March 31: Federal Tax Response to COVID-19


On Monday, March 30, 2020, Prime Minister Justin Trudeau announced further adjustments to Canada’s wage subsidy program. The announcement was only a high-level description of the subsidy. We will provide further details when the information is released. Here is an update from our accounting partner, MNP.

 

What is currently known about the wage subsidy:

  1. The government will subsidize up to 75 percent of employee wages for eligible employers, backdated to March 15, 2020.
  2. An eligible employer is any business whose revenue has decreased by 30 percent or more due to the pandemic. This definition includes businesses of all sizes, as well as non-profit organizations and charities.
  3. The 75 percent subsidy will apply to the first $58,700 of salary per employee, resulting in a maximum subsidy of $847 per employee per week.

 

What is still not known about the wage subsidy:

  1. Which types of employers qualify for the subsidy (i.e. corporations, individuals and partnerships)?
  2. How will the 30 percent decline in revenue be measured?
  3. Does the subsidy apply to employees who are also shareholders of a company in the case of a family business?
  4. How do the existing programs (including the Work-Sharing Program and the Canadian Emergency Relief Benefit (CERB) interface with the wage subsidy program to provide benefits and support to employees, including seasonal, contract and commission-based workers?
  5. How will the subsidy be distributed to recipients?

 

What does this mean?
We appreciate that the government is responding to what is a very fluid and evolving situation. CDSPI will share updates and insights from tax experts on how these announcements will impact you and your practice when further details are released.
As the economic repercussions of COVID-19 continue to unfold, it’s more important than ever to have a financial plan.

 

For professional planning advice, contact an Investment Planning Advisor* at 1.800.561.9401 or email us at investment@cdspi.com.

 

*Investment Advisory services are provided by licensed advisors at CDSPI Advisory Services Inc. Restrictions may apply to advisory services in certain jurisdictions.

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