COVID Wage Subsidy - Leaving Job

littlemiss123

My employer has paid us the wage subsidy since April, and is expected to do so until the end of August. While I don’t understand the full mechanics of the subsidy, my understanding is that a tax liability may arise at the end of the year for those in receipt of the subsidy.

I have been offered another job which I plan on accepting. My question is - when or if this tax liability arises at the end of the year, who is liable? When deciding to use the scheme, my employer confirmed that whatever way the scheme is implemented, the company would ensure there will be no effect on our take home net pay for the year (i.e. pay any differences or tax bills that may arise). While this is a good faith gesture that they will stick too, when I hand it my notice this good faith might soon disappear. Is my employer legally liable for the bill, or am I going to have to pick this up myself?

Turkish1

No your employer is not liable for this at year end. I would think it's a near certainty that this 'good will' disappears and you will get hit with the tax. It's likely that the most common mechanism will be that your tax credits will be reduced over one/two years in order to recoup this tax liability.

littlemiss123

Turkish1 wrote: »

No your employer is not liable for this at year end. I would think it's a near certainty that this 'good will' disappears and you will get hit with the tax. It's likely that the most common mechanism will be that your tax credits will be reduced over one/two years in order to recoup this tax liability.

Thanks so much for the quick reply....unfortunately that I what I was thinking.

Reducing the tax credits makes sense. I guess it isn’t feasible that half the country will readily cough up to a couple thousand in one lump at the end of the year. Softens the blow a bit I guess.

Calahonda52

OP, I cannot see how the employer would give you what you are interpreting on the full wage.
Maybe at the margin, in terms of any differences between what you were getting as THP and what Uncle Leo delivered, but not at the full wage.

littlemiss123

Calahonda52 wrote: »

OP, I cannot see how the employer would give you what you are interpreting on the full wage.
Maybe at the margin, in terms of any differences between what you were getting as THP and what Uncle Leo delivered, but not at the full wage.

I expect that if our tax credits are adjusted next year as Turkish1 mentioned, the company would offer a pay increase such that our THP was the same as previous years?

Lenar3556

littlemiss123 wrote: »

I expect that if our tax credits are adjusted next year as Turkish1 mentioned, the company would offer a pay increase such that our THP was the same as previous years?

They could do that, although would be advised against it. Adjusting employees gross pay to achieve particular nett’s is generally not a good practise for employers to engage in.