Year-end reporting: what you need to know for 2020
Nov 18, 2020Resources
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Last updated: Tuesday, November 24
Ready or not… here it comes! Year-end is right around the corner, and like the rest of 2020, there’s going to be a learning curve over the next few months. But there’s no need to panic; in fact, now’s your opportunity to do your future self a big favour and get your plans and details in place.
Regular reporting requirements
One of the best ways to prep ahead of time is to get a handle on your upcoming Year-End reporting requirements. Within the Payworks application, clients can access the “Year-End Processing” screen, which includes both a handy checklist to review now and a series of output options and authorizations to be addressed once the new year begins.
One of the steps clients can (and should!) tackle upfront is to review preliminary Year-End reports. They can take a look at Warnings and Shortages and start untangling some future knots now. The Pay Element Setup Summary and the Box Report provide a heads up on how existing payroll data will feed into the required tax forms, and will flag any missing information that can be gathered upfront.
While these preview reports can only reflect payroll data to date, they’ll certainly illuminate any loose ends to be pre-emptively addressed.
Payworks clients are encouraged to review the Guide to Year-End Processing, now located in the Help Centre , or to connect with their dedicated service representative for more details on annual Year-End reports.
What’s different this year?
While the implications of remote work, wage subsidies and all other things 2020 are still being finalized at the government level, there are some proactive report-gathering measures to be taken now:
- The Canada Revenue Agency (CRA) has added four new boxes to the T4 for reporting the employment income and retroactive payments necessary to validate payments for support programs (such as the Canada Emergency Wage Subsidy [CEWS], Canada Emergency Response Benefit [CERB] and Canada Emergency Student Benefit [CESB]).
a. Code 57: Employment income from March 15 to May 9, 2020
b. Code 58: Employment income from May 10 to July 4, 2020
c. Code 59: Employment income from July 5 to August 29, 2020
d. Code 60: Employment income from August 30 to September 26, 2020
Additional details on these T4 changes are available at https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/support-employers-cra-covid-19.html#howto.
The population of these new T4 boxes will be automated within the Payworks application for all clients who’ve processed payroll in the application from March 15, 2020 onwards. For more recent clients, we’re in the process of determining how best to assist in compiling the information required – please stay tuned (and begin assembling your earning and taxable benefit figures from your previous payroll system now!).
- Remember the 10% Temporary Wage Subsidy for Employers (and Payworks’ handy calculator)? While short-lived compared to many other federal relief programs, this initiative was key in assisting many organizations in managing the initial weeks of the pandemic.
The CRA has advised that eligible businesses may need to fill out Form PD27 for each payroll program (RP) account. You can start reassembling the information used for your initial application now, and can learn more on the CRA site: https://www.canada.ca/en/revenue-agency/services/subsidy/temporary-wage-subsidy/tws-reporting.html.
- Given the substantial number of Canadians who’ve relied on government relief programs this year, it’s wise to prepare for an increase in audits to ensure these supports were correctly administered.
This means building and maintaining what the CRA describes as “adequate books and records to ensure that your claim is accurate and complete”, including “ledgers, journals, financial statements, contracts, elections, calculations or other working papers, payroll records, sales invoices and any other relevant document.” The Baseline Remuneration Report, CEWS Earning Report and Employer Paid Contributions Report within the Payworks application are all good places to start – clients are recommended to take a look through the COVID-19 Reports section of the Reports menu.
To get prepped, please review https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-frequently-asked-questions.html#h_8 and https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/keeping-records/what-records-who-keep-them.html.
As 2020 has been all about agility, we encourage all Canadian businesses to get ready and stay responsive as a clearer picture of this Year-End continues to emerge. And in the meantime, Payworks will continue to educate ourselves and our clients about the changes ahead!