As we prepare for our next release we are looking at adding a worksheet to help with the calculation and substantiation of the 10% Temporary Wage Subsidy to the 2020 T4 slips module. Here is an early draft of our proposed worksheet. Please let me know if you think this would be useful to you and if there are any changes/improvements you would like us to incorporate?
Sarka
Yes! Great addition.
Hi Sarka,
Unless I am reading it incorrectly I think it is incorrect to state that it is the maximum number of employees times $1,375.
The rule is: “The subsidy is equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee to a maximum of $25,000 total per employer.” https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
So it is up to $1,375 for each eligible employee. So if one reached the maximum, the balance of another employee cannot be transferred to that employee.
For example if you have two employees, you can get up to 2,750, but if employee 1’s wages are $1,000 and employee 2’s wages are $26,750, you could only get $100 of subsidy for employee 1 and $1,375 for employee 2.
Actually the way the legislation is written I believe the one parameter in question is number of employees times $1,375.00. There did not appear to be a specific limit for each individual employee.
I agree that the way the bill is written would support your interpretation, but how would you then calculate the maximum amount if you would have 2 employees in first period, 5 in the next and 2 in the 3rd month for example?
CRA’s interpretation seems to be a maximum per employee. “up to $1,375 for each employee.”
For reference, here is the legislation: https://www.parl.ca/DocumentViewer/en/43-1/bill/C-13/royal-assent
COVID-19 — deemed remittance
(1.02) For the purposes of this Act, if an eligible employer pays, at a particular time that is within the eligible period, eligible remuneration in respect of which a particular amount is required to be deducted or withheld under subsection (1), then the eligible employer is deemed to have remitted to the Receiver General at the particular time in respect of the particular amount, an amount equal to the least of
(a) the amount determined by the formula
A − B
where
A
is the prescribed amount, and
B
is the total of all amounts, each of which is an amount deemed to have been remitted by the eligible employer under this subsection prior to the particular time (and, if more than one such payment is made at the particular time, the eligible employer may designate the order in which the amounts are considered to have been paid),
(b) the amount determined by the formula
C × D
where
C
is the prescribed percentage, and
D
is the amount of the eligible remuneration, and
(c.) the amount determined by the formula
E × F
where
E
is the prescribed amount, and
F
is the total number of eligible employees employed by the eligible employer during the eligible period."
In your example you would use 5 employees. The maximum number of unique employees to receive wages during the period.
I think that we need to keep in mind that there was a large volume of information that politicians have released by way of regulation, legislation and also just by announcement. The CRA interprets the law just like accountants and lawyers interpret the law. Sometimes there are differences of opinion.
Case in point is the CERB program and the $1,000 income threshold. The intention is to allow people to perhaps work part time and earn some income and also still be eligible for the $2,000.00 CERB. However, when you actually apply through My Account with the CRA, it does not really say that. The CRA indicates that for periods after the initial application you must continue to not work for Covid reasons and do not make more than $1,000.00. I have no idea how you make up to $1,000.00 and also continue to not work at the same time especially after the initial period of claim.
I am never just quite sure if the CRA makes an honest interpretation error or makes intentional misleading statements about programs and the way they believe a program should work.
I know that the complete rules are not released yet but I think there will be a requirement to report the amounts for each employee on their T4? If this is the case, the spreadsheet should have the ability to do this calculation. We already have the spreadsheet from Tax Templates Inc. for the general calculation.
@Rein the examples on the CRA site use the max per employee, even when an employee leaves. Sarka has the calculation correctly calculating
See Example 3
10% Wage Subsidy
Thanks for the link Debbie. I understand where you are coming from.
What I am concerned about is that once we have to report the amounts per employee on the T4s for a client that doesn’t have CEWS (75%) we will get some employees with subsidies that exceed $1,375. I am not sure what is going to happen then.
