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Temporary Wage Subsidy for Employers (10%)

Helping Businesses Keep Their Workers

Canada Revenue Agency (CRA) and Canada Payroll Association (CPA) help articles:

CRA FAQ on Temporary Wage Subsidy for Employers

CRA New Releases Update

CPA FAQ on COVID-19

What is the 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 CRA.

Which employers are eligible?

  • Employers who are a:
    • individual (excluding trust),
    • partnership,
    • non-profit organization,
    • registered charity or
    • Canadian-controlled private corporation (CCPC) eligible for the small business deduction (this includes cooperative corporations),

    and who:

    • have an existing business number and payroll program account with the CRA on March 18, 2020 and
    • pay salary, wages, bonuses, or other remuneration to an employee.

    The Temporary Wage Subsidy for Employers is limited to the eligible employers listed above.

    See the CRA's FAQ for more information.

    How much is the subsidy?

    The subsidy is equal to 10% of the remuneration you pay between March 18, 2020, and June 19, 2020, up to $1,375 per employee and to a maximum of $25,000 total per employer.

    How do I calculate the subsidy?

    QuickBooks Standard Payroll has built the calculation of the 10% subsidy (if eligible) into the Payroll Summary by Employee Report. To see this calculation:

    1. Check the Wage Subsidy (10%) box.
    2. Look at the bottom of the report for the subsidy amount to deduct from your payroll tax payments made to the Canada Revenue Agency (CRA).

    See the CRA FAQ on the Temporary Wage Subsidy for Employers for more information.

    Recording the 10% Subsidy in QuickBooks Online Payroll (QBOP)

    1. Go to Reports and scroll down to Payroll Reports.
      1. Select the Payroll Summary by Employee Report.
      2. Check the Wage Subsidy 10% box (if eligible).
      3. Select Run Report.
      4. The subsidy amount to deduct from your next payroll tax payment is found at the bottom of the report.

    2. Go to the Payroll Tax homepage and select Prior Tax Payment (adjustment). This will reduce your Federal tax liability by the subsidy amount determined above.
      1. Select Add Payment.
      2. In Income Tax enter the calculated subsidy amount as a positive number.
    3. Make a journal entry to reduce the federal tax liability (debit) and increase income (credit) by the subsidy amount (as determined in the first step above).

    Step-by-step example of how to apply the subsidy to an eligible business

    The following example is for a monthly tax remitter whose taxes are due to the CRA on the 15th of each month.

    Schedule of 10% subsidy for Monthly Remitter
    March 18 to March 31 (remember to only calculate from March 18 to March 31) Due: April 15
    April 1 to April 30 Due: May 15
    May 1 to May 31 Due: June 15
    June 1 to June 19 (remember to only calculate up to June 19) Due: July 15
    The example below is for:
    Payroll period March 1 to March 31
    Payroll tax deadline April 15

    Get set up for the subsidy

    This setup only needs to be done once.

    1. Go to Accounting then Chart of Accounts.
    2. Select New.
    3. For Account Type select Other Income.
    4. In Detail Type select Income.
    5. Name the account Temporary Wage Subsidy.
    6. Select Save and close.

    TempWageSubsidy1_CA_Ext_09Apr20.jpg

    Step 1 - Determine the subsidy amount

    First you need to determine the subsidy amount you're entitle to for the tax period. The example report is for March 31, after the tax period has ended.

    1. Go to Reports and scroll down to Payroll Reports.
    2. Find and select the Payroll Summary by Employee report.
    3. Check Wage Subsidy 10%.
    4. Select Run Report.

    The Temporary Wage Subsidy (10%) row is at the bottom of the report. This amount is your tax subsidy for the defined applicable tax period. Remember to reduce your tax payment to the CRA by this amount.

    Based on $1,000 of gross pay you would be entitled to $100 in federal payroll tax relief on your April 15 filing and payment deadline.
    ($1,000 gross pay for Freddy x 10% = $100)

    TempWageSubsidy6_CA_Ext_09Apr20.jpg

    TempWageSubsidy7_CA_Ext_09Apr20.jpg

    Step 2 - Record the tax subsidy amount

    Next you record the tax subsidy amount to reduce your payroll tax liability after the tax period has ended. In this example we record the subsidy amount after March 31 when the tax period has ended.

    1. Go to Taxes then Payroll Tax.
    2. Select Enter prior tax history.
    3. Select Add Payment.
    4. In Period Start Date: enter March 1, 2020.
    5. In Period End Date: enter March 31, 2020.
    6. In Payment Date: enter the date you make the actual payment to the CRA (i.e. April 15th).
    7. In Income Tax: enter the subsidy amount calculated in Step 1 for the March period.
    8. Select OK to save the entry.

    TempWageSubsidy2_CA_Ext_09Apr20.jpg

    Step 3 - Record Payroll Taxes in product as you normally would

    In this example, you record the Payroll taxes for March, 2020.

