Wage Subsidy and Employment Incentive Programs in Canada: Eligible Costs

Hiring new staff costs a lot. Wage subsidy and employment incentive programs in Canada help by covering part of what you pay employees. But only certain costs qualify, and the rules change by program and province.

It is important to know what counts as an eligible cost before you hire. This can help you get reimbursed. If you claim the wrong costs, your application might get rejected.

What Counts as Eligible Costs

Most wage subsidy and employment incentive programs pay back direct employment costs. These are costs that only exist because you hired someone. While every program is different, eligible costs usually fall into a few main groups.

Gross Wages or Salary

Gross wages or salary are the main eligible cost in almost every program.

Eligible wage costs include:

Regular hourly or salaried pay for the employee
Pay for standard work hours
Pay during the approved subsidy period

For example, the Graduate Transition to Employment Program (GTEP) in Newfoundland and Labrador covers wages paid to a recent graduate during the approved work term.

Wages paid before the program starts or after it ends are not eligible.

Mandatory Employer Payroll Contributions

Some programs also cover payroll costs you must pay by law.

These may include:

Employer Canada Pension Plan (CPP) contributions
Employer Employment Insurance (EI) contributions
Workers’ compensation or workplace health premiums (if allowed)

Not every program covers these costs. Many only pay back wages. Always read the program guide or your approval letter to be sure.

If you want to compare which programs cover payroll contributions, tools like GrantHub’s eligibility matcher can help you filter options by province and see what is included.

Training Costs (Sometimes Eligible)

A few employment incentive programs will pay for training costs. This is less common than wage coverage.

Training costs may include:

On-the-job training for the new hire
Short courses needed for the job
Safety certifications related to the role

These costs are only eligible if:

They are approved in advance
They are directly tied to the subsidized job
They happen during the contract period

Programs that focus on youth or skills development are more likely to include training as an eligible cost.

Extra Support for Underrepresented Groups

Some programs offer a higher wage subsidy if you hire someone from a priority group.

For example, the Canada Green Corps – Science and Technology Internship Programme (CGC‑STIP) offers:

Up to 75% of eligible wages
Extra support for hiring youth from equity-deserving groups
Internships of up to 12 months, usually at 30+ hours per week

Remember, only the wage portion is covered. Overhead and equipment are not eligible.

Costs That Are Almost Never Eligible

Most wage subsidy and employment incentive programs do not pay for:

Overtime pay
Bonuses or profit-sharing
Severance pay
Office rent or utilities
General business overhead
Wages for owners or shareholders (unless the program says so)

Trying to claim these costs is a common reason for delays or denied payments.

Common Mistakes to Avoid

Claiming Wages Paid Before Approval

Programs usually only cover costs after you get written approval. If you pay someone before approval, you may not get reimbursed.

Including Overhead or Admin Costs

Wage subsidies pay for employment costs, not your business expenses. Rent, software, and management time are almost never eligible.

Misclassifying Contractors as Employees

You must have T4 employees to claim most wage subsidies. Contractors paid by invoice do not qualify.

Missing Documents

You need to show payroll records, proof of payment, and timesheets. If you do not have these, your claim could be delayed for months.

For more tips, see Common Mistakes Employers Make When Applying for Wage Subsidy Grants.

Eligible Costs Under the Graduate Transition to Employment Program

The Graduate Transition to Employment Program (GTEP) in Newfoundland and Labrador helps employers hire post-secondary graduates.

Key points:

Only wages paid to the graduate are eligible
The job must be new or add to your workforce
The position must be full-time
The graduate must meet program rules

Costs that are not eligible include:

Recruitment or advertising costs
Equipment or software
Bonuses or commissions unless approved
Wages paid before program approval

Always check your approval letter to confirm which costs are eligible before you submit a claim.

Frequently Asked Questions

Q: Are employer CPP and EI contributions always eligible?
No. Some programs only pay gross wages. Others include statutory payroll costs. Check your program guide or approval letter.

Q: Can I use more than one wage subsidy for the same employee?
Usually not. Most programs do not allow you to claim the same wage costs twice, even across federal and provincial programs.

Q: Is a wage subsidy considered taxable income?
Yes. Wage subsidies are government assistance and must be reported for tax purposes.

Q: Can I hire part-time employees under these programs?
Some programs allow part-time jobs, but many—like graduate programs—require full-time work.

Q: Can I claim a raise for the employee during the subsidy period?
Only if the new wage is approved in advance. Raises that are not approved may not get reimbursed.

Next Steps

Eligible costs decide if your wage subsidy application is successful. Before you hire, check which costs the program will pay and which you must cover.

GrantHub tracks hundreds of wage subsidy and employment incentive programs across Canada. Use it to find programs that fit your business and hiring plans.

Wage Subsidy and Employment Incentive Programs in Canada: Eligible Costs