For most businesses the T4 season is a stressful one with added responsibilities and tight timelines. This reality is especially true for businesses that calculate payroll manually throughout the year with the help of Canada Revenue Agency (CRA) calculators. Even if you are using a helpful software program like QuickBooks, T4s can still be a daunting process. Unfortunately, it’s one of the main responsibilities that falls upon businesses both large and small when there are employees waiting on their T4 slips to complete their personal income taxes.
The good news is that you don’t need to take on the T4 season alone. AIS Solutions offers a variety of services that are designed to provide you with the help and support you need during the T4 season. An added bonus? Our processes and support will help you to alleviate the burden of accounting and bookkeeping tasks all year round.
What are T4 slips in Canada?
As any working Canadian can tell you, a T4 slip or Statement of Remuneration Paid is a vital part of keeping track of how much money an employee has made while working for a company and the taxes that have come off of their paychecks. But from an employer’s point of view, there’s a little more to it.
A T4 slip is an information slip which reports how much you, as an employer, have paid to your individual employees in a calendar year. It reports not only the basic wages but also any other expenses paid out on the employee’s behalf. This includes things like RRSP contributions, medical and dental benefits, and car allowance. All of these subsidiary payments are considered taxable benefits to your employees, and therefore they must be reported.
CRA requires that all employers provide a T4 slip to their employees as well as file with CRA. There are two steps to the T4 filing process:
- Prepare the T4 slip that is provided to the employee.
- Prepare the T4 summary that is provided to the CRA.
T4 Slips Provided to the Employee
The T4 slip provided to the employee must outline all monies that are paid to them in the form of:
- Salary
- Wages (including termination pay in lieu of notice)
- Bonuses
- Vacation pay
- Tips and gratuities
- Honorariums
- Director’s fees
- Management fees
- Executor’s and administrator’s fees received to administer an estate.
All of these forms of income are reported in Box 14 of the T4 slip.
The remaining boxes break down the individual deductions and payments made to the employees. It’s important that CPP, EI, and income tax are deducted from the employee’s paycheque throughout the year to avoid you, the employer, being charged with “failure to deduct” penalties.
T4 Summaries Provided to CRA
The T4 summary prepared for CRA acts to summarize the total wages paid and deductions made across all of your employees. CRA will compare the amounts deducted for CPP, EI, and income tax on this report against the source deductions remittances you made throughout the last year.
The calculations required in the T4 summary will show whether you under- or over-remitted throughout the year. If you under-remitted your source deductions, you should make the shortfall payment to CRA either with the return or through your banking institution as soon as possible to avoid any additional penalties.
What Happens if a Company Doesn’t Give Employees Their T4 Slips?
As stated by the Government of Canada, businesses must give employees their T4 slips on or before the last day of February of the following year for which the slips apply. Failure to do so may be assessed as a penalty, which could lead to potential fines. The penalty for not giving employees their T4 slips is $25 per day per recipient, with a minimum penalty of $100 and a maximum of $2,500.
Employers have the option of giving their employees paper or electronic copies of their T4 slips through a secured portal. Even with this option, companies can find it difficult to provide all of their employees their slips on time. That’s where it’s especially helpful to have the experience of an established and dedicated bookkeeping team like AIS Solutions on your side.
How Can AIS Help Get You Through T4 Season?
AIS has several ways to help you get through the T4 season, so you can focus on the day-to-day elements of growing your business and avoid the burden of bookkeeping.
Payroll Services
The T4 season may be a painful time for business owners, but payroll overall may also be a source of struggle. We offer payroll services to not only help you maneuver through the tumultuous T4 season but throughout the whole calendar year. We also manage deadlines and requirements to help businesses avoid costly late filing fees. Find out more about how you can get started with AIS and our impeccable payroll services.
QuickBooks Training and Support
Whether you are brand new to QuickBooks, have been using it for years, or have no clue what it is, we can help you learn more about using this incredibly useful software. We offer QuickBooks training and support to bookkeepers and accountants to ensure they are getting the most out of the program.
Bookkeeping Help for Accounting Firms
T4 season can also be a particularly stressful one for accountants and accounting firms, as they deal with an influx of tax returns. AIS can help you before the initial stress of the T4 season arrives by ensuring you have a clean set of books to work with before the chaos begins. The relationship between accountants and bookkeepers is an important one, and we thrive when working with other like-minded professionals. Learn more about our bookkeeping services for accounting firms and how we can form a mutually beneficial relationship today.
We support small businesses all across Canada.
Contact AIS Solutions today to learn more about how we can help you not only during the T4 season but with your general bookkeeping needs all year round.
Photo by Thomas Lefebvre on Unsplash
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