Reporting the TWS to the CRA

On this page

• Keep your records
• Submitting your self-identification form
• If you were not eligible for the subsidy
• Reporting the subsidy on the T4 Summary
• Reporting the subsidy as taxable income

Keep your records

You will need to keep information to support your 10% Temporary Wage Subsidy for Employers (TWS) calculation. The Canada Revenue Agency (CRA) may ask you to provide the following:

• total eligible remuneration paid from March 18 to June 19, 2020
• federal, provincial, or territorial income tax deducted from the remuneration paid
• Canada Pension Plan contributions (CPP), Employment Insurance premiums (EI) deducted from the remuneration paid
• total number of eligible employees employed from March 18 to June 19, 2020

Submitting your self-identification form

If you are eligible to take advantage of the TWS, you may need to fill out and submit Form PD27, 10% Temporary Wage Subsidy Self-Identification Form for Employers, for each of your payroll program (RP) accounts. The CRA will use the information from your Form PD27 to reconcile the TWS on your payroll program (RP) accounts.

You are encouraged to provide all the information requested on Form PD27 and submit it to the CRA as soon as possible to avoid receiving a discrepancy notice at the end of the year. You do not need to wait until you file your T4 information return.

Submit your self-identification form online, by mail or fax

Online:

Use one of the following options to submit your Form PD27 online through My Business Account:

• Submit your completed Form PD27 web form
• Scan and submit your completed Form PD27 using “Submit documents”

Sign in to My Business Account Register

By mail or fax:

• Send your completed form to the CRA

  Mail or fax your completed Form PD27 to:

  National Verification and Collection Centres (NVCC)

  Newfoundland and Labrador NVCC
  Post Office Box 12071 Station A
  St-John's NL  A1B 3Z1
  Fax number: 709-772-6677

  Shawinigan NVCC
  4695 Shawinigan-Sud Boulevard
  Shawinigan-Sud QC  G9P 5H9
  Fax number: 819-536-5031

  Surrey NVCC
  9755 King George Boulevard
  Surrey BC  V3T 5E1
  Fax number: 604-585-5774   

  Winnipeg NVCC
  66 Stapon Road
  Winnipeg MB  R3C 3M2
  Fax number: 204-984-4138

The following scenarios may help you complete Form PD27, based on your circumstance:

• Scenario 1 – You are an eligible employer who wants to take advantage of the TWS, but have not reduced your remittances

  If you have not reduced your remittances before now, you need to calculate the dollar amount you are eligible to receive, enter it, and the percentage of the TWS you are claiming, for each pay period in Part D.

  Example

  An employer pays their 4 employees twice a month, on the 1st and the 15th of every month. They remit to the CRA on a monthly basis.

  The first payday in the 3-month eligibility period (March 18 to June 19, 2020) for this employer is April 1, 2020. At the end of the month, the employer needs to calculate their eligible TWS amount and prepare their remittance to submit to the CRA:

  TWS calculation

  Payroll issued	Gross	Income tax (federal & provincial)	Canada Pension Plan (CPP) (both shares)	Employment Insurance (EI) (both shares)	Total deductions	Eligible subsidy (10% of gross)	Income tax after subsidy
  April 1, 2020	$8,000.00	$1,145.32	$778.72	$303.36	$2,227.40	$800.00	$345.32
  April 15, 2020	$8,000.00	$1,145.32	$778.72	$303.36	$2,227.40	$800.00	$345.32
  Total	$16,000.00	$2,290.64	$1,557.44	$606.72	$4,454.80	$1,600.00	$690.64

  The employer’s total eligible TWS amount is $1,600, based on 4 employees over a 1 month period. The employer can now reduce the income tax portion of their remittance by $1,600, and remit the following amounts to the CRA:

  Remittance amount submitted to the CRA

  Deductions	Total
  Income Tax	$690.64
  CPP	$1,557.44
  EI	$606.72
  Total remittance	$2,854.80

  The employer needs to keep a detailed record of this transaction to provide to the CRA in order to validate their reduced remittances, if required. They also need this information to calculate their eligible TWS amount for their next period’s remittance, as they need to ensure they do not go over the maximum of $1,375 per eligible employee to a maximum of $25,000 per employer.

  In this particular calculation, 10% of the employer’s gross remuneration is $1,600, which is within the maximum amount per employee (4 employees at $1,375 = $5,500) and the maximum amount per employer ($25,000). Therefore, the employer can take advantage of the full $1,600.

