COVID-19 - 75 Percent Wage Subsidy Update
APRIL 2, 2020
Yesterday, Bill Morneau, Finance Minister, released further details concerning the wage subsidy grant. He indicated that companies will be required to reapply for the subsidy each month and the 30 percent eligibility requirement will be determined based on year-over-year revenue from the corresponding month from 2019. He also confirmed that the 75 percent wage subsidy will be available for Canadian businesses that have experienced a 30 percent decline in revenue due to COVID-19. The revenue decline will be assessed based on gross revenue and employers will be required to attest that they are doing “everything they can” to pay the remaining 25 percent of employee wages.
The grant will be based on 75 percent of an employee’s pre-crisis salary (meaning if you are not able to pay the final 25 percent of their salary, you could hire them at a 25 percent reduced salary, and have 100 percent their new reduced salary funded). Please note there are maximum’s per employee and special rules for owners, who may also be eligible. For pre- or low-revenue startups that might be affected, Morneau stated that the government is still working out details, suggesting that revenue could potentially be compared to the month directly prior (e.g. February 2020 compared to March 2020).
The Finance Minister also reaffirmed that the 75 percent subsidy does not replace the 10 percent wage subsidy that was originally introduced a couple of weeks ago. Small businesses concerned that they do not meet the criteria for the 75 percent are still able to apply for the 10 percent subsidy. That subsidy is focused specifically on small businesses, non-profit and charity organizations and does not come with a decline in revenue criteria. Canadian small businesses that have not seen a direct decline in revenue due to COVID-19, or cannot prove the 30 percent decline criteria for the 75 percent subsidy, could still be eligible for the 10 percent subsidy.
Applications for the 75 percent subsidy program are set to open soon and will be available through the Canada Revenue Agency’s website. Morneau said today that he expects funds to be available for companies in approximately six weeks.
Further details about the wage subsidy program can be found on the Government of Canada website at: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html. Please note that legislation for this measure has not yet been enacted, so we could see changes to the finer details of the program.
Please contact us if you require our assistance in determining whether your business will qualify for the 75 percent subsidy program or if you will need help in processing the application.