If you think the information on your T4 – Statement of Remuneration Paid is incorrect, you’ll need to contact your employer or the issuer of the slip, and quite possibly have an amended slip issued.
When it comes to income tax filing, both the employee and the employer have certain responsibilities.
- As an employee, you must file an annual tax return and pay any income tax due, (which is especially important if you earn income from sources other than your main employment during the year). You also should file to claim any deductions or credits that reduce your tax liability.
- The employer has tax responsibilities as well. “It’s the employer’s responsibility to deduct taxes and benefits from their employees’ pay and issue a T4 slip for each year of employment, even though it’s the employee who actually pays the taxes,” explains Seth Abbey, a business lawyer at the firm of Spiegel Sohmer Inc. in Montreal, Quebec. “When a tax problem occurs, it’s generally best for the employee and employer to work together to resolve it, to avoid disputes and possible litigation,” Abbey adds.
What is a T4?
A T4 slip, Statement of Remuneration Paid, is a document that summarizes all of the money paid by an employer to an employee during a calendar year, including amounts deducted at source – which means paid directly to the government – for income tax and benefits. The T4 may also include the cash value of certain taxable benefits the employee receives during the year in kind, but which are still taxable. That’s why you would pay income tax on an amount your employer pays on your behalf for professional membership dues, for use of a company car or for certain types of insurance. When your employer sends you a T4 slip, it sends the same information to the government, too.
If your T4 doesn’t match your pay stubs, there’s likely a problem.
If your T4 contains incorrect information about how much you earned, or how much was deducted at source, it’s important that you get an amended (replacement) T4 slip issued by your employer. Your employer can amend any T4 slip after it has been filed, by creating a new T4 slip, writing “amended” on it and sending it, along with a cover letter, to the Canada Revenue Agency tax centre for your region.
You should also receive copies of this amended slip and use the latest slip issued when filing your Tax Information and Benefit Return. If you are issued an amended slip after you file your tax return, you will need to make an amendment or “Adjustment” to your tax return after you receive your Notice of Assessment (NOA).
If Your Employer Refuses
If after speaking with your employer about correcting the information on your T4 and issuing an amended slip, they refuse to or are unable to provide you with one, you can file your tax return with estimated figures. Keep records and copies of any communication you have had, such as your paystubs or Records Of Employment (ROEs), and you can then file your tax return with the “estimated” correct information. Include in your estimate how much you really earned, and how much was deducted at source for CPP, EI and Income Tax as calculated from your pay stubs.
If you do file your tax return with an “estimated T4”, the CRA’s computers are likely to detect a mismatch when they compare the source information to amounts reported on your tax return. This process is called the CRA Matching Program and any discrepancies here may result in you receiving a request for more information. If you do receive a request from CRA, be prepared to provide copies of your pay stubs and copies of your communication with your employer, and explain to them, in writing, what happened. From your records, it should be clear how much you earned and how much was paid by your employer for your income tax and benefits.
If your employer took source deductions from your salary and just never remitted them to the government, in general, the CRA may audit your employer. The CRA recommends keeping all of your tax documents, especially pay stubs and proof of deposit, for at least six years from the time you file your income tax.
If You Are Reassessed
If you didn’t get a review or audit letter, but – surprise! – a Notice of ReAssessment shows up in the mail demanding that you pay the difference between the amount documented on your T4 as deducted at source and the real amount, you should contact the CRA immediately. You may be able to resolve the issue by submitting the necessary documents as advised by them, or you may need to file a Notice of Objection to fight the reassessment.
A Notice of Objection is a way of telling the CRA that you disagree with the assessment and want to show reasons why it is wrong and should be replaced. You will need to show the same information as suggested above – how much you actually earned, via deposits and pay stubs, and, if possible, proof that you told your employer about the problem. As with any tax dispute, it may be a good idea to consult a professional with tax experience, such as an accountant or a tax lawyer.
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