What is a T4?
A T4 is also called a statement of remuneration paid; it is essential a receipt of all earnings, benefits, and deductions for the calendar year.
An employer completes a T4 using the total amounts they have paid in earnings and benefits and what they have withheld, such as CPP, EI and income taxes, and remitted to the CRA. The T4 is then used by the employee as a part of their employment income reported on line 10100 on their income tax return.
Your personal T4 will include all of the remunerations you received in the calendar year. It will serve as your reference point when filing your return. However, note that T4s can be wrong. You should investigate any listed amount that does match your own records. In addition, you may have multiple T4 slips, in which case you will need to add them as you submit your tax return electronically.
What is a T4 Summary?
The T4 Summary is the report that an employer creates and submits to the CRA by the end of February each year. It represents the total of the information reported on all of the T4s they created for each employee for the calendar year.
The T4 Summary provides important information such as total insurable earnings for all employees, which is good to know for EHT limits; it also gives the total of contributions for CPP, EI, and income tax that the CRA is expecting that the employer submitted. Those totals are made up of both the employees’ contributions and the employers’.
How Do Employers Prepare a T4?
Most employers use a software program for their payroll throughout the year; that software provides either T4s completed or the reports for the employee to do them, themselves, based on what was processed throughout the year.
If the software is not completing them, then the employer can choose a couple of options with the CRA to get the filed. Most commonly used are Internet file transfer or Web Forms. Web Forms is a program within the CRA website that allows an employer to create and file T4 forms (and many others) directly to the CRA.
In order to prepare T4s for the employees, the employer must ensure they have the totals of all amounts paid and withheld either from their software or in whatever other means they were tracking their ongoing payroll process.
Note: If you have (or are) an employee that worked for you in two different provinces, they should be receiving a T4 for the earnings and deductions that are related to the work in those provinces.
For more information on completing a T4, review the guide on the CRA website.
Whether you are the employer or employee, it is important to understand what all the boxes mean on the T4 so you can complete it properly, or understand what has been reported for you and catch any potential error.
What Do the Boxes on the T4 Mean?
The major boxes on a T4 slip are as follows:
- Box 14: Total employment income, this is all income…commissions, wages, salary, tips, benefits, etc.
- Box 16/17: Employee’s Canada Pension Plan/Quebec Pension Plan (CPP/QPP) contributions
- Box 18: Employee’s EI premiums
- Box 20: Registered pension plan (RPP) contributions
- Box 22: Income tax deducted
- Box 24: Employment Insurance (EI) insurable earnings
- Box 26: CPP/QPP pensionable earnings
- Box 44: Union dues
- Box 46: Charitable donations
- Box 52: Pension adjustment
- Box 55: Provincial Parental Insurance Plan (PPIP) premiums
- Box 56: PPIP insurable earnings
There are several other boxes that may be included in the “other information” section on your T4 that relate to niche or unusual remuneration or amounts your employer might withhold. Depending upon what the “other” is, may mean the amount is also in one of the other boxes listed above, as well. For example, a taxable benefit is reported both in box 14 and box 40.
Though there are a lot of boxes to think about, you don’t have to worry about entering all of them individually when using TurboTax’ auto-fill my return feature. It imports all the information directly from the CRA, into the right locations.
When Should I Receive My T4?
You should receive your T4 on or before the last day of February. It should detail everything your employer paid withheld in the following calendar year. Other related slips are not due until the end of March. If you can’t locate your T4, sign into your CRA My Account as it will be on file with them as soon as your employer submits it.
What if My T4 is Incorrect?
Mistakes can happen on T4s. If you suspect yours has an error, you should contact your employer. If they do not correct the error by the time your taxes are due, you must complete your taxes as an estimate and fix them later, if necessary.