In order to provide an estimate of the savings to the average brokerage in Ontario, some assumptions were made about the brokerage model. A staff of 6 permanent employees was used with 5 support staff at $45k/year and 1 managerial staffer at $90/k year. The brokerage was assumed to have 50 REATLOR® agents that are all independent contractors. The brokerage was also assumed to have an annual net revenue of between $800,000 and $1.2 million net of commission to REALTORS® and before overhead or expenses were included.
The Federal government has announced a 75% wage subsidy program to ensure employees remain on payroll for businesses affected by COVID-19. The program will be backdated to March 15, 2020 and runs until June 6, 2020. It should be noted that the program is still subject to the approval of Parliament and could change during that process.
Businesses are eligible if they have seen a revenue reduction of at least 30% due to COVID-19. Businesses will have to demonstrate a decline in monthly revenues compared to the same month in 2019 (i.e., compared to March, April, or May 2019). Applications must be made each month. Details are yet to be announced for new businesses that are less than a year old, but they are also expected to qualify. An application portal will be launched by the Canada Revenue Agency (CRA) in the next 3-6 weeks and businesses are encouraged to set up direct deposit with the CRA to speed up payments.
Employers who are eligible will receive 75% of wages for the first $58,700 of an employee’s annual salary. The government is encouraging businesses to make best efforts to cover or top up the employee’s remaining salary. In our model, the average brokerage has 5 employees at $45,000/year and 1 employee at $90,000 a year. It would breakdown as follows:
- The five employees earning $45,000/year would typically make $865/week. The Federal government will now pay $649/week per employee leaving the brokerage to cover the remaining $216/week per employee. That means the brokerage will save $3,245/week for 3 months, which equals a total eligible savings of $9,735.
- For the management employee earning $90,000, their salary is over the $58,700 annual cap and therefore they will receive the maximum subsidy amount of $847/week. Over the 3-month eligible period that is a total savings of $10,164. However, in this scenario, brokerages are encouraged to make best efforts to top up the remaining salary.
Average Brokerage = Real savings of up to $6,633/month for 3 months per brokerage ($19,899 total)