 15, 2020 for 12 weeks and is administered by the Canada Revenue Agency.
- Published
- May 27, 2020
- Department
- Unavailable
- Section
- Regulations Amending the Income Tax Regulations (COVID-19 — Deemed Remittance)
- Comment deadline
- Unavailable
- Effective date
- Unavailable
- Publication part
- Part II
Summary
Summary#
These are final regulations called Regulations Amending the Income Tax Regulations (COVID-19 — Deemed Remittance), registered May 14, 2020 and published May 27, 2020. They set specific dollar limits and a percentage for the short-term temporary 10 per cent wage subsidy (TWS) and expand which employers can claim the Canada Emergency Wage Subsidy (CEWS).
What it does#
- Prescribes the TWS amounts so employers can immediately keep some payroll deductions:
- 10% of remuneration (or a lower percentage if the employer chooses);
- capped at $1,375 per eligible employee; and
- capped at $25,000 total per employer.
- Confirms these TWS rules apply for the TWS eligible period (the legislation sets the period as March 18, 2020 to June 19, 2020).
- Expands which employers can claim the CEWS (the CEWS itself is a separate refundable wage credit in the Income Tax Act that covers up to 75% of wages for eligible periods):
- newly includes registered journalism organizations;
- includes registered amateur athletic associations;
- includes private schools and colleges, including specialized schools (for example, driving, language or flight schools);
- includes certain tax-exempt corporations owned by Indigenous governments that run businesses funded mainly by commercial revenue.
- Allows some partnership structures to qualify for CEWS when ineligible members’ ownership does not exceed 50%.
- States that the CEWS qualifying period in the law starts March 15, 2020 and runs for 12 weeks; the Canada Revenue Agency will administer the programs.
Who's affected#
- Employers who already qualify for the CEWS or TWS.
- Newly included groups: registered journalism organizations, registered amateur athletic associations, private schools and colleges, and certain tax-exempt corporations owned by Indigenous governments.
- Partnerships that include some ineligible members, where those members’ combined interest is 50% or less.
- Small businesses among the newly eligible employers (they may face minor extra paperwork).
- The Canada Revenue Agency, which applies and checks claims.
Why it matters#
- It gives more employers immediate cash flow by letting them keep part of payroll remittances (the TWS) and makes more employers eligible for the larger CEWS, helping them pay, keep or rehire employees.
- The federal government estimated the CEWS program’s cost at about $73 billion; expanding eligibility aims to get funds to more businesses hit by COVID‑19 without changing the announced TWS caps.
- For affected employers, the change means extra financial relief now but also some extra record-keeping and reporting when claiming the subsidies.
Key topics
Source: Canada Gazette