This measure, initially announced as part of the March 18, 2020 Economic Response Plan (ERP), provides eligible employers with a temporary wage subsidy for a period of three months. The subsidy was announced to be 10% of remuneration paid during that period, up to certain per employee and per employer maximums.  Businesses were to benefit immediately from this support by reducing their remittances of income tax withheld from their employees’ remuneration.  Remittances for CPP and EI cannot be offset by the subsidy.  While the legislation fine-tunes the subsidy, it is largely consistent with the initial announcement.


In order to be eligible, the employer must meet three criteria:

  • employ one or more individuals in Canada (“eligible employees”);
  • was registered, with a business number and a payroll remittance account, on March 18, 2020; and
  • be any of the following:
    • most Canadian-controlled private corporations (CCPCs), based on eligibility for the small business deduction (see below);
    • an individual (other than a trust);
    • a partnership, all members of which are entities
    • a non-profit organization (exempt from income tax pursuant to Subsection 149(1)(l)); or
    • a registered charity.

Eligibility for a CCPC requires that the CCPC had a business limit, for purposes of the small business deduction, greater than nil for its most recent tax year ended prior to March 18, 2020 (or, if it has no taxation year ended before that date, would have a business limit greater than nil if its taxation year ended on March 17, 2020).

For this purpose, the reduction to the business limit caused by passive income (“Adjusted Aggregate Investment Income”) is not considered.  However, a CCPC which had no business limit for other reasons (for example, its taxable capital, in combination with other associated corporations exceeded $15 million; it was a member of an associated group of corporations and was not assigned any portion of the business limit; or it assigned its entire business limit to one or more other CCPCs under the specific corporate income rules) would not qualify for the subsidy.


A portion of remuneration (e.g. wages, salaries) paid to employees from March 18, 2020 to June 19, 2020, inclusive, will be recoverable by the employer.  The legislation indicates that several amounts determining the available subsidy will be prescribed by regulation, and those regulations are not in the draft legislation.  The amounts in italics below are amounts that were announced in the ERP, and are expected to be formally set by regulations yet to be released.

The subsidy will be equal to the least of three amounts, as follows:

  • a fixed maximum for each employer of $25,000.  CRA has indicated that this amount is per employer, and is not required to be shared between related or associated employers;

  • a fixed percentage, being 10%, of remuneration paid to eligible employees during the period from March 18, 2020 to June 19, 2020; or
  • the number of eligible employees employed during the period from March 18, 2020 to June 19, 2020, multiplied by a fixed amount, $1,375.

Therefore, to get the maximum benefit of $25,000, the employer must have more than 18 employees with total wages no less than $250,000 during the period.

Application process

No formal application process has been released.  Any subsidy to which the employer is entitled is deemed to have been remitted as a payroll remittance for income taxes withheld from the employees’ remuneration.  In other words, source deduction remittances for income tax, but not for CPP or EI, can be reduced for the available subsidy, providing an immediate cash flow benefit to the employer.

Presumably, there will be an eventual requirement to account for the subsidy claimed, possibly when T4 slips are prepared and filed in early 2021.  However, no additional filings have been implemented to date.

Other notes

The initial announcements did not include individuals or partnerships as employers eligible for this benefit, an exclusion which was the subject of considerable commentary.  They are included in the legislation.

The legislation does not provide any exclusion for owners of the employer or persons related to the employer, so their remuneration should be eligible.  Note, however, that a proprietor or partner is not an employee of their unincorporated business, so no subsidy would be available for their work.