Were you eligible for the 10% Temporary Wage Subsidy and you accounted for it during 2020? If you did and you have a payroll account with the Canada Revenue Agency, you have to complete and submit Form PD27. As an employer, filing your TWS information on time is important. Elevate and Alex Mitrovic, CPA, CA, of Welch LLP will guide you through this important process.
“There is light at the end of the tunnel as to the global pandemic and the havoc it has caused for Canadian business owners”, says Alex, he continues “it’s important to remain compliant with CRA regardless of your situation. My team, along with Elevate, want everyone to be as audit-proof as ready. We have helped countless businesses stay afloat and thrive despite the upheaval – let’s get to the finish line together and ensure all is in order”. Alex has provided the following information to help you get there.
Do any of the following apply to you:
- Remittances were already reduced;
- Remittances are intended to be reduced at year-end; or
- The Canada Emergency Wage Subsidy (CEWS) was claimed in the year 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).
Form PD27 Due Before Filing of T4s
CRA has indicated that the PD27 must be processed by them before the TWS credits claimed by the employer will be posted to the source deduction account. Consequently, the PD27 needs to be filed before the T4s are filed as it informs CRA of the discrepancy between the remitted amounts during the year and the tax deductions reported on the T4s. Failure to do so may trigger a Pensionable and Insurable Earnings Review (PIER) by CRA.
Part D of Form PD27 requires the employer to provide details of the calculated wage subsidy, and also provides a box for written comments to provide further details not included in the calculations. CRA will use this form to verify the TWS claimed as well as reconcile to the CEWS claimed, if applicable. Eligible employers who only claimed the CEWS are still required to file Form PD27, indicating in the comment box the lower percentage claimed.
Claiming the TWS
If you have not yet reduced your remittances with the TWS, you can still calculate and apply for the subsidy using the Form PD27. Employers should indicate in the Additional Comments section of the Form how they would like to apply the subsidy. The three options are:
- Reduce the income tax portion of their future 2020 remittances, up to the total eligible TWS amount;
- Request that the CRA pay the total eligible TWS amount to them; or
- Request that the CRA transfer the total eligible TWS amount to the next year’s account (the CRA will do this after it has processed the next year’s T4 information return).
Completing Form PD27
For each pay period identified on the form, the employer will need to provide the following information:
- Gross remuneration per pay period
- Income tax deducted
- CPP contribution (both employer and employee portions)
- EI premiums (both employer and employee portion)
- Wage subsidy claimed in dollars
- Wage subsidy claimed as a percentage
- An explanation as to which remittance(s) was reduced. If the full TWS has not been claimed an explanation of how the employer intends to reduce subsequent remittances, seek a refund, or state its intention to file only under the CEWS program.
The self-identification form can be submitted online, by mail or fax. Online submissions are filed through CRA My Business Account. Parsing through payroll guidance can be daunting. If you are unsure of where to start, need help moving it along, or want to entrust us with the work, please reach out to us at [email protected]