If you have an employee in Canada and you paid them over $500, you’ll need to file a T4. But what is a T4 exactly, and how does it affect you?
A T4 - Statement of Remuneration Paid is a form that tells the Canadian Revenue Agency (CRA) how much an employee earned in that year. It’s up to you as the employer to complete the form. Your employees will use that as evidence when filing their income taxes.
The T4 includes information on:
- Pension contributions
- Taxable income
- Fishing income
As an employer, you must complete a T4 for every employee paid over $500 in the calendar year. If you provide taxable group life insurance benefits, you must include every employee with the benefit, even if they were paid less than $500.
Here’s what the T4 looks like:
You can access the CRA form here.
How do you fill one out?
The T4 has multiple information boxes for an employer to fill in. Each box has a two-digit box number, a three-digit line number, and a label. For example, Box 14, Line 101 — Employment Income.
Some, like name and address, are self-explanatory, so we’re just going to run through some of the less straightforward boxes, and how to address them. For full details on filling in the T4, check out the CRA guidelines.
Box 14 — Employment Income
Employment income is anything you (as the employer) paid to an employee for the calendar year of the T4. It could include any of the following:
- Tips and gratuities
- Honoraria (thank you or gift payment)
- Vacation Pay
- Directors’ Fees
You should report the gross income, not the net. That means all income before deductions.
Box 16/17 — Employee’s CPP/QPP Contributions
These boxes refer to Canada Pension Plan and Quebec Pension Plan contributions. Usually, only one will be filled in, unless your employee worked in more than one province.
As an employer, you must deduct CPP or QPP contributions from your employees’ pay, and make a matching contribution. The contributions each year are calculated as a percentage of all pay between an exempt minimum allowance ($3,500 for 2019) and a maximum cap.
For 2019, the rates are:
- 5.10% for CPP, up to a maximum of $2,748.90
- 5.550% for QPP, up to a maximum of $2,991.45
Box 18 — Employee’s EI Premiums
In Canada, most work done for an employer is considered “insurable work.” Like other forms of insurance, premiums must be paid in order to make a claim later—in this case, both you and your employee must pay EI (Employment Insurance) premiums. Employment Insurance pays employees under special circumstances where they won’t get their usual paycheck, such as being made redundant or taking parental leave.
In this box, enter the EI premiums that you deducted from your employee. If you didn’t deduct any premiums, leave Box 18 blank.
If you’re not sure if you entered the correct amount, or you are concerned you may have over or under-deducted for the year, you can verify what EI deductions should have been made using CRA’s official calculation method.
Box 20 — RPP Contributions
RPP stands for “Registered Pension Plan.” If you set one up for your employee, they’ll need to let you know how much (if anything) they intend to contribute. Since it’s a private, voluntary plan, they have a choice about contribution amount. To fill out this box, list any contributions your employee made for the year. If they didn’t contribute to an RPP, leave this box blank.
Box 24 — Total EI Insurable Earnings
Unlike other boxes, you must enter something in Box 24. Enter the employee’s total insurable earnings for the year—or 0 if the employee earned no insurable earnings. Often, Boxes 14 and 24 will have the same number.
Types of insurable income include:
- Salary and Wages
- Bonuses, Gratuities and Tips
- Pay in Lieu of Notice
- Statutory Holiday Pay
- Vacation Pay
Box 26 — CPP/QPP Pensionable Earnings
Like Box 24, Box 26 must be filled. Pensionable earnings are types of payment paid to the employee. Qualifying earnings include:
- Statutory sick pay
- Statutory maternity pay
- Ordinary or additional statutory paternity pay
- Statutory adoption pay
Expenses, such as allowances for food or travel, are not pensionable earnings.
As an employer, the pension contribution you owe is calculated as a percentage of qualifying earnings under the maximum allowance for the year ($55,900 for 2018). For this box, enter all pensionable earnings up to the maximum allowance amount. If there are no pensionable earnings, enter 0.
Box 29 — Employment Code
Certain types of employment are handled differently in Canada. If your employee falls under one of the following categories, enter the following two-digit code into Box 26:
- 11 – Placement or employment agency workers
- 12 – Taxi drivers or drivers of other passenger-carrying vehicles
- 13 – Barbers or hairdressers
- 14 – Withdrawal from a prescribed salary deferral arrangement plan
- 15 – Seasonal Agricultural Workers Program
- 16 – Detached employee – Social security agreement
- 17 – Fishers – Self-employed
If you use code 11,12,13 or 17, don’t fill in Box 14 — Employment Income.
If your employee does not fall into one of the above categories, leave Box 29 blank.
Box 40 — Other Taxable Allowances and Benefits
Box 40 is where you fill in all the benefits you paid the employee (besides income)—such as parking expenses, cell phone or food allowances.
How to file a T4
Most employers choose to file online and if you are returning more than 50 T4s, you must file online.
Online submissions come in two formats: a web form, or an internet file transfer. Web forms are just digital versions of the T4, and come with step-by-step instructions. The Internet file transfer option allows you to submit an xml file from commercial payroll software, of up to 150MB.
If you have less than 50 T4s to file, you can submit paper forms. Mail your paper T4s to:
Post Office Box 1300 LCD Jonquière
What to do if you make a mistake
Unfortunately, accidents happen. If you do make a mistake, how you correct it will depend on the type of error made, whether you have already filed, and how you filed. Check the CRA guidelines to:
When is the filing deadline?
All T4s must be filed by the last day (28th or 29th) of February. If the last day of February falls on the weekend, the deadline becomes the next business day.
If you are mailing your T4 slips, the envelope must be postmarked no later than the deadline.
Consequences for missing the deadline can include:
- Employees can report you to the CRA
- You may be fined
- The CRA may take you to court
We want you to have a stress-free tax season. If you’re feeling disorganized, download our Canadian Tax Checklist to see all your obligations in one place.