What you need to do to prove your eligibility.
Think of this program as separate from your payroll, and run your T4 slips and payroll the same as you always would. The subsidy cheques should not be booked to anything Wage-related when completing your bookkeeping; instead, they are taxable income and should be booked as Revenue.
The subsidy payments you received need to be recorded as Revenue for your business — do not reduce your wage expense by the amount. The subsidy is taxable, and your T4 slips need to include the actual wages each of your employees were paid.
Any CPP and EI amounts that were reimbursed are also considered Revenue, so do not adjust the CPP and EI expense amounts.
If you’re receiving these payments, you should expect an audit sometime in 2021. Here’s what you can do now to prepare:
- Save detailed listings of your revenue for the applicable months: March, April, May 2019 and March, April, May 2020. Also include January and February 2020 if you used those periods as your baseline.
- Save all your payroll records for January 1 through December 31, 2020.