  If the employer keeps 4 employees with the same payroll every period, they will provide the following information to the CRA for each eligible pay period on Form PD27:

  Subsidy calculation with 4 eligible employees employed from March 18 to June 19, 2020

  Subsidy calculation with 4 eligible employees employed from March 18 to June 19, 2020

  From pay period	To pay period	Gross remuneration in pay period	Income tax deducted	CPP contributions	EI premiums	Wage subsidy claimed ($)	Wage subsidy claimed (%)
  2020-03-18	2020-04-01	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  2020-04-02	2020-04-15	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  2020-04-16	2020-05-01	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  2020-05-02	2020-05-15	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  2020-05-16	2020-06-01	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  2020-06-02	2020-06-15	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  Total	-	$48,000.00	$6,871.92	$4,672.32	$1,820.16	$4,800.00	-

  However, if the employer had the same payroll for three months but did not reduce their remittances during the entire 3-month eligibility period, they can still take advantage of the TWS. In this case, the employer can still calculate and report the eligible TWS amount of $4,800 and choose one of three ways to apply the subsidy. They can:

  • 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 at the end of the year
  • 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).

  The employer should state how they want to apply the eligible TWS amount on their Form PD27 under Additional Comments.

• Scenario 2 – You are an eligible employer who wants to take advantage of the TWS and have already reduced your remittances

  If you have already reduced your remittances, you need to enter the dollar amount and percentage of the TWS you claimed for each pay period in Part D, and provide details on how you reduced your remittances under Additional Comments.

• Scenario 3 – You are an eligible employer who wants to take advantage of the TWS and have already reduced your remittances, but you have not used your full eligible TWS amount

  If you already reduced your remittances but your income tax amount was lower than your eligible TWS amount, you can advise the CRA and continue to reduce your remittances before calendar year end until you reach your eligible TWS amount.

  Example

  An employer pays their 4 employees twice a month, on the 1st and the 15th of every month. They remit to the CRA monthly.

  The first payday in the 3-month eligibility period (March 18 to June 19, 2020) for this employer is April 1, 2020. At the end of the month (April, for this example), the employer needs to calculate their eligible TWS amount and prepare their remittance to submit to the CRA.

  TWS calculations

  Payroll Issued	Gross	Income tax (federal & provincial)	Canada Pension Plan (CPP) (both shares)	Employment Insurance (EI) (both shares)	Total deductions	Eligible subsidy (10% of gross)	Income tax after subsidy	Remaining wage subsidy for period
  April 1, 2020	$8,000.00	$572.66	$389.36	$303.36	$1,265.38	$800.00	$0.00	$227.34
  April 15, 2020	$8,000.00	$572.66	$389.36	$303.36	$1,265.38	$800.00	$0.00	$227.34
  Total	$16,000.00	$1145.32	$778.72	$606.72	$2,530.76	$1,600.00	$0.00	$454.68

  The employer's total eligible TWS amount is $1,600 based on 4 employees over a 1-month period. The employer is now eligible to reduce their income tax by $1,600 in the 2020 tax year; however, since they have only $1,145.32 in income tax for the period, they can reduce their remittance by $1,145.32 only. They will remit the following amounts to the CRA:

  Remittance amount submitted to the CRA

  Deductions	Total
  Income Tax	$0.00
  CPP	$778.72
  EI	$606.72
  Total remittance	$1,385.44

  The employer needs to keep a detailed record of this transaction to give to the CRA to validate their reduced remittances, if required. They also need this information to calculate their eligible TWS amount for their next period's remittance. This will help them make sure they do not go over the maximum of $1,375 per eligible employee and the maximum of $25,000 per employer. They will be able to reduce their future remittances by an additional $454.68 of leftover eligible subsidy.

  In this particular calculation, 10% of the employer's gross remuneration is $1,600. This amount is within the maximum per employee (4 employees at $1,375 = $5,500) and the maximum per employer ($25,000).

