The Canada Revenue Agency (CRA) is looking to ALL Canadian employers to help validate COVID-19 relief payments made to individuals and businesses in 2020, regardless of whether your business has applied for these benefits or not.
McNabb Lucuk LLP is here to help you understand the new 2020 T4 reporting requirements before you complete your slips and summaries to save you time and confusion.
New Codes for Pay Dates from March 15 through September 26, 2020
ALL employers must report employment income and retroactive payments for specified time periods in 2020 under new information codes. The codes are in addition to reporting employment income in Box 14 or Code 71 on your employee T4 forms. It is important to note that the new codes apply to the date(s) the employee was paid, not dates worked.
The codes and applicable pay dates are as followed:
- Code 57: Employment income – March 15 to May 9, 2020
- Code 58: Employment income – May 10 to July 4, 2020
- Code 59: Employment income – July 5 to August 29, 2020
- Code 60: Employment income – August 30 to September 26, 2020
Example: If your pay period was August 16 through August 29, 2020 and the employee wages were paid on September 4, 2020, you would use Code 60.
Temporary Wage Subsidy Reporting
Businesses who took advantage of the Temporary Wage Subsidy (TWS), are required to complete Form PD27, the 10% Temporary Wage Subsidy Self-identification Form for Employers.
Form PD27 will be used by the CRA to verify whether an employer qualified for both the Canada Emergency Wage Subsidy (CEWS) and the TWS and claimed a TWS. The form will also be used to resolve any differences between the amount of payroll remittances and amounts reported on the 2020 T4 Summary reconciliations for any pay periods within the TWS entitlement period, March 18 through June 19, 2020. To ensure the T4 summary totals align with the amount paid to the CRA, employers must report exact TWS amounts claimed for each payment date.
The TWS was accessed by calculating your business’s subsidy amount, up to $1,375 for each eligible employee to a maximum of $25,000 for each eligible employer, and reducing your income tax payroll remittances by that value. If your business under-calculated the TWS during remittance, you can still access the benefit amount you are entitled to, which may be shown as a refund on your T4 summary. This COVID-19 relief program was popular amongst employers who may not have qualified for the Canada Emergency Wage Subsidy (CEWS).
Similar to the new information codes on the employee T4’s, the TWS is based on payment dates. The PD27 however, requires employers to report amounts based on pay period dates which has caused some confusion for employers.
If you need clarification or assistance with anything presented above, or have other questions regarding employee T4’s, please speak with your accountant or contact us directly by phone at 780-539-3400, or email [email protected] or [email protected]