Temporary Wage Subsidy for Employers

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.  This program was created in reaction to the COVID-19 Pandemic on March 18^th, 2020 and will be in force until June 19^th, 2020.

Detailed information about this program can be located at https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html

To account for your payroll program in AgExpert Accounting:

1) Create your paycheques as normal.  There is no change to this process, as you are still required to deduct CPP, EI, and income tax from your employee’s paycheques.

2) For paycheques dated before March 18^th, 2020, there will be no change to the payroll remittance.  Remit the deductions that AgExpert Accounting calculates.

3) For paycheques dated on or after March 18^th, 2020, you will be able to calculate your reduction based on your total payroll for the period.  You will still need to record your payroll remittance at its full amount but make note of the gross pay on the report.

4) Once your remittance is recorded, you can calculate the amount of your reduction.  Multiply your gross payroll for the period by 10%.  Your subsidy will be the lesser of your calculation or the maximum subsidy for the month ($1,375 * # of employees).

In this case, $3,000 * 10% = $300.  This is less than the maximum subsidy, which is $1,375 * 1 = $1,375.  Therefore, your monthly subsidy is $300.

5) Once you have calculated your subsidy, you can reduce your current payroll remittance of federal, provincial or territorial income tax that you send to CRA.  First, enter the subsidy calculated as a credit note in your system.

6) When you are ready to make your payment to CRA, you will use some of this credit to offset your payroll remittance.  In our example, the total income tax paid was 395.16, so we can reduce our payment by the amount of the subsidy.

7) If the amount of your subsidy exceeds the amount you can reduce your source deduction payment by, then the balance of the credit will carry forward to be used on future payroll remittances.  You will be able to track how much credit is still outstanding each time you do a transaction to your payroll supplier.

If you received a TWSE payment, you must submit form PD27, 10% Temporary Wage Subsidy Self-Identification Form for Employers.  The form can be submitted at the end of the eligible period.  CRA will use the information from your PD27 to reconcile the subsidy on your payroll accounts to ensure you do not receive a discrepancy notice at the end of the year.

Last updated on October 21, 2020 by FCC AgExpert