  If the employer keeps 4 employees with the same payroll every period, the employer will submit the following information for each eligible pay period on Form PD27:

  Subsidy calculation with 4 eligible employees employed from March 18 to June 19, 2020
  Remittance amount submitted to the CRA

  From pay period	To pay period	Gross remuneration in pay period	Income tax deducted	CPP Contributions	EI premiums	Wage subsidy claimed ($)	Wage subsidy claimed (%)
  2020-03-18	2020-04-01	$8,000.00	$572.66	$389.36	$303.36	$800.00	10%
  2020-04-02	2020-04-15	$8,000.00	$572.66	$389.36	$303.36	$800.00	10%
  2020-04-16	2020-05-01	$8,000.00	$572.66	$389.36	$303.36	$800.00	10%
  2020-05-02	2020-05-15	$8,000.00	$572.66	$389.36	$303.36	$800.00	10%
  2020-05-16	2020-06-01	$8,000.00	$572.66	$389.36	$303.36	$800.00	10%
  2020-06-02	2020-06-15	$8,000.00	$572.66	$389.36	$303.36	$800.00	10%
  Total	-	$48,000.00	$3,435.96	$2,336.16	$1,820.16	$4,800.00	-

  The remittances the employer will submit to the CRA for each month of the 3-month eligibility period will be $4,156.32. They will reduce the income tax portion to zero and the remaining CPP contributions and EI premiums to a total of $692.72 ($389.36 + $303.36) for each period.

  The employer would have been eligible to reduce their remittances by $4,800 but could only reduce them by $3,435.96 (the total income tax deducted during the eligibility period). As a result, the employer can reduce the income tax portion of their future remittances by the remaining TWS amount $1,364.04 ($4,800 - $3,435.96). The employer has not exceeded their employee maximum of $5,500 ($1,375 x 4) or the employer total of $25,000.

  If the employer's payroll stays the same after the 3-month eligibility period, they can reduce the income tax portion of half of their June remittance to zero, and reduce the income tax portion of their July remittance by the remaining eligible TWS amount of $791.38. ($1,364.04 - $572.66). This means the employer will have to submit $353.94 ($1,145.32 - $791.38) of income tax in that remittance.

  In Additional Comments on Form PD27, the employer should give details of how they applied their eligible TWS amount. In this case, the employer would write that they reduced the income tax portion of all remittances in the 3-month eligibility period to zero and that they plan to reduce their future remittances by their remaining eligible TWS amount of $1,364.04.

• Scenario 4 – You are an eligible employer who wants to take advantage of a reduced percentage of the TWS

  If you elect for the TWS to be equal to a lower percentage of the remuneration you paid for a specific pay period in order to claim a portion of the Canada Emergency Wage Subsidy (CEWS), you need to enter the reduced dollar amount and percentage that you are claiming for that specific pay period in Part D. If you fail to do so, you will be credited for the entire TWS and your CEWS claim may be reduced and recovered, if necessary.

  Example

  Using the same calculations as the example in scenario 1, a similar employer also qualified to apply for the CEWS.

  Since the employer qualified for both the TWS and the CEWS, they decided that beginning with the May 15, 2020 payroll, they would no longer calculate the TWS for access to immediate capital and would only apply for the CEWS to save on calculating two subsidies.

  The calculations for the employer’s April remittance are identical to the calculations in the example in scenario 1, above. They will reduce their remittance by $1,600, and send $2,854.80 to the CRA.

  The employer’s calculations for their May remittance, however, are different because they are electing not to claim the TWS for the second pay period:

  TWS calculations

  Payroll Issued	Gross	Income tax (federal & provincial)	Canada Pension Plan (CPP) (both shares)	Employment Insurance (EI) (both shares)	Total deductions	Eligible subsidy (10% of gross)	Income tax after subsidy
  May 1, 2020	$8,000.00	$1,145.32	$778.72	$303.36	$2,227.40	$800.00	$345.32
  May 15, 2020	$8,000.00	$1,145.32	$778.72	$303.36	$2,227.40	$0.00	$1,145.32
  Total	$16,000.00	$2,290.64	$1,557.44	$606.72	$4,454.80	$800.00	$1,490.64

  The total eligible TWS amount the employer is electing to claim is $800 (the eligible TWS for the first pay period). The employer can now reduce the income tax portion of their remittance by $800, and remit the following amounts to the CRA:

  Remittance amount submitted to the CRA

  Deductions	Total
  Income Tax	$1,490.64
  CPP	$1,557.44
  EI	$606.72
  Total remittance	$3,654.80

  The employer’s June remittance will not require any calculations or deductions related to the TWS because they have elected not to claim it for these pay periods. They will remit all deductions to the CRA for this month.

