The T4 slip or “Statement of Remuneration Paid” summarizes the earnings paid to an employee over a calendar year. It also shows other specific amounts that an employee will use later for income tax purposes.
There are certain criteria involved upon issuing a T4. As an employer, you would have to complete T4 slips for all individuals who received remuneration during the calendar year if:
There were deductions of CPP/QPP contributions, EI premiums, PPIP premiums, or income tax from an employee’s gross pay.
the remuneration over the calendar year was more than $500.
The income reported on a T4 slip is for the year which it was paid, regardless of when the work was performed, even if the employee is deceased. For example, if an employee is paid in January 2020 for income they earned in December 2019. It will be reported on their 2020 T4 slip. Just as a note, if an employee is provided with taxable group term life insurance benefits, T4 slips are always required, even if all remuneration paid in the calendar year is $500 or less. It is also important to remember that any employees who worked in more than one province or territory during the year, are required to receive a separate T4 slip for the earnings and deductions that apply to each province or territory.
The T4 is a complicated document that is organized by numbered boxes. Many of you may not know exactly what these amounts and boxes represent. I will briefly explain these boxes in numerical order:
Box 10 – Province of employment; this is important because payroll is treated/taxed differently based on the province of employment. A separate T4 is also created for each province an employee works in.
Box 12 – Social insurance number; this is where the employee’s SIN number is recorded. It must be correct and match the employee. Employers also have tools available to verify if an employees SIN is correct.
Box 14 – Employment income; this box represents the total employment income before deductions. This can include salary, wages, pay in lieu, bonuses, vacation pay, stat pay, tips, directors fees, management fees and the list goes on. Some amounts, such as, commissions, taxable allowances, taxable benefits and various other payments paid to employees during the year may also have to be reported in the "Other information" area at the bottom of the T4 slip. The box number is filled in as needed when these amounts apply to an employee, otherwise this lower portion remains blank. You can read more about the “Other information” area of the T4 slip at the bottom of this article.
Box 16 – Employee’s CPP (Canada Pension Plan) contributions; this is the amount deducted from gross pay and remitted as CPP contributions. Just a reminder, not all income is considered pensionable. CPP is only deducted if an employee is over 18 and under 70 years of age.
Box 17 – Employee’s QPP (Quebec Pension Plan) contributions; this is the amount deducted from gross pay and remitted as QPP contributions. Just a reminder, not all income is considered pensionable. QPP is only deducted if an employee is over 18 and under 70 years of age.
Box 18 – Employee’s EI (Employment Insurance) premiums; this is the amount deducted from gross pay and remitted as EI premiums. Just a reminder, not all income is considered insurable. EI premiums are deducted regardless of the age of an employee.
Box 20 – RPP (registered pension plan) contributions; this amount represents the amount the employee contributed to a RPP. If the employee did not contribute to a plan, this box is left blank.
Box 22 – Income tax deducted;this amount is the total income tax deducted from the employee's remuneration over the year. This amount includes the federal, provincial (except Quebec, as it is recorded on the Releve 1), and any territorial taxes. If no tax was deducted based on income or TD1 exemptions, this box is left blank.
Box 24 – EI insurable earnings; this amount is the portion of earnings reported in Box 14 that were deemed to be insurable (dollar value used to calculate EI premiums). Often this amount will be the same as Box 14, but may also be different depending on the type of earnings.
Box 26 – CPP/QPP pensionable earnings; this amount is the portion of earnings reported in Box 14 that were deemed to be pensionable (dollar value used to calculate CPP/QPP deductions) up to the maximum pensionable earnings ($57,400 for 2019). Often this amount will be the same as Box 14, but may also be different based on employee age and different income types. It is also important to remember that Box 26 must always have an amount in it. If boxes 16 and 17 are blank, “0” is entered in Box 26.
Box 28 – CPP, EI, PPIP exemptions sometimes apply to an employee. The designated box will receive an “X”if an exemption applies.
Box 29 – Employment code; some employees have a unique employment code based on their job type or career. If the employee falls under one of these categories, the appropriate code is entered in this box, otherwise it is left blank. This box can also determine if an amount is entered in Box 14.
Box 44 – Union Dues; this amount represents the amount deducted from employees for union dues. This box is only used if the union will not issue receipts for union dues to employees.
Box 46 – Charitable donations; this is the amount deducted from the employee's remuneration and donated to qualified charities in Canada.
Box 50 – RPP or DPSP registration number; this is the seven-digit registration number issued for a registered pension plan (RPP) or a deferred profit sharing plan (DPSP). This box is completed if the employee will have a pension adjustment (PA) amount. An amount is recorded in this box even if the plan only requires employer contributions.
Box 52 – Pension adjustment; if an employer has a registered pension plan (RPP) or a deferred profit sharing plan (DPSP), the dollar amount of the employee's pension adjustment (PA) for the year is recorded in this box. If you require information on how to calculate the PA please visit: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4084.html for the Pension Adjustment Guide T4084. If you need help calculating a PA, you can call the Registered Plans Directorate at 1-800-267-3100 or 613-954-0419 (in Ottawa).
Box 54 – Employer’s account number; this is the 15-character account number that the employer uses to submit source deductions. This number is also known as the payroll program account number. Just as a reminder, the employer account number will not be shown on the employee copy of the T4 slip.
Box 55 – Employee’s PPIP premiums; any provincial parental insurance plan (PPIP) premiums deducted for employees working in Quebec are recorded here.
Box 56 – PPIP insurable earnings; this box also only applies to employees working in Quebec. The amount recorded in this box is the portion of earnings reported in Box 14 that were deemed to be insurable (for PPIP purposes and used to calculate the employee's PPIP premiums), up to the maximum ($76,500 for 2019). If there are no insurable earnings, insurable earnings are equal to box 14 or insurable earnings are over the annual maximum, this box is left blank.
The "Other information" area at the bottom of the T4 slip has empty boxes to enter codes and amounts that relate to other income types, taxable allowances, taxable benefits, deductible amounts and other entries if they apply to an employee. The boxes are blank and not pre-numbered. The codes are entered that apply to the employee, if no additional codes are required, these boxes are left blank. In the event that more than the six empty boxes are required for an employee, a second T4 slip would be issued. If a second T4 slip is issued, not all the data is repeated, only the employer's name and address, the employee's SIN and their name is recorded along with the required boxes in the "Other information" area at the bottom. Each code and amount are only recorded once on an employee’s T4 slip. Currently there are 29 other codes that can be used in the “Other information” area.
As you can see the T4 slip can be a complicated document. At first glance it can look reasonably simple but the CRA has certain rules that must be followed when creating T4 slips. For a detailed breakdown on how T4 slips are filled out please visit https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/completing-filing-information-returns/t4-information-employers/t4-slip/filling-t4-slip.html.
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