T4 Slips: What Canadian Employees Should Know

US personal tax Whether your business is only beginning to sell to US customers, or US customers represent the core of your business, anticipating and dealing knowledgeably with the US tax environment is critical to your bottom line. Our full-service US corporate tax group can help in all tax aspects of doing business in the US. Given high US corporate tax rates, don’t be surprised by a US tax liability only to find out that there were planning opportunities available to reduce it. If your business is based in Québec or if you have employees work in Québec, you’ll need to issue an RL-1 Employment and Other Income slip. You must file an RL-1 slip if you paid salaries, wages, gratuities, tips, fees, scholarships or commissions as an employer.

• 👉If your YTD amounts are incorrect, you might end up either over- or underpaying taxes and other source deductions.
• Canada has reciprocal social security agreements with other countries.
• If you choose paper, you must provide your employees with two copies of the T4 slip in person or by mail.
• Report in box 44the amount you deducted from your employee for union dues.

If you provide accommodation or utilities free of charge, it is a taxable benefit to your employee. The method you use to determine the value of the benefit depends on whether or not the place in a prescribed zone has a developed rental market. Many employers grant options to their employees as a form of compensation. If you control the The Canadian Employers Guide To The T4 points you have to report on their T4 slip theFMV of any personal rewards they received from redeeming the points. If the term of repayment for the home-relocation loan is more than five years, the balance owing at the end of five years is considered a new loan. To calculate the benefit, use the prescribed rate in effect at that time.

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If you provide taxable group life insurance benefits, you must include every employee with the benefit, even if they were paid less than $500. Footnote 13 Enter the taxable security option benefit under code 38. If eligible, enter the amount of the security options deduction under code 86 and either code 39 or 41, as applicable. The value of the taxable benefit for personal use of the cell phone for the year is $617. The employee reimbursed the employer $200 for the cell phone in December.

If you remain eligible to remit quarterly from one year to the next we will not re-notify you by letter. If you are currently an eligible quarterly remitter, and you have not been notified to the contrary, continue to remit quarterly. If you paid a retiring allowance to an Indian, see Retiring allowances.

Pensionable and Insurable Earnings Review (PIER).

Stock bonus plan – Under this plan, an employer agrees to give the shares to the employee free of charge. In effect, the employer agrees to sell or issue shares to the employee for no cost. If you pay professional membership dues for your employee and you are https://kelleysbookkeeping.com/ the primary beneficiary of the payment, there is no benefit for the employee. For more information on private health services plans, go toPrivate Health Services Plan and see archived Interpretation Bulletin IT-339R2, Meaning of private health services plan .

• Each tax season many Canadians puzzle over the difference between a T4 and a T4A.
• If you don’t, you might get a penalty for remitting or filing late.
• An eligible person who is not a Canadian citizen or a permanent resident of Canada and who applies for a SIN will get one beginning with the number 9.
• The employer would deduct CPP contributions, EI premiums and income tax as applicable.

A retiring allowance also referred to as a severance pay may include an eligible portion and anon‑eligible portion. Enter the 15‑character account number that you use to send us your employees’ deductions. This number is your payroll account number that appears at the top of your PD7A statement of account. Your payroll program account number should not appear on the two copies of the T4 slip that you give to your employees.

Example 1 – Annual pensionable and insurable earnings are below the maximum

After you calculate the value of the benefit, including any taxes that may apply, add this amount to the employee’s income for each pay period or when the benefit is received or enjoyed. This gives you the total amount of income from which you have to make payroll deductions. You then withhold deductions from the employee’s total pay in the pay period in the normal manner. The deductions you withhold, especially the employment insurance premiums, will depend on whether the benefit you provide is cash, non-cash, or near-cash. In this situation, the employer must prepare an amended T4 slip for the employee.