    1. Go to Taxes then Payroll Tax.
    2. Select Pay Taxes.
    3. Select Federal Taxes on the line for the applicable period.
      Note: the Income Tax amount has been reduced by the subsidy amount entered in Step 2.
    4. Select Record payment.
    5. Review the information to ensure you have the correct bank account and payment date selected.
    6. Select Record payment
    7. when you are ready to complete the entry.

  • TempWageSubsidy8_CA_Ext_09Apr20.jpg

    Step 4 - Record a journal entry

    Next you record a journal entry for the subsidy amount of $100 for the March tax period.

  1. Select .
  2. Select Journal Entry.
  3. Do the following in the Journal Entry form:
    1. In Journal Date: enter the date the tax payment was recorded.
    2. On the first line select Payroll Liabilities: Federal Taxes and enter $100.00 in the DEBITS column.
    3. On the second line select your other account for this purpose (i.e. Temporary Wage Subsidy Income) and enter $100.00 in the CREDITS column.
    4. Add a brief description on each line to explain that this is the subsidy for March.
  4. When you have finished select Save and close.

TempWageSubsidy4_CA_Ext_09Apr20.jpg

Four separate values are determined for the calculation of the 10% Temporary Wage Subsidy for each payroll tax remittance period.

1st Payroll Tax Remittance Period

Value 1 - Maximum subsidy per employer

  • All employers are entitled to a maximum $25,000 for the duration of the Subsidy Period of March 18, 2020 - June 19, 2020.
  • This is running a balance.
  • Value 1 = $25,000

Value 2 - Maximum subsidy for all employees

  • An employer can claim a maximum of $1,375 per employee over the course of the subsidy program period.
  • This is a running balance.
  • Value 2 = Number of employees paid from March 18 to the end of the payroll tax remittance period x $1,375.

Note: Include employees that were terminated but still paid in the time frame.

Value 3 - 10% of Remuneration in Period

  • An employer can claim up to maximum of 10% of the employee’s wages paid from March 18 to the end of the payroll tax remittance period.
  • Value 3 = Add together Total Regular Wages (do not include reimbursements) + Non Cash Taxable Benefits paid from March 18 to the end of the payroll tax remittance period then multiply by 10%.

Value 4 - Federal Income Tax in Period

  • An employer can claim only up to the amount of Federal Income Tax collected in the tax remittance period.
  • Value 4 = Total Federal Income Tax collected in the tax remittance period (do not include Quebec Income tax).

10% Temporary Wage Subsidy

  • The Temporary Wage Subsidy that can be claimed in this first Payroll Tax Remittance Period is the LOWEST value of the four values calculated above.
  • Beyond the 1st Payroll Tax Remittance Period

    Value 1 - Maximum subsidy per employer

    • This is a running balance.
    • Value 1 = The amount of Value 1 from the previous tax remittance period subtract the 10% Wage Subsidy calculated from the previous tax remittance period.

    Value 2 - Maximum subsidy for all employees

    • This is a running balance.
    • Value 2 =
      • Number of NEW employees hired (paid) in the payroll tax remittance period x $1,375, ADD to this,
      • The amount of Value 2 from the previous tax remittance period subtract the 10% wage subsidy calculated from the previous tax remittance period.

      Note: Include employees that were terminated but still paid in the time frame.

    Value 3 - 10% of Remuneration in Period

    • Value 3 = Add together Total Regular Wages (do not include reimbursements) + Non Cash Taxable Benefits paid in the payroll tax remittance period then multiply by 10%.

    Value 4 - Federal Income Tax in Period

    • Value 4 = Total Federal Income Tax collected in the tax remittance period (do not include Quebec Income tax).

    10% Temporary Wage Subsidy

    • The Temporary Wage Subsidy that can be claimed in this Payroll Tax Remittance Period is the LOWEST value of the four values calculated above.

    The Last Payroll Tax Remittance Period in the Subsidy Program

    Value 1 - Maximum subsidy per employer

    • This is a running balance
    • Value 1 = The amount of Value 1 from the previous tax remittance period subtract the 10% Wage Subsidy calculated from the previous tax remittance period

    Value 2 - Maximum subsidy for all employees

    • This is a running balance
    • Value 2 =
      • Number of NEW employees hired (paid) in the payroll tax remittance period up to June 19, 2020 x $1,375, ADD to this,
      • The amount of Value 2 from the previous tax remittance period subtract the 10% Wage Subsidy calculated from the previous tax remittance period.
        Note: Include employees that were terminated but still paid in the time frame.

    Value 3 - 10% of Remuneration in Period

    • Value 3 = Add together Total Regular Wages (do not include reimbursements) + Non Cash Taxable Benefits paid from the start of payroll tax remittance period to June 19, 2020 then multiply by 10%.

    Value 4 - Federal Income Tax in Period

    • Value 4 = Total Federal Income Tax collected in the tax remittance period (do not include Quebec Income tax).
    • 10% Temporary Wage Subsidy

      • The Temporary Wage Subsidy that can be claimed in this Payroll Tax Remittance Period is the LOWEST value of the four values calculated above.

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