10% Temporary Wage Subsidy Self-Identification Form
In March 2020, the federal government announced the 10% Temporary Wage Subsidy (TWS) for employers, which would allow eligible employers to reduce the amount of payroll deductions required to be remitted to Canada Revenue Agency (CRA) between March 18 and June 19, 2020. The TWS was capped at $1,375 per employee, and $25,000 per employer. No application was required, and eligible employers manually calculated the subsidy and deducted the amount from payroll withholdings to CRA.
The TWS works in tandem with the Canada Emergency Wage Subsidy (CEWS) program. If an eligible employer claimed both the TWS and CEWS, the TWS amount would reduce the employer’s CEWS claim. An eligible employer could also choose only to apply for CEWS, and not claim the TWS.
In July 2020, CRA released a mandatory reporting form, PD27 10% Temporary Wage Subsidy Self-Identification Form for Employers. Eligible employers who claimed the TWS are now required to complete this form, which will report the total remuneration paid between March 18 and June 19, 2020, income tax deducted from that remuneration, and the total number of employees paid during that period. Employers who were eligible for the TWS and the CEWS, but chose only to claim CEWS, are also required to complete this form in order to elect the TWS to be 0%. If an employer fails to file the form, they may be credited for TWS and their CEWS claim may be reduced. The only situation in which the PD27 form is not required, is if an eligible employer did not participate in either the TWS or the CEWS program.
CRA has not indicated a filing deadline for this form; however, we would suggest that this form be filed in advance of filing your 2020 T4 slips and summary. This will allow CRA to process the form and update your payroll account as necessary.
CEWS T4 Filing Implications
CRA has introduced additional T4 reporting requirements in order to help validate payments made under the CEWS program. When preparing 2020 T4 slips, in addition to reporting the total employment income of an employee in Box 14 or Code 71 as in previous years, employers must now report employment income paid to employees during specific periods that align with the CEWS periods. In the “other information” section at the bottom of employees’ T4 slips, use these new codes for the following periods:
- Code 57: Paid employment income during March 15 to May 9.
- Code 58: Paid employment income during May 10 to July 4.
- Code 59: Paid employment income during July 5 to August 29.
- Code 60: Paid employment income during August 30 to September 26.
The codes above will report the paid employment income for CEWS periods 1 through 7. CRA has not released information as to whether paid employment income for periods after September 26, 2020 will be required, or the corresponding T4 codes.
Note that if you have already filed your 2020 T4 slips and summary, you do not need to refile.
Canada Emergency Rent Subsidy (CERS) Program
On November 19, 2020, the CERS legislation received Royal Assent. The CERS program replaces the Canada Emergency Rent Assistance (CECRA) program.
Program Summary
- The application procedure requires completing and submitting a form to CRA.
- For the base subsidy, the maximum amount of qualifying rent expenses that can be claimed for each qualifying period is $75,000 per location.
- An additional 25% subsidy is available for eligible entities that have experienced a revenue drop and are subject to a public health restriction that has been introduced in response to the COVID-19 pandemic.
- The qualifying periods align with the CEWS program periods, starting with CEWS period 8 (September 27 – October 24).
- The subsidy is based on the revenue reduction percentage. The larger the decline, the larger the subsidy.
General Overview
The following is a general overview of these rules.
ELIGIBLE ENTITIES
Most entities are eligible. The definition of an eligible entity for the purposes of the CERS is the same as that for the CEWS. Eligible entities for both programs can include individuals, taxable corporations and trusts, non-profit organizations, and registered charities.
ELIGIBLE EXPENSES
You must have qualifying property expenses to receive the CERS. Qualifying properties are buildings in Canada that you own or rent and use in the course of your business activities. Eligible expenses can generally be split into two categories – one for tenants and one for owners of real property.
Expenses that qualify for tenants include rent, operating expenses (insurance, utilities, common area maintenance charges), and property taxes.
Expenses that qualify for property owners include mortgage interest, insurance and property taxes.
REVENUE DECLINE
Similar to the CEWS 2.0 program, the subsidy is based on the total decline in revenue. The greater the decline, the greater the subsidy. An eligible entity must calculate its qualifying revenue in order to determine its percentage revenue decline for each qualifying period. This calculation is the same as in the CEWS program.
SUBSIDY AMOUNT
Eligible entities that suffer a decline in revenue because of the ongoing pandemic may qualify to receive rent subsidy support on a sliding scale, up to a maximum base subsidy rate of 65% of eligible expenses. The maximum base rate of 65% is available to entities that experience a revenue decline of 70% or greater.
An additional top-up of 25% is available for those entities that are forced to close or limit their activities because of a public health order.
APPLYING FOR CERS BENEFITS
CERS will support qualifying businesses until June 21, 2021. The first claim period was from September 27, 2020 to October 24, 2020. The application must be filed no later than 180 days after the claim period.
The CERS can be applied for online, through CRA’s My Business Account. To apply, an entity must first create a CERS (ZA) number. The applicant will be prompted to create this number upon accessing the CRA’s online application, and it will be generated immediately.
Walsh King Assistance
Chris Reimer, senior manager in our assurance group, and our team have assisted several clients in successfully applying and receiving funds under the CEWS program.
There are numerous technical issues within the CEWS and CERS rules. We would be happy to assist in the application process.
Posted in COVID-19
