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EDITOR’S NOTE – March 30: Ottawa has now announced a 75 per cent wage subsidy for businesses struggling from the effects of COVID-19. Please click here for more.

The federal government has released new information on how small businesses impacted by the new coronavirus can access the proposed temporary wage subsidy unveiled last week as part of Ottawa’s sweeping $82-billion economic aid package.

READ MORE: Latest updates on the novel coronavirus pandemic

The temporary program is aimed at helping employers reduce payroll deductions and retain workers amid the COVID-19 outbreak, which has sickened more 349,000 worldwide, including over 1,400 cases confirmed cases in Canada, as of Monday morning.

However, business groups and experts say much more needs to be done to prevent massive layoffs.

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Here is what small business owners need to know about accessing the wage subsidy:

How does it work?

Small businesses will get wage support by reducing how much they hand over in payroll deductions to the Canada Revenue Agency (CRA) rather than receiving a government cheque.

The subsidy is equal to 10 per cent of the remuneration paid between March 18 and June 20, 2020, up to $1,375 per employee and a maximum of $25,000 total per employer, according to the CRA.

READ MORE: Coronavirus — Here’s where Canada is on the curve

Using the CRA’s example, a company with five employees will be able to receive a maximum subsidy of $6,875 (or $1,375 per employee).

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Businesses are required to do the math themselves for the total subsidy, based on CRA guidelines.

Once a company has done the calculations, it can reduce its current remittance of federal, provincial or territorial income tax sent to the CRA. Companies can’t reduce Canada Pension Plan contributions or employment insurance (EI) premiums.

“If you calculated a subsidy of $2,050, you would reduce your current remittance of federal, provincial or territorial income tax by $2,050,” the CRA said. “You could continue reducing future income tax remittances, up to the maximum of $25,000, for all remuneration paid before June 20, 2020.”

Who is eligible?

The tax agency says employers are eligible to receive the benefit if they meet the following criteria:

Are non-profit organizations, registered charities or a Canadian-controlled private corporation (CCPC)

Have an existing business number and payroll program account with the CRA as of March 18

Pay salary, wages, bonuses or other remuneration to an employee

READ MORE: 500,000 Canadians have filed for EI this week

Private companies are eligible for the subsidy if their earnings and other capital in Canada for the last year is less than $15 million.

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The CRA also said companies who are closed or did not pay salary, wages, bonuses or other remuneration to an employee between March 18 and June 20, 2020 cannot receive the benefit.

What records do companies need to keep?

Eligible employers will need to keep the following for their bookkeeping:

Total remuneration paid between March 18 and June 20, 2020

Federal, provincial or territorial income tax that was deducted from that remuneration

Total number of employees paid from March 18 to June 20, 2020

The CRA says more information on how to report this subsidy “will be released in the near future.”

Is this enough to help?

Minister of Finance Bill Morneau speaks during a press conference on economic support for Canadians impacted by COVID-19 at West Block on Parliament Hill in Ottawa on Wednesday, March 18, 2020. THE CANADIAN PRESS/Justin Tang.

Last week, a half-million Canadian workers filed for EI benefits in just a four-day period, as evidence of the historic job losses related to COVID-19 quickly came into focus.

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Employment and Social Development Canada said on Friday that the department received about 500,000 applications for EI, compared with just 27,000 in the same week a year ago.

READ MORE: Here’s how to apply for EI and the new COVID-19 emergency benefit

Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), said the subsidy is “wildly inadequate” given the economic crisis COVID-19 has created.

“We have at least half the economy shut down with no business income, and I think it’s probably more than that now,” Kelly told Global News.

“Many small businesses have been trying to make do since their revenue fell off a cliff last week.” Tweet This

Kelly said his organization has received calls from 600 small and medium-sized business owners worried they will not be able to survive the coming weeks. The CFIB normally receives 50 calls a day, according to Kelly.

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Benjamin Bergen, executive director with the Council of Canadian Innovators (CCI), said the wage subsidies need to be significant enough to “freeze the economy” to help keep businesses afloat and fuel the economic recovery when the pandemic is over.

“What we are hearing from our members is that the measures [announced last week] are not enough,” he said. “We need really bold and decisive action.”

The CFIB, CCI and others have called on the Trudeau government to follow the lead of some European countries and cover a larger portion of the payroll.

READ MORE: Trudeau announces economic aid package to help Canadians amid outbreak

Denmark, for example, is planning to cover 75 per cent of salaried workers’ pay, capped at roughly $4,700 a month, while Britain has said it will cover up to 80 per cent.

Prime Minister Justin Trudeau said Sunday the government has “not ruled out anything” when it comes to further help for employers.

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“We are continuing to talk about next steps, looking at best practices from around the world and what other countries … are doing to ensure that our economy remains solid,” Trudeau said. “There is no one measure that is going to be sufficient.”

Trudeau said Monday he will have a conference call with premiers and territorial leaders to discuss next steps on providing help for Canadians.

“The premiers and I will also talk about continuing to move forward with measures to support families and small businesses to ensure our economy rebounds,” he said

Kelly urged Ottawa to act now to prevent millions of Canadians from being laid off.

“If they act next week or the week after, it’s going to be too late,” he said.

“If they don’t move on this quickly, the consequences are going to be terrible for employers and employees.” Tweet This