Important information to know
Before you prepare your T4 slips it is important to know the following:
- If you have more than 50 employees, you are required to file your T4 slips electronically.
- For small businesses with fewer than 50 employees, you can send paper copies of the T4 slips to the CRA by mail, but they must be accompanied by a T4 Summary.
- A T4 Summary is a summary of the payments you made to each employee.
- If you submit your T4 slip electronically, you do not have to fill out a T4 Summary.
It is also vital to know exactly what your responsibilities are when you pay employees. As a Canadian employer you must do the following when preparing the T4 slip:
- Deduct Canada Pension Plan/Quebec Pension Plan (CPP/QPP) contributions, employment insurance (EI) premiums, provincial parental insurance plan (PIPP) premiums, and income tax from remuneration or other amounts you pay.
- Hold these amounts in trust for the government and make sure they are separate from your operating costs. Also, make sure that this money is not a part of any estates you will be liquidating or involved in bankruptcy proceedings.
- Send the CPP, EI, federal, and provincial income tax (except in Quebec) to the Canada Revenue Agency (CRA).
- If your business is in Quebec, do the same for the Quebec contributions, but send them to Revenu Québec.
- Report this income and deductions on the T4 slip Summary and then send them to the CRA.
- Issue the T4 slips to each employee no later than the last day of February in the year following the year you are filing for.
When to fill out a T4 slip
You have to fill out a T4 slip to report the following:
- salary, wages (including pay in lieu of termination notice), tips or gratuities, bonuses, vacation pay, employment commissions, gross and insurable earnings of self-employed,
- taxable benefits or allowances,
- retiring allowances,
- deductions you withheld during the year, and
- pension adjustment (PA) amounts for employees who accrued a benefit for the year under your registered pension plan (RPP) or deferred profit-sharing plan (DPSP).
You are required to fill out T4 slips for all individuals who received income from you during the year if:
- you had to deduct CPP/QPP contributions, EI premiums, PPIP premiums, or income tax from their income,
- the payment was more than $500.
You are also required to report income on a T4 slip for the year it was paid, not necessarily for when the work was done. For example, if your employee worked the last two weeks of December 2020, but you did not pay them for this work until January 2021, then you still need to report that income on their T4 slip for 2021, even if that employee never actually worked a day in 2021.
Filling out T4 slips
Before filling out the T4 slips it is important to make sure you have the correct Social Insurance Number (SIN) for each employee. This is important as you need to make sure that the record of earnings is correct as it can affect their CPP or QPP benefits, which will become a big issue later on. If you had an employee who had more than one province or territory of employment during the year, prepare a separate T4 slip for the earnings and deductions that apply to each province or territory. This means that if your company has offices across the country, make sure you know if there have been any transfers between provinces or territories.
Follow these guidelines to fill out your T4 slips:
- Fill out the slips clearly.
- Report, in dollars and cents, all amounts you paid during the year, except pension adjustment amounts, which are reported in dollars only.
- Report all amounts in Canadian dollars, even if they were paid in another currency.
- Do not enter hyphens or dashes between numbers.
- Do not enter the dollar sign ($).
- Do not show negative dollar amounts on slips.
- If you do not have to enter an amount in a box, do not enter “nil”; leave the box blank.
- Do not change the headings of any of the boxes.
Due dates for the T4 slips
There are a few important dates that you need to know when filing T4 slips for your employees. You have to give your employee their T4 slip and file your T4 information return with the CRA on or before the last day of February following the calendar year to which the information return applies. If the last day of February falls on a Saturday or Sunday, your information return is due the next business day. For example, if you are filing T4 slips for the calendar year of 2021, you would need to get the slips to your employees and file them with the CRA by February 28, 2022 (which falls on a Monday). The CRA will consider the T4 slips filed once they have received them or if they are postmarked on or before the due date.
Possible penalties for failure to return
If you do file late, the CRA will consider this a Failure to Return and penalties will be given according to the number of T4 slips you filed late and how many days late you were. The Canada Revenue Agency has assessed these penalties to accommodate smaller businesses so they are not penalized the same amount of money as a larger business. The following chart come from the Government of Canada website that guides employers through filling out T4 slips. Related articles:
