10% Temporary Wage Subsidy for Employers
Providing eligible employers with a temporary wage subsidy for a period of three months from March 18, 2020 to June 19, 2020. The subsidy will be equal to 10% of remuneration paid during that period up to $1,375 per eligible employee to a maximum total of $25,000 per employer. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities. For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10% wage subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period. PBO estimates the cost of this measure to be $844 million for the first quarter of 2020-21. The time horizon for this costing is aligned to PBO’s current Economic and Fiscal Scenario, although there may be potential fiscal impacts for subsequent years
2020-03-25 (C-13)
Providing eligible employers with a temporary wage subsidy for a period of three months from March 18, 2020 to June 19, 2020.
The subsidy will be equal to 10% of remuneration paid during that period up to $1,375 per eligible employee to a maximum total of $25,000 per employer. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.
For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10% wage subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.
The number of employers eligible to claim the 10% wage subsidy was determined based on the number of corporations claiming the small business deduction (SBD).
The number of corporations claiming SBD was projected using the average annual growth rate of the number of claimants between 2013 and 2017 provided by CRA. The sectoral distribution of the corporations eligible for the SBD was interpolated according to the 2019 sectoral distribution of small and medium-sized businesses. These data were based on the survey of Statistics Canada.
The number of employers eligible for the SBD by firm size was estimated based on the distribution of the small business counts by enterprise size. The number of employees in corporations by sector and by firm size was interpolated according to the number of the 2017 private sector employment by industrial sector and business size provided by the Innovation, Science and Economic Development Canada.
The three-month earnings of the employees in these businesses were calculated by multiplying the average earnings by the number of employees by sector and by corporation size.
The total subsidy for the small businesses was calculated by multiplying 10% of the total earnings by the reduction rate of the employee’s compensation in the private sector in response to the COVID-19. The reduction rate was estimated based on the PBO economic model. The calculation takes into consideration the maximum subsidy per employee and per employer.
PBO estimates the cost of this measure to be $844 million for the first quarter of 2020-21.
The time horizon for this costing is aligned to PBO’s current Economic and Fiscal Scenario, although there may be potential fiscal impacts for subsequent years.
The uncertainty is inherent in the projected number of employees who will lose their jobs in these businesses. Also, the interaction effect of this policy with other COVID-19 measures is difficult to anticipate because of the complex nature of the programs. The distribution of businesses based on their size and nature could be different from what was estimated.
- Estimates are presented on an accrual basis as would appear in the budget and public accounts.
- A positive number implies a deterioration in the budgetary balance (lower revenues or higher spending). A negative number implies an improvement in the budgetary balance (higher revenues or lower spending).
- Totals may not add due to rounding