Factory workers

Canada Emergency Wage Subsidy enhanced, CRA announces new T4 requirements

Factory workers

The federal government continues to adjust and clarify various features of the Canada Emergency Wage Subsidy  program, the COVID-19 relief benefit designed to help employers cover a portion of their wage expenditures through the worst of the pandemic. Another round of lockdowns, coupled with a stubbornly challenging economic environment across many sectors, has prompted Ottawa to make enhancements to the subsidy.

This month the government announced details for claim periods 11 to 13 (December 20, 2020 to March 13, 2021), increasing the maximum top-up subsidy rate to 35 per cent from 25 per cent, for a maximum subsidy rate of 75 per cent for those periods (40 per cent base rate plus 35 per cent top-up). In addition, it was announced that the base revenue drop comparison months for period 11 will be the same as period 10, while the maximum subsidies for employees on leave with pay will be $595.

The news follows Canada Emergency Wage Subsidy (CEWS) changes announced in November 2020, which included:

  • An extension of the program until June, 2021
  • A renewal of the maximum subsidy rate for periods 8 through 10 at 65 per cent (40 per cent base rate and 25 per cent top up)
  • Allowing qualifying applicants to use the greater of the new top-up calculation or the previous 3-month average drop in revenue to calculate their subsidy for periods 8 through 10. Starting in period 8, the top-up rate and base rate will be calculated using the same one-month revenue decline
  • A change that allows employers to calculate pre-crisis pay (baseline remuneration) for employees on specified types of leave, retroactive to period 5

Employers should take note that the deadline to file a CEWS claim for periods 1 through 5 (March 15th 2020 to August 1st, 2020) is January 31st, 2021.

The filing deadlines for periods 6 and on are as follows:

Period 6 (eligible dates August 2nd, 2020 to August 29th, 2020): February 25th, 2021

Period 7 (eligible dates August 30th, 2020 to September 26th, 2020: March 25th, 2021

Period 8 (eligible dates September 27th, 2020 to October 24th, 2020: April 22nd, 2021

Period 9 (eligible dates October 25th, 2020 to November 21st, 2020): May 20th, 2021

Period 10 (eligible dates November 22nd, 2020 to December 19th, 2020: June 17th, 2021

Period 11 (eligible dates December 20th, 2020 to January 16th, 2021): July 15th, 2021

Period 12 (eligible dates January 17th, 2021 to February 13th, 2021): August 12th, 2021

Period 13 (eligible dates February 14th, 2021 to March 13th, 2021): September 9th, 2021

 New T4 reporting requirements for CEWS verification

Employers should note that four new T4 information boxes have been created to reflect payments of employment income made during specified periods in 2020. The CRA will be using the information provided in these boxes to confirm the accuracy of CEWS claims. Beyond using T4 boxes 57 to 60, no additional information is being requested of CEWS claimants.

Clients submitting information to their accounting firms for T4 preparation must also break out payments made for each employee according to the following table:

T4 Box 57 58 59 60
Period March 15 – May 9 May 10 – July 4 July 5- August 29 August 30 – September 26

Canada Revenue Agency is aiming to confirm payments of employment income that correspond with each of these respective periods.

In addition, if your organization has filed a Temporary Wage Subsidy (TWS) claim, you will need to submit a PD27 self-identification form. The PD27 summarizes the payroll remittances that the TWS will cover. The CRA has clarified that it will cross-reference these PD27 filings to match the TWS claim against any remittance deficiency noted on a T4 summary filing.

As always, if you require assistance accessing or processing COVID-19 relief benefits, please contact a member of our team.

Armando Iannuzzi, Co-Managing Partner

Armando Iannuzzi

905-946-1300, x. 239