TAX YEAR 2020 - CRA New T4 reporting requirements for Employers

SOLVED

CRA is now requiring employers to report the income of employees during the COVID-19 pay periods on their T4 Slips or Statement of Remuneration Paid so that CRA can validate payments made to workers under the Canada Emergency Response Benefit (CERB).

For the tax year 2020, CRA requires to use new other information codes when reporting employment income for 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

Is there a way that Sage can include the above additional codes on T4 slips and automate the calculation of employees’ income on the aforementioned pay periods?

Our company is using Sage 50 Pro Accounting (Release 2020.2) and we have about 400 employees. An automation of this additional requirement on employees’ T4s for the tax year 2020 would be of great help.

Thank you!

  • 0

    Questioning this process as well?I use sage50 Quantum Accounting and currently, all my income lines are used. Is Sage going to update the software so we are able to include these new codes?

  • 0 in reply to dccarter

    I still have not received any answer from Sage. I did already e-mail Customer Portal <[email protected]> but I was only advised to call their support team at 888-522-2722.

  • 0 in reply to Jarem

    Ahhh, I left a call back # for customer support. If I find anything out, I will post it here on this thread.

  • 0 in reply to dccarter

    Thanks, will do the same too. Just kinda busy this week coz of our payroll and month-end too.

  • 0 in reply to Jarem

    Yep, me too.
    Sounds good!

  • 0

    Hello all, 

    Great question, I've forwarded this onto the Sage 50 CA support and R&D team for feedback on what Sage 50 CA modifications can be expected. Will update you all with any news. 

    Warm Regards, 
    Erzsi

  • 0 in reply to Erzsi_I

    Excellent!
    I'm currently on hold to speak with a sage representative. Hopefully they can provide some updates.I will post any new information

  • 0 in reply to dccarter

    so there will be an update offered with these requirements, hopefully before the end of the year, if not,  by the new version of 2021. Hope this helps!

  • +1 in reply to dccarter
    verified answer

    Yes, I received the following 30 minutes ago from the product team who expects the CRA to announce further changes in the next few months:

    As a result of government COVID-19 programs, some changes for T4 reporting at the end of the year were expected. In addition to the usual updates in payroll tax tables and payroll forms, the Sage 50 product team was, and is, committed to making changes required for COVID-19 reporting. The Sage 50 team is currently reviewing how these new requirements will be supported.

    It is expected that the customers can continue as they have without making changes to their payroll.

    In addition to reporting employment income in Box 14, Sage 50 will likely automatically report the income paid in the separate periods as separate codes as is required.

    Customers will be expected to update to the latest version (which will be Sage 50 2021.1), to print and report their 2020 T4’s as the functionality for the new codes will likely not be added to the Sage 50 2020.3 tax table update.

  • 0 in reply to Erzsi_I

    Hi Erzsi - please pass along to the product team that they need to research whether the CRA wants the amount EARNED in the period, or PAID in the period.  And what if a company's pay period has the first week in one CRA period and the second week in the subsequent CRA period.  Thank you!

  • 0 in reply to Brenda - The Office

    Brenda, the CRA announcement with examples was reasonably clear that this reporting as with all reporting on a T4 form is based on the date paid. This makes it relatively easy to automate as the payroll programs have the amounts required by date paid. IF the reporting was to be based on earnings then it would be a totally manual process.

    Also, as stated this reporting is to assist with the audit the of the CERB benefits and amounts received by individuals during the various CERB periods. CERB only worked with amounts received not earned.

    Hope this helps

    No, I am not a programmer, although I have been in years passed, and I don't want to take away anything from the complexities of the programming at Sage to update Sage 50. They perform a great function. 

  • 0 in reply to Alwyn

    HI, Alwyn - I looked at the CRA announcement as well.  It was reasonably clear when have a payroll where the earnings period is before the date actually paid - it was the date paid that was to be used.  But I have a client who pays semi-monthly right up to that date (any adjustments made next pay period) so we have a situation where the pay period ended 15th March (first day for Code 57) but the cheques were cut and issued on Friday 13th.  Am not certain if the gov't wants that paycheque included in Code 57 or not.  The client's business was closed on the 15th as it's a Monday through Saturday operation.  Have you any ideas?

    Thanx.

  • +1 in reply to Jo Ruelle
    verified answer

    My thoughts are that the reporting in the box is based on the date of the payment. What they are trying to trace is related to CERB. Did the employee receive more than the $1,000 in the Period? Did they report the correct payments received when they applied for CERB? The date of payment is also the trigger for reporting on a T4 when it comes the beginning or end of the year. If the pay date is January 2nd it is report in that year not when earned. I also have an employer who pays on the 15th of the month for the full month, however, in March 2020 the 15th was a Sunday so the payment was made on the 13th paying to the end of March. When I checked with CRA regarding the TWSE they advised that the date of the check is the trigger, not the period being paid. Similar situation here is my take.

    This reporting has nothing to do with CEWS which is based on earnings.

  • 0 in reply to Alwyn

    Thanx, Alwyn.  That was my thought as well, but it's nice to have it confirmed.  I've done taxes for years so am very aware of the pay period issue as have had too many young'uns who thought that - because they'd quit the job end December - that last cheque they received in January was on the previous year's T4. and got caught by CRA's matching.  T4E's also had that issue.

    CEWS, I also agree, is quite a different matter - it's the revenue decrease that counts there but will require extra documentation (Excel is handy).  What CRA is doing is checking to see what people claiming CERB actually made during the payment periods.  However, I note that Code 57 covers periods 1 &2, Code 58 covers periods 3 & 4, Code 59 covers periods 5 & 6, and Code 60 covers period 7.  So this could get interesting for taxpayers who were eligible for CERB in some periods but not in others to prove  their eligibility for the periods in which they collected the $500/week.  I can foresee a lot of demand by employees for a modified Employee Report (detail) showing all the payment dates and amounts.

  • 0

    Does anyone know if non-cash taxable benefits (e.g. group life insurance and auto standby charges) are to be included in boxes 57 - 60 on the T4 and also on the 10% Temporary Wage Subsidy Self-Identification form?

  • 0 in reply to mrf
    SUGGESTED

    You have just opened one nasty can of worms.  I rather suspect, if group life insurance has been continued for the laid-off employee and said employee still has use of the company vehicle, these would be considered part of the remuneration for the relevant periods.  These would affect the 10% subsidy only in that they might raise the employee above the maximum and so limit the amount of the subsidy.  I used Exel to track the employees where doing this as had a few max out.

    I do know that the Canadian Payroll Association strongly urges employers to include taxable benefits on each pay statement where at all possible.  Group benefits such as life insurance are relatively easy to do within Sage though, again, I do have s/sheets as backup.  For the auto standby, my recollection is that an estimate is put on each paycheque with a final reconciliation at year-end.  This way, the proper calculations can be made for CPP, EI, and FIT.  If an employee maxes out on EI and CPP anyway, it's not so crucial except where FIT deductions are concerned, and this can be rectified by taking additional FIT on each paycheque.

    I do include taxable benefits on each paycheque for my clients.  Don't happen to have any auto standby charges - for which I am profoundly grateful - but strongly recommend you get going with s/sheets in the event you do have to go back and adjust those periods.  If - as is possible - that involves a prior year, the client's accountant will need to be involved as well.

    Good luck.

  • 0 in reply to Jo Ruelle

    Hey Jo:

    I fully agree that if a benefit was paid as an allowance it is to be included in the calculations. For the purposes of TWSE the amount had to be on the payment made during the three periods as this subsidy involved the amounts paid. These are the amounts which will be shown on the T4 forms in the special boxes 57 - 60. Because the subsidy is based on the amount paid within each of the Periods, Sage is likely to be able to program the completion of these boxes. If the amount was not on the pay cheques at the time I would wonder about making any changes now. If the normal accounting practices for a firm would only include an allowance, such as the car stand by charge, twice a year it would only be included for TWSE if the payment is made on a pay cheque between March 18th and June 19th. Just my way of looking at it after reading as much as I can find including the relevant sections of the ITA.

  • 0 in reply to Alwyn

    The taxable benefits were not paid to the employee, they were paid by the company which makes them non-cash taxable benefits .  I was told that non-cash taxable benefits were not to be included when I applied for the actual subsidies which is why I'm not sure if they need to be included on the new T4 Reporting requirements for boxes 57 - 60 and also on the TWS Self-Identification form.  

  • 0 in reply to mrf

    Interesting, mrt.  They are subject to CPP, EI, and FIT, so why wouldn't they be included as income for that period.  CRA may be ignoring them because a lot of firms do a year-end reconciliation of same and then putting them on the last paycheque of the year or making a Dec 31 adjustment.

    Have this question into the Payroll Association so will see what they say.

  • 0 in reply to mrf

    mrf - my message may have been a little misleading. The first comment I made was my intention. The amounts for the non-cash taxable benefits and allowances had to be on the payment made. Yes, non-cash items are not paid out but they have to be included in the total remuneration for purposes of calculating the deductions. The amounts are then deducted before the cheque amount is determined. The total remuneration for each period is the important number for calculating TWSE and CEWS.

  • 0 in reply to Alwyn

    Jo, thanks for checking with the Payroll Association.  On the CRA website page for CEWS, Eligible Remuneration, it specifically says 'eligible remuneration includes amount you PAID an employee... eligible remuneration does not include amounts such as non-cash taxable benefits'

  • 0 in reply to mrf

    Hi - My question exactly. I made a spreadsheet for all periods involved and entered the amounts that I claimed in my CEWS - these amounts do not include Standby charges or any other non cash taxable benefits - now I'm wondering if I am supposed to include total GROSS Earnings for each period? We have already reported the non taxable benefits (usually box 40) in T4's?

  • 0 in reply to SharonBookkeeper

    Clarification by telephone with the CRA - the amounts to be reported in the four new boxes on the T4 form are the actual payments made to an employee between the dates required for each box. If a payroll payment is made on March 15th it is not included in Box 57. However, if the payment date is March 18th it is included. It is the actual payment amount and the payment date that determines how much is reported in each of the new Boxes. The claimed amounts for TWS and CEWS have no bearing on this reporting. The amounts reported are important  for the auditing of the CERB only.

  • 0 in reply to Alwyn

    Hi - Yes I understand the date parameters of the reporting periods - my question is - Taxable Benefits including Life Insurance / Auto Standby charges etc are always included in your gross Earnings. When reporting the amounts for boxes 57 - 60 are these taxable benefits also to be included in Gross Earnings for each period?