Reviewing your 2020 records is the first step to making sure that year-end is a smooth process. Within this step, you should review important year-end dates, review employee and payroll records, and reconcile payroll discrepancies.
The last pay period is likely the best opportunity to process payroll adjustments as part of a recurring payroll to account for discrepancies during the tax year.
Once this period is over, it often entails starting a new period that belongs to the following tax year.
Confirm if the last period's pay date falls on one of the federal bank holidays. For most payroll providers, the deadline to process payroll will be adjusted to the closest business day.
In Humi Payroll, you can see the total number of periods in the Period column on the Run Payroll page. In the example below, the employer has a semi-monthly pay schedule with 24 periods in total, and the last period's pay date will be on December 31st, 2020.
If the final period's payday falls on one of the federal bank holidays, the adjusted run-by date will be one business day before the holiday.
Ensure all payrolls for the 2020 tax year are processed no later than 4:30pm EST on the last run-by date.
Humi Payroll automatically remits your payroll deductions from each pay period to the CRA. However, if you plan on making independent remittances, keep in mind your final due date based on your remittance schedule for the 2020 tax year.
First week of January 2021
First week of February 2021
February 28th, 2021
March 1st, 2021
April 30st, 2021
In addition, make sure all employees paid within 2020 are setup in Humi Payroll, even if they have been terminated. Learn how to do this.
Other resources that may help you:
It is important to have payroll records ready for review before year-end to identify potential discrepancies and facilitate reconciliations. Employers are legally responsible for keeping payroll and employment records for each employee for at least 36 months.
It's also a best practice for employers to backup all payroll records regardless of whether third-party payroll providers produce the records.
Humi provides historical records for all payrolls that are processed throughout the year. In addition, special purpose reports like payroll registers, YTD summaries, remittance summaries, and COVID-19 wage subsidy summaries are available. Learn more about Humi's payroll reporting.
In August, the CRA introduced additional T4 reporting requirements for the 2020 tax year. Employers are required to separately report each employee's employment income for the following periods in the Other Information section:
If you were using Humi Payroll before March 15th, 2020 no further actions are required. When Humi prepares T4 slips at year-end, the relevant amounts will be automatically pre-filled in the employees' T4 records.
If you weren't using Humi Payroll prior to March 15th, at year-end you will be guided through an in-app process to retroactively enter the employment income information. It is highly recommended that you have the payroll records handy during that process.
If you don't have the payroll records on hand, you may still obtain the relevant records by contacting your previous payroll service provider, or in the case where ROEs have been issued to employees, refer to Block 15C insurable earnings by pay period.
If you have already filed all T4 slips and summary for 2020, you don't need to refile to provide the new information.
There are three things to look at when reviewing payroll records.
1. Check for discrepancies in paid benefits or additional income types.
If not done already, confirm that all types of pay offered to employees are set up correctly according to CRA-mandated requirements. Learn more.
Ensure employees’ compensations, taxable benefits & allowances, and additional income types paid throughout the year are accurate and meet statutory requirements.
2. Check for discrepancies in Income Tax, CPP, and EI withholdings, as well as remittances.
Humi Payroll automatically calculates the employer-obligated amounts for statutory deductions based on each employee's pay.
However, it's best practice that employers also perform a self-directed review of all payroll records periodically. The CRA has published a series of helpful resources to facilitate this review process:
In addition, make sure that payroll tax account remittances match payroll registers to-date.
3. Check for discrepancies in claimed Temporary Wage Subsidy amounts vs entitled amounts.
In March 2020, as part of the nation-wide financial aid package, the Canadian Government released the the 10% Temporary Wage Subsidy for eligible employers. If you have claimed the subsidy either on your own or through Humi Payroll, make suret hat the overall claimed amounts are consistent with the actual entitled amounts. The maximum claimable amount for an employer is 10% of the gross remuneration paid to employees between March 18th, 2020 to June 19th 2020, up to a maximum of $1,375 per employee or $25,000 for the company.
If you have made claims through Humi Payroll during the policy's effective period (or retroactively after the period), you can find a summary of all claims made in the in-app COVID-19 wage subsidy report.
Payroll Review Summaries
Throughout the end of 2020 and beginning of 2021, Humi will be providing tailored Payroll Review Summaries for applicable employers via email, which will consist of four sections:
If any discrepancies are discovered in your manual review process or revealed in Humi's Payroll Review Summaries, please contact firstname.lastname@example.org immediately.
Note: the purpose of the summaries is to help reveal basic errors in implementation or usage in Humi Payroll. They are not designed to replace the employer's review of payroll records. Humi does not guarantee all discrepancies are captured in the Payroll Review Summaries.
Remit any owed income Tax, CPP, or EI statutory deductions as part of, or before, the final remittance for the tax year through the CRA's My Business Account. There will be no penalties or interests incurred as long as the owed amounts are remitted and received by the CRA within the remittance period's due date.
As a leniency policy, the CRA offers a last resort resolution known as Payment on Filing, which allows eligible employers to remit a reconciliation payment by the last day of February without being subject to a penalty or interest.
Employers are eligible if they meet all three of the following requirements.
1. If the reconciliation payment is less than 1% of their total annual remittances.
2. They have perfect payroll compliance:
3. They must have one or more of the following circumstances:
However, we generally recommend remitting any owed amounts as soon as possible, so Payments on Filing can be utilized for true emergencies, such as reconciling discrepancies that are discovered after the final remittance due date.
If applicable, reach out to email@example.com to have records adjusted retroactively. This will ensure payroll records in Humi Payroll will reflect the additional remittances made.
To avoid delays in resolution due to the high volume of requests at year-end, it is highly recommended that you provide the specifics of the desired adjustments if possible.