Tax season is approaching and T4 Tax Slips are being distributed through employer payroll systems and Canadian payroll software. If your company uses payroll outsourcing, then outsourcers will be preparing the correct T4 Tax Slips for your employees. Below is important information for your company when preparing T4 Tax Slips.
What are T4 Tax Slips and how do they affect a payroll system?
A Canadian T4 tax slip, or Statement of Remuneration Paid, is prepared and issued by an employer to advise employees how much employment income they were paid during a tax year and the amount of income tax that was deducted. Quebec employees will receive a RL-1, Employment and Other Income Slip, as well a T4 tax slip. The T4 slip is the equivalent of the W2 form that is issued in the United States.
Who in your payroll system or payroll software receives a T4 Slip?
T4 slips will be issued for each employee who received remuneration with respect to employment where:
• Deductions for Canada/Quebec Pension Plan contributions, Employment Insurance, Quebec Parental Insurance Plan premiums and/or income tax were required.
• The remuneration was $500.00 or more
• Any amount of group term life insurance was provided.
Employment income includes salary, bonuses, vacation pay, controlled tips, commissions, payroll deductions, taxable allowances, the value of taxable benefits and payment in lieu of notice.
What is the Deadline for issuing T4 slips?
T4 tax slips must be completed and issued by the last day of February the year after the calendar year to which the T4 tax slips apply. Ensure your payroll system and payroll software is prepared for this date.
Other T4 Tax Information Slips
Other T4 tax information slips include:
• T4A – Statement of Pension, Retirement, Annuity, and Other Income
• T4A(OAS) – Statement of Old Age Security
• T4A(P) – Statement of Canada Pension Plan Benefits
• T4E – Statement of Employment Insurance and Other Benefits
• T4RIF – Statement of Income From a Registered Retirement Income Fund
• T4RSP – Statement of RRSP Income
It is important to note that employees who work in more than one province during the year must have a separate T4 slip for the earnings and payroll deductions for each province in which they were employed. For example, your Alberta payroll system will be different from your Ontario payroll deductions. If you use payroll outsourcing, your outsourcer will need to account for this.
As well, an employee must receive a separate T4 from each employer they worked for in a calendar year.
For more information regarding T4 slips or to view a sample please follow this link below to the Canada Revenue Agency website.
Jennifer Roche / Payroll Administrator / PEO Canda