  The employer will provide the following information to the CRA in Form PD27

  Subsidy calculation with 4 eligible employees employed from March 18 to June 19, 2020

  Payroll Issued	End of the Pay Period	Gross remuneration in pay period	Income tax deducted	CPP Contributions	EI premiums	Wage subsidy claimed ($)	Wage subsidy claimed (%)
  2020-03-18	2020-04-01	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  2020-04-02	2020-04-15	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  2020-04-16	2020-05-01	$8,000.00	$1,145.32	$778.72	$303.36	$800.00	10%
  2020-05-02	2020-05-15	$8,000.00	$1,145.32	$778.72	$303.36	$0.00	0%
  2020-05-16	2020-06-01	$8,000.00	$1,145.32	$778.72	$303.36	$0.00	0%
  2020-06-02	2020-06-15	$8,000.00	$1,145.32	$778.72	$303.36	$0.00	0%
  Total	-	$48,000.00	$6,871.92	$4,672.32	$1,820.16	$2,400.00	-

  The employer would have also reported the TWS amounts they took advantage of in their CEWS application.

  For the March 15 to April 11, 2020, period, the employer reported the TWS amount of $800 on the CEWS application for their April 1 payroll.

  For the April 12 to May 9, 2020, period, the employer reported the TWS amount of $1,600 on the CEWS application for their April 15 and May 1 payroll.

  For the employer’s CEWS applications, they will enter $0 for Line F, 10% Temporary Wage Subsidy for Employers reduction, because they elected not to take advantage of the TWS for those periods.

• Scenario 5 – You are an eligible employer whose pay period is outside of the 3-month eligibility period

  If your pay period began before March 18, 2020, but you paid your employees on or after March 18, 2020, the remuneration still qualifies for the TWS. You need to enter in Part D the dollar amount and percentage of the TWS you are claiming for each pay period. If you are submitting Form PD27 through My Business Account, select March 18, 2020, as the start date for any pay period that began before March 18, 2020.

  Example

  An employer’s first eligible pay period was March 10 to March 16, 2020, and they paid their employees on March 19, 2020. The employer’s second eligible pay period was March 17 to March 23, 2020, and they paid their employees on March 26, 2020.

  If they submit Form PD27 via My Business Account, they will:

  • enter March 18, 2020, as the start date and end date for the first pay period, and state under Additional Comments that the first pay period was paid on March 19, 2020
  • enter March 18, 2020, as the start date and March 23, 2020, as the end date for the second pay period

  If they submit Form PD27 via mail or fax, they will:

  • enter March 10, 2020, as the start date and March 16, 2020, as the end date for the first pay period, and state under Additional Comments that the first pay period was paid on March 19, 2020
  • enter March 18, 2020, as the start date and March 23, 2020, as the end date for the second pay period

  If the pay period began on or before June 19, 2020, but you paid your employees after June 19, 2020, the remuneration does not qualify for the TWS.

• Scenario 6 – You are an eligible employer who does not want to take advantage of the TWS

  There are two categories of employers who are eligible for the TWS, but are electing not to take advantage of it:

  1. As an employer you are electing not to participate in both the CEWS and TWS. You do not need to submit the Form PD27.
  2. Your organization has applied for CEWS and does not want to participate in two programs. If you are eligible for the TWS but you want to participate only in the CEWS, you can make a special election for your TWS to be equal to 0% of the remuneration you pay. To make the election, enter March 18 to June 19, 2020, as the pay period and enter “0” in Part D for the dollar amount and percentage of the subsidy you are claiming.

  If you do not enter “0” in Part D, you will be considered to have taken advantage of the full 10% TWS and your CEWS claim may be reduced and recovered if necessary.

If you were not eligible for the subsidy

The CRA will use information from your Form PD27 to reconcile the subsidy on your payroll program (RP) account(s). If you reduced your payroll remittances, but it is later determined you were not eligible for the TWS, the CRA will assess you for the income tax you deducted from your employees’ pay, but did not remit. This assessment may include penalties and interest.

Reporting the subsidy on the T4 Summary

If you take advantage of the TWS, you may include your TWS amount on Line 82 of the T4 Summary, as this amount is part of the remittances you made to the CRA in 2020. This is in addition to completing and submitting your Form PD27.

Reporting the subsidy as taxable income

If you take advantage of the TWS, you must report the total subsidy amount as income on your tax return in the same year you reduced your remittances.