January 11, 2021
There are a number of deadlines quickly approaching for the Canada Emergency Wage Subsidy (CEWS) and the Temporary Wage Subsidy (TWS). You may miss out on these important subsidies if you apply late. In addition, there are several reporting deadlines approaching that will impact all employers, even those that did not receive the CEWS.
Briefly, the CEWS allows employers which have experienced a reduction in revenue in a particular month to receive a subsidy for the wages paid to their employees in respect of that period. The periods eligible for CEWS are four-week periods that commenced on March 15th and are currently expected to end in June 2021. Although the first four months of the program required a 30% drop in revenue to obtain a 75% subsidy, in the subsequent periods any drop in revenue will make an employer eligible for some level of subsidy. The subsidy rate is higher for employers with a higher drop in revenue. More details can be found in our previous publications.
The deadline for making or amending a CEWS application is the later of January 31, 2021, or 180 days after the end of the period. This means that all applications or amendments for periods covering March 15, 2020 through August 1, 2020 (periods 1 to 5) must be made by January 31, 2021. The application for period 6 will be due by February 25, 2021.
If you would like us to assist you with your CEWS application or amendment for periods 1 to 5, you must contact us immediately to ensure it will be completed by the deadline.
OTHER IMPORTANT DEADLINES AND REPORTING MATTERS
T4 Reporting Changes
There has been no extension for the filing deadlines for T4 summaries and slips, they will be due March 1, 2021.
Additional Information Included
Changes have been made to the information required to be reported on a T4 to assist the CRA with validating payments under the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Response Benefit (CERB), and the Canada Emergency Student Benefit (CESB).
For the 2020 taxation year, in addition to reporting employment income in Box 14 or Code 71, you will now use new “other information codes” when reporting employment income and retroactive payments in the following periods:
Code 57: Employment income – March 15 to May 9
Code 58: Employment income – May 10 to July 4
Code 59: Employment income – July 5 to August 29
Code 60: Employment income – August 30 to September 26
Allocations should be made to those periods based on when the amount is paid. For example, if you are reporting employment income for the period of April 25 to May 8, payable on May 14, use code 58.
Standby Charge Calculation
A taxable benefit called a standby charge is assessed when an employee is allowed to use an employer owned vehicle. The amount of this benefit may be reduced where an employee uses the vehicle primarily for employment purposes rather than primarily for personal purposes. As many employees’ travel was significantly reduced in 2020, the government is proposing to allow employees to use their 2019 mileage to determine if the reduction is available.
More information can be found on the Finance Department’s website.
PD27 Temporary Wage Subsidy (TWS)
The TWS was the first wage subsidy announced by the government which was subsequently replaced by the CEWS. It operated by allowing employers to reduce the amount withheld for their employees’ payroll income tax remittance and was limited to $25,000. Eligible employers were most Canadian owned private corporations, unincorporated businesses, charities and NPOs. The amount of the CEWS was reduced by any TWS claim so many eligible employers did not claim it.
More details can be found on CRA’s website.
You need to complete and submit Form PD27 to the CRA if you were eligible to take advantage of the TWS, and:
- You already reduced your remittances;
- You intend to reduce your remittances (the form will help you calculate your eligible TWS amount); or
- You claimed the Canada Emergency Wage Subsidy (CEWS) and, as a result, need to confirm on Form PD27 the amount of the TWS you are taking advantage of (refer to Line F of your CEWS application).
Note the PD27 is required if you claimed CEWS or TWS and were eligible for TWS. Form PD27 will be used to claim any TWS you did not claim previously and to allow CRA to reconcile the employee income tax remitted to CRA by you, to the amount shown on T4 slips.
Form PD27 should be filed prior to T4 slips and summaries.
There were several tax filing and payment extensions last year. At this time, none have been announced and you should expect to file your returns and make any tax payments by the normal deadlines this year.
If you have any questions concerning the above, do not hesitate to contact your trusted advisor at Wilkinson & Company LLP.
This summary deals with proposed matters that are complex and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect laws and practices which are subject to change. For these reasons, this material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter.
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