2012 Canadian Year End Income Tax Slip Preparation

posted in: Payroll Basics, Uncategorized | 0

It’s hard to believe that another year has passed.  Where does time go??  This is the most critical time of  year for all payroll professionals.  It’s Year-End.  Are you ready for the challenge, the long hours and very tight deadlines?  Don’t be afraid, not all year-ends are created equally…

What is involved at the end of the year in preparing income tax slips for 2012?  The prep process is simple:

For the organization

1) Compare your PD7A or Notice of Assessments for each remittance made to the CRA (Canada Revenue Agency) to the Statutory Remittances reported on your payroll register

2) Identify and correct any discrepancies

3) Complete your PIER audits

http://wp.me/P2Dyr5-1k

For the Employees

1) Reconcile all earnings to verify what needs to be reported will be displayed on the 2012 income tax slips (T4s)

2) Ensure all manual cheques are added to the employees records

3) Ensure all cancelled cheques are subtracted from the employees records

4) Add in all year end taxable benefits

5)  Prepare your pension adjustments

6) Ensure all employees have a valid SIN (social insurance number) or you will be subjected to fines and penalties

 

Deadlines to prepare Canadian Income Tax returns for both employees and company summaries are February 28 each year.  For all provinces (except Quebec) the forms and the summary must be at minimum post-marked by February 28th.  It is advisable to sent the T4s out at least 5 business days prior to the deadline.  I would suggest the T4 Summary would be couriered to the CRA at least 2 business days prior to the deadline.   For Quebec tax forms (RL-1) and the RL-1 Sommaire (summary) it is mandatory to have both the tax slips and the summary in the hands of employees or RQ (Revenue Quebec) by February 28.  Effective midnight on March 1 your returns are considered late.  Penalties and interest are assessed immediately.  Unlike the Federal year-end simply having the RQ forms post marked by February 28 is not good enough.

One last thing you should know.  If you are shutting down operations or selling your business prior to the end of the year.  The February 28 deadline does not apply to you.  You have 30 days from dissolution of your business to provide T4s and to complete your T4 Summary.  Waiting till the end of the year is not for you.  In fact, your year-end happens on or before the 30 days post closure.  You must send out those income tax slips.  Don’t sit on them till the following year.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/clsccts-eng.html

Here’s to helping you better understand what’s in your pocket

Until next time.

 

Let us know what you think