By Karen McKay, CPA, CGA
As COVID-19 took its devastating toll on the economy last spring, the federal government introduced the 10% Temporary Wage Subsidy (TWS). That aid program was quickly followed by the Canada Emergency Wage Subsidy (CEWS). With 2020 quickly drawing to a close, the government is now requiring all eligible businesses, eligible partnerships, non-profits, charities and individuals / sole proprietors having a payroll account to file an election indicating how they have applied the 10% TWS. While there is no official deadline for submitting the PD27 10% Temporary Wage Subsidy Self-Identification Form for Employers (PD27), we recommended that all businesses and organizations that need to report do so by December 31, 2020.
How TWS Works
The TWS allows employers to reduce the amount of payroll deductions they remit to the CRA by up to 10% of the gross salary for the pay dates occurring between March 18 and June 19, 2020. Only the income tax portion of the remittance is eligible to be reduced. EI and CPP remittances must be made in full. The maximum that can be claimed is $1,375 per eligible employee, up to $25,000 per employer.
Meeting the end-of-year deadline for completing form PD27 will require employers to reconcile the discrepancies between the source deductions remitted under the TWS program and the T4 information they will be submitting to CRA in early 2021. If the withheld tax, as reported on the T4, does not match what the business has remitted to the CRA because of the TWS subsidy, the accounts will not reconcile. Form PD27 will explain the difference in advance to the CRA and potentially prevent a Pensionable and Insurable Earnings Review (PIER).
Who Must Complete Form PD27?
Any eligible business or organization that is eligible for the TWS must complete form PD27. Employers that are eligible for both CEWS and TWS must also complete the form to declare the amount of TWS that reduced their CEWS claim. Employers that have only received the CEWS subsidy should still complete form PD27 to indicate that they have not made a claim under the TWS program. Employers eligible for TWS must have had a payroll account with CRA on March 18, 2020.
Relief Program Pay Dates
All pay dates falling within the March 18 and June 19, 2020 timeframe must be reported, even if some of the days covered by the pay period occurred prior to March 18th. Conversely, if an employee is paid after June 19th for work that occurred during the TWS window, that pay is not eligible.
Completing Form PD27
The information required to complete form PD27 is not extensive. For each pay period, employers will need to provide:
- 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.
For more information on form PD27, please contact your GGFL accountant.
