COVID-19 – Canadian Tax and Business News, release #19
Our COVID-19 Canadian Tax and Business News updates are our way of informing our clients, friends and business associates with recent information that may help businesses and individuals while coping with the outcomes from the COVID-19 pandemic.
Our goal is to monitor the news and release relevant information as it becomes available.
The summary below is based on our understanding and interpretation of the announcements made by the government. The information below is in summary form and subject to change until the proposals are passed as legislation. Contact one of our professionals to discuss these matters in the context of your situation before acting upon such information.
2020 Additional T4 Reporting Requirements
The Canada Revenue Agency (CRA) has introduced additional T4 reporting requirements for the 2020 tax year. These additional requirements will apply to all employers and are being implemented to assist the CRA in verifying COVID19 assistance payments such as the Canada Emergency Response Benefit (CERB), the Canada Emergency Student Benefit (CESB) and the Canada Emergency Wage Subsidy (CEWS).
Employers will be required to report employment income and retroactive payments using specialized codes 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
The CRA provided an example that if an employer is reporting employment income for the period of April 25 to May 8, 2020, that is payable to the employee on May 14, 2020, code 58 should be used as the payable date falls within the period covered by Code 58 even though the income was earned in the period covered by Code 57.
Based on the CRA example, retroactive payments must be reported when paid and not when the income was earned. As discussed in our prior news updates, retroactive payments mainly benefited employers bringing back employees that were subsidized through CEWS. The issue is the CEWS is based on when the employment income was earned and not when it was necessarily paid. As a result, these added T4 reporting requirements appear to be in place mainly to verify CERB and CESB payments and not CEWS. We will continue to update you if additional information is released.
As we all try to stay safe, we need to remind ourselves business will get back to normal but in the meantime lets all do our part to get to normal as soon as we can. If you have any questions or require further information, don’t hesitate to reach out to us.