And it’s that time again….T4 Filing in Canada

And it’s that time again….T4 Filing in Canada

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tax time concept with sign post under blue sky The holiday season is now over and so we launch into January and April, which for business owners is T4 time.  It’s certainly not a fun time for a lot of employers, especially if they are calculating payroll manually throughout the year with the help of Canada Revenue Agency (CRA) calculators.  Even if you are using a software program like QuickBooks, it sometimes can be daunting.  But unfortunately, it is one of the responsibilities that falls upon businesses, large or small, when they have employees.

What Is A T4 Slip in Canada?

If you have ever had a job in Canada you’ve likely received a T4 slip at some point in your life, whether it was for a summer student job or as a full-employee in your career.

But what exactly is a T4 slip and why is it important that it is prepared? (You can download a copy of a T4 Slip here)

A T4 slip is a mandatory requirement by CRA (Canada Revenue Agency) for all employers to provide to their employees as well as file with CRA.  There are two parts to the T4 Filing process

  1. Preparing the T4 Slip that is provided to the employee
  2. Preparing the T4 Summary that is provided to CRA

In its simplest terms, the T4 slip is an information slip reporting how much you, as an employer, has paid to its individual employees in a calendar year.  The T4 slip reports not only the wages we most often think of as our income, but also any other expenses paid out on our employees behalf, such as RRSP contributions, or medical and dental benefits or car allowance.  All of these subsidiary payments are considered taxable benefits to your employees and therefore must be reported to CRA.

The T4 slip provided to the employee outlines 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, and executor’s and administrator’s fees received to administer an estate).  All of these types of income are reported in Box 14 of the T4 Slip.

The remaining boxes on the T4 Slip breakdown the individual deductions/payments made to the employees.  It is important that deductions are made for CPP, EI and Income tax from the employee’s paycheque throughout the year to avoid you being charged “Failure to deduct” penalties.

(CRA can assess you a penalty of 10% of the amount of CPP, EI, and income tax you fail to deduct. If this happens more than once in a calendar year, they can apply a 20% penalty to the second or later failures if they were made knowingly or under circumstances of gross negligence, so you definitely don’t want to get on their bad side)

The T4 Summary is prepared for the purposes of CRA to summarize the total wages you paid and deductions you made across all of your employees.  They will compare the amounts deducted for CPP, EI and Income tax on this report against the source deductions remittances you made throughout last year. The calculations that are required in the T4 summary will show you whether you under or over-remitted throughout the year.  If you have 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.

Methods for Filing your T4 Slips and T4 Summaries

  1. Traditional Paper Method  ( for only up to 50 T-slips)
    1. Sample T4 Slip
    2. Sample T4 Summary Information Return
  2. Electronic Media – CD, DVD – (again only for up to 50 slips)
  3. Internet – (If you file more than 50 T4 slips for a calendar year, you must file the return over the Internet.) Here is all the information you need to file your return online
  4. If you use Accounting Software programs like QuickBooks, you have the ability to file your T4’s and T4 Summary returns directly from within the software.  All you will need is a web access code. Do make sure that you review the slips and the returns before filing them.

The deadline for distributing T4’s to your employees and filing your T4 Summary is February 28th.  CRA is very unforgiving if these are filed late, as you can see below.  The penalties are not only based upon the number of slips that you are issued, but are charged on a daily basis!  (Don’t we all wish we could do that Smiley Face)

Legislated late-filing penalties

Number of information

returns (slips)

Penalty (per day)

Maximum penalty

1 – 50

$10

$1,000

51 – 500

$15

$1,500

501 – 2,500

$25

$2,500

2,501 – 10,000

$50

$5,000

10,001 or more

$75

$7,500

And as you know, if you ever need help with filing your T4 slips, or processing your payroll throughout the year so that you don’t need to think about T4’s ever again, you know how to reach us Smiley Face

CRA Website Links for T4’s:

General Information and Overview Page

T4 Slips – When to complete, Customized T4 Slips, Completing and Distributing T4’s

How to Complete the T4 Summary

Copyright: ximagination / 123RF Stock Photo

Juliet Aurora

About The Author

Juliet Aurora is the CEO of AIS Solutions and Co-Founder of Kninja Knetwork. Through both of these businesses she fulfills her mission to Educate and Empower those around her. In 2017, her firm was named Intuit's Global Firm of the Future, the first time the title has ever been awarded to any firm outside of the US. She has also has been named as one of the Top 50 Women in Accounting, one of the Top 50 Cloud Accountants and one of the Top 10 Canadian Influencers in the Bookkeeping Industry. Her passion for education is channeled through the Intuit Trainer Writer Network, hosting Kninja Knowledge Webinars and most recently, developing a Cloud Accounting Course for the next generation of accounting professionals.

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