Firstly, what is a “successor employer”? A successor employer is a new employer that continues its predecessor’s business in substantially unchanged form and hires employees of the predecessor as a majority of its workforce.
If your business amalgamates with another, special rules apply with respect to T4 reporting. You as the successor employer can keep the business number (BN) of one of the corporations, or you can apply for a new one. If one of the corporations is non-resident, however, you must apply for a new BN.
Since no new employer exists for CPP and EI purposes, continue deducting normally, considering the deductions and remittances that occurred before the amalgamation. These remittances will be reported under the payroll program account of the successor BN.
If you had previously been granted a reduced employer’s EI premium rate, you will need to contact Employment and Social Development Canada to make sure you are still eligible for the reduced rate.
Where your business amalgamates and you are a successor employer, the requirement to file a T4 slip will depend on whether the predecessor’s company remittance balance is transferred to the payroll deduction account of the successor company:
- Balance is moved to the successor’s BN: If the remittance balance is moved to the successor’s payroll deduction account, the predecessor does not file T4 slips for the period leading up to the amalgamation. The successor files the T4 slips for the entire year by the regular due dates.
- Balance is not moved to the successor’s BN: If the remittance balance is not moved to the successor’s payroll deduction account, the predecessor must file T4 slips for the period up to the day before the amalgamation (within 30 days of the account closure). The successor files the T4 slips from the amalgamation date until the end of the year by the regular due dates.
With an amalgamation, the predecessor corporations do not have to file T4 returns for the period leading up to the amalgamation. The successor corporation files the T4 returns for the entire year.
All employers that request approval for the amalgamation of the corporations involved are to send their request in writing, including a copy of the Certificate of Amalgamation or similar document, to their CRA Tax Centre.
Looking for more details? Visit the Government of Canada website on this topic here: https://www.canada.ca/en/revenue-agency/services/tax/canada-pension-plan-cpp-employment-insurance-ei-rulings/cpp-ei-explained/employer-restructuring-succession-employers.html
This article is an excerpt from Dialogue Magazine, which is received by members of the National Payroll Institute. If you are not already a member, we encourage you to join.
