Businesses hoping to apply for Canada’s 75 per cent wage will have to wait several weeks to get that money, according to Finance Minister Bill Morneau.
Morneau unveiled more details about the wage subsidy that Prime Minister Justin Trudeau has announced, and then updated, in recent days.
The wage subsidy will provide 75 per cent of each employee’s salary for business – of any size – that has lost at least 30 per cent of its gross revenue since this time last year due to COVID-19. Companies will have to reapply every month and Morneau said there will be “severe” consequences for anyone who tries to take advantage of the system.
The subsidy will apply to the first $58,700 of each employee’s salary and provide up to $847 a week per employee for up to 12 weeks, with a possible extension if the crisis continues. The money is available to companies of all sizes, as well as charities and non-profits, and will be retroactive to March 15.
“Funds will be available in approximately six weeks,” the finance minister said Wednesday.
Businesses will be able to apply through a Canada Revenue Agency portal “soon,” Morneau said, and money is supposed to begin flowing in six weeks. For businesses that cannot show revenue from the previous year, the previous month’s revenue may be an option. Companies that are signed up for CRA direct deposit will receive funds faster.
Companies will be required to “show what the pre-crisis income was of an employee and show that they’re paying that employee an amount up to $847 and then they will get that money returned to them from the Canada Revenue Agency.”
Morneau urged businesses to rehire workers and to top up the extra 25 per cent not being provided by the wage subsidy.
“I know in the cases they can afford to pay their workers, they will do that,” he said. “We need to get through this intact.”
The point of the wage subsidy is to get employers to keep workers on the payroll, hopefully leading to a faster economic recovery, the finance minister said. It will not be available to those who receive the Canadian Emergency Response Benefit, which is for workers who remain laid-off, or are self-employed and have no income due to COVID-19.
The wage subsidy is expected to cost $71 billion. The CERB, which provides $2,000 to workers who’ve lost their jobs as a result of COVID-19, will cost an additional $24 billion. Altogether, Morneau said these direct measures will cost around $105 billion.
“As a result of this… the deficit will go up,” Morneau said, noting this equals to about five per cent of the country’s GDP.