Businesses hoping to apply for Canada’s 75 per cent wage will have to wait at least three to six 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 three months, with a possible extension if the crisis continues. The money is available to companies of all sizes, as well as charities and non-profits.
Morneau urged companies to rehire workers quickly and rely on extra credit to bridge the gap until the wage subsidy comes in. Businesses will need to show they are paying their workers in order to receive the subsidy.
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.
Morneau urged businesses 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.
The wage subsidy is expected to cost $71 billion. The Canadian Emergency Response Benefit, 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 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.
More to come.