Essential Things to Consider for Year End T4 Filing

As the holiday season is fast approaching, this might not be the most wonderful time of the year for those who are involved in the payroll process including the payroll professionals and CFOs. But with the services of the MT Alfano Enterprises, you have less to worry about as we got you covered with our newly revised year-end T4 guide for 2015.

The T4 slip is an information slip that shows how much an employer has paid its individual employees within a calendar year. While it mainly includes the wage that the employee receives, it also includes benefits, allowances, deductions, and pension plan contributions. These are subsidiary payments which are considered taxable benefits to your employees and it must be reported to CRA.

It will allow the employee to complete their tax return and will notify the CRA how much money they have received. In other words, it shows the neat summary of the employee’s life at the company for a particular year. When it comes to tax filing time, this will ensure that both the employee and the CRA are on the same page.

There are some things to consider when it comes to T4.  For example, you pay an employee more than $500 in a year or you collect CPP/QPP contributions, EI premiums, or income tax from the remuneration, you are required to issue a T4. Take note that most remuneration is EI insurable and you have to issue a T4 when you pay an employee.

Meanwhile, there are a few instances when the T4 is still needed even if you didn’t pay the employee any amount of money. One case is when you provide your current employees with taxable group term life insurance benefits. If you provide such benefits to your former or retired employees, issue a T4A while for your current, former, or non-resident employee with security options, a T4 slip is needed.

Also, the income that you have reported on a T4 slip is the income for the year which it was paid, not during the services where they were rendered. Example, if one employee works in late December and you pay the hours for that work in early January, such income must be reported on the T4 for the subsequent year.

Lastly, the T4 must be issued on a province by province basis. This means that if one employee worked in more than one province, he/she should receive separate T4s for each province. Going back to the $500 rule mentioned previously, it means that you have to include the total income from all T4s that were issued on behalf of a single employee.

The entire T4 process can be a daunting task especially if you ignore some key steps. With a lot of stakeholders and little boxes that you have to take a look carefully, the room for error can be huge. However, the key here is preparation. You can also tap the services of professionals who specialize in this field for an efficient and effective year-end payroll filing. To have a smooth year-end, work it out with MT Alfano Enterprises for accurate and up-to-date legislative requirements.

Canada Revenue Agency: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4/menu-eng.html

Helping you understand what’s in your pocket…

Until next time