New 2020 T4 Reporting Requirements for Employers

Employers completing T4 slips and summaries for 2020 should be aware of the new wage reporting requirements for employers that were introduced by the Canada Revenue Agency (CRA) for the T4 slip, Statement of Remuneration Paid.

The additional wage reporting requirements are applicable to all employers who issue T4 slips to employees. 

The 2020 T4 slips must report certain employment payments to help CRA identify if the employees meet the eligibility requirements for certain COVID-19 related government programs, regardless of whether the employees have applied for the programs or not.

The additional information to be reported on the 2020 T4 slips will help to validate payments made to Canadians under the following: 

1. Canada Emergency Response Benefit (CERB)
2. Canada Emergency Student Benefit (CESB)
3. Canada Emergency Wage Subsidy (CEWS) [payments made to employers]

Reporting Employment Income from COVID-19 Pay Periods

Along with reporting employment income in Box 14 or Code 71 for the 2020 calendar year, new information codes have been introduced to report both retroactive payments and employment income during the following periods:

•  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

The periods above relate to the date the employee was paid.  For example, CRA provides the following guidance:

“If you are reporting employment income for the period of April 25 to May 8, payable on May 14, use code 58.”

The periods above align with periods relating to eligibility periods for the CERB, CESB, and CEWS (other than CEWS periods ending after September 26, 2020).

With respect to the CERB and CESB, the new reporting requirements should enable CRA to easily verify if an individual taxpayer received less than $1,000 of income in a four-week period. 

If an employee has received CERB or CESB payments and received remuneration with respect to that CERB or CESB period, the employee and not the employer will be responsible for repayment of the CERB or CESB.

For information related to after CERB, see this Government of Canada page titled, After CERB: Transitioning to New Benefits. 

Reporting the 10% Temporary Wage Subsidy

On March 18, 2020, the federal government announced the 10% Temporary Wage Subsidy (TWS), which provided small eligible employers a subsidy of up to 10% of employee remuneration paid, up to certain limits, for three months. 

Eligible employers could have taken advantage of the TWS by reducing their payroll remittances by the amount of the subsidy calculated based on remuneration paid between March 18, 2020 and June 19, 2020. 

As a result of the TWS, employers who took advantage of the TWS will need to complete Form PD27, 10% Temporary Wage Subsidy Self-Identification Form for Employers.  The CRA will use this form to reconcile the amount of payroll remittances during the pay periods that fall within the TWS periods of March 18, 2020 to June 19, 2020.

Submitting Form PD27

CRA’s guidance to employers who are eligible for the TWS is that they are required to complete and submit form PD27 if:

• The employer has already reduced its remittances.
• The employer intends to reduce its remittances.
• The employer claimed the CEWS and, as a result, needs to confirm on Form PD27 the amount of the TWS the employer is taking advantage of.
• The employer claimed the CEWS but did not reduce its CEWS claim by the amount of its TWS entitlement.

If you are an eligible employer and have not reduced your remittances before now you can still benefit from the TWS. You will need to calculate your eligible TWS amount and submit Form PD27 and request that CRA transfer the total eligible TWS amount to next year’s account.

There is no official filing deadline for submitting Form PD27, but we recommend that this form is filed by eligible employers before the 2020 T4 slips and summaries are filed with CRA.

First Place to Start

The first place to start with the new wage reporting requirements for employers and the TWS is with your payroll module or payroll provider to ensure that the relevant information is easily accessible.

We Are Here to Help

Manning Elliott is here to help. If you still have questions about the new wage reporting requirements for employers or the TWS, please contact your Manning Elliott advisor.

For additional help navigating through these trying times, visit our blog to stay up to date on the most recent activity related to COVID-19.

This content is believed to be accurate as of the date of posting. Canadian Tax laws are complex and are subject to frequent change. Professional advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.