To help employers keep and return workers to their payroll through the challenges posed by the COVID-19 pandemic,  the new Canada Emergency Wage Subsidy was announced on March 27, 2020. This would provide a 75 % wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020. 

This wage subsidy aims to prevent further job losses, encourage employers to re-hire workers previously laid off as a result of COVID-19, and help better position Canadian companies and other employers to more easily resume normal operations following the crisis. While the Government has designed the proposed wage subsidy to provide generous and timely financial support to employers, it has done so with the expectation that employers will do their part by using the subsidy in a manner that supports the health and well-being of their employees.

On April 9, the  Federal Government proposed the following additional flexibility:

• To measure their revenue loss, it is proposed that all employers have the choice to compare their revenue of March, April and May 2020 to that of the same month of 2019, or to an average of their revenue earned in January and February 2020.
• For March 2020, the government proposes to reduce the 30-per-cent benchmark to 15 percent, in recognition of the fact that many businesses did not begin to be affected by the crisis until partway through the month.
• In recognition that the time between when revenue is earned and when it is paid could be highly variable in certain sectors of the economy, it is proposed that employers be allowed to measure revenues either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received).
• Special rules of not-for-profits/charities – these employers will include most forms of revenue, excluding revenues from non-arm’s length persons and would be allowed to choose whether or not to include revenue from government sources as part of the calculation.  Once chosen, just use the same approach throughout the program period.

“Pre-crisis remuneration” for a given employee is also now defined in the updated backgrounder and would be based on the average weekly remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in respect of which the employee did not receive full remuneration.

Charities will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration.

The 10% 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 Canada Revenue Agency (CRA).

Eligible employers (individuals (excluding trusts), certain partnerships, non-profit organizations, registered charities, or Canadian-controlled private corporations) who pay salary, wages, or taxable benefits to employees, between March 18, 2020 and June 19, 2020, can reduce payroll remittances of federal, provincial, or territorial income tax by the amount of the subsidy. This measure is only applicable to remittances made to the CRA.

The filing deadlines for certain tax forms have been extended to allow organizations more time to complete and submit them, recognizing that charities and nonprofits will be focused on deploying their resources to address the effects of the COVID-19 virus situation. T3010 returns are not due until December 31, and T1044 and T2 filings are deferred until June 1. 

The federal government is offering temporary flexibility for employers with regards to the following:

• Wage subsidies
• Part-time employment
• Employment period
• Changes to project and job activities

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This Imagine Canada document will be regularly updated as the federal government announces new measures that will impact the charitable and nonprofit sector.

Last updated: January 11, 2021.