Event: Xero Toronto meetup

MaRS

On Feb 26 at 8amET at the MaRS Discovery District in Toronto we’re hosting a breakfast meet and learn event for Xero Online Accounting fans. You’ll have an opportunity to meet fellow small business owners and advisors to learn how Xero can be used in Canada for your bookkeeping. We’ll be talking about ways to grow your business and better manage your accounting, payments and payroll.

This event is presented in conjunction with Fuel Accounting – Canada’s award winning Xero experts.

Register

It’s tax (slip) season

T4 slipsThe 2014 deadline for filing your T4 tax slips is Monday, March 2nd. You must provide your employees with a paper or electronic copy of their T4 by this date. So it’s crunch time for preparing T4 tax slips in Canada. You also need to provide copies of the T4 slips to the Canadian Revenue Agency, along with the T4 Summary for your company on March 2, 2015.

If you are filing more than 50 T4 slips you must file electronically, not by mail. Here are some of the most important points to understand for filing T4s and T4As for the 2014 tax year, compiled into the ultimate resource with links to the appropriate sections of the Canada Revenue Agency website.

Filing T4 Slips

A few notes on the important lines to fill out on each employee’s T4 slips with links to more information on the CRA website. Be sure to check out the CRA’s complete guidelines for completing the T4 slips.

  • Box 14 – Employment Income: Input the amount of salary and wages, bonuses, vacation, taxable benefits etc.
    • Code 40: In addition to any taxable benefits included in box 14, enter the amount of any taxable allowances or benefits provided to an employee in the ‘Other Information’ section of the T4 slip with “Code 40”
    • The CRA provides a detailed account of the many types of benefits and allowances that can be included in an employee’s income

  • Boxes 16 & 17 – CPP or QPP Contributions: Input the employee’s contributions that were deducted from pensionable earnings
    • The maximum contribution amount, for employer and employee, is $2,425.50, or 4.95% of the pensionable earnings
    • Maximum pensionable earnings for 2014 are $52,500 and the basic exemption amount is $3,500
  • Box 18 – Employee’s EI Premiums: Input the amount of EI you deducted from the employee’s earnings
    • The EI premium rate for 2014 is 1.88%, up to a maximum of $913.68 deducted for the year

  • Box 24 – EI Insurable Earnings: Input the total amount of insurable earnings that were used to calculate EI contributions
    • Maximum annual insurable earnings for 2014 is $48,600
    • Code 42 – Employment Commissions: Input the amount of commissions paid to an employee in the ‘Other Information’ section of the T4 slip with “Code 42” (Be sure to include this amount in Box 14 as well)
  • Box 26 – CPP/QPP Pensionable Earnings: Input the total amount of pensionable earnings paid to the employee, up to $52,500 (This amount is usually equal to Box 14)

Filing T4A Slips

The T4A slip is a different kind of tax slip that you generally prepare for independent contractors, or anyone that you have paid other types of income related to employment. Filing a T4A is typically optional, but it becomes mandatory if you have deducted income tax from any payment, or if all the payments totaled more than $500.

  • You can submit your T4As by mail, unless you are filing more than 50, in which case you must file electronically
  • Box 20 – Self-employed Commissions: Input the amount of commissions paid to an independent agent, but do not include any GST/HST paid
  • Box 22 – Income Tax Deducted: If you deducted income tax from the recipient, then you input the total here
  • Box 48 – Fees for Services: Input the total amount paid for services, but do not include any GST/HST paid

Tips

Make sure you report the amounts in Canadian currency (sorry, Bitcoin not accepted yet).

Do you have staff in Québec? You’ll need to fill out an RL-1 as well.

Simplify by using PaymentEvolution Payroll

If you are thinking about filling out your slips by hand or are planning to sit at your laptop for hours manually creating these T4 statements – STOP. Using PaymentEvolution Payroll will reduce the process time to just a few minutes – and you’ll even be able to file the slips electronically to the Canada Revenue Agency. Oh, and you’ll be able to do this for every province and territory in Canada – including creating the RL-1 slips for Québec. Make this tax (slip) season stress free with PaymentEvolution.

Event: The State of Canadian Small Business 2015

brassaii-entranceOn January 29 at 6pmET at Toronto’s Brassaii Restaurant (461 King Street West, Toronto, ON M5V 1K4), PaymentEvolution, Kashoo, FBC and easyrecordbooks will host the 2015 Small Business Meetup. Actually, let’s not be so formal – it’s a small business party!

We’re bringing together small business experts, advisors and cool local businesses to connect and talk. You’ll also have a chance to check out some new to-be released services from Kashoo and PaymentEvolution.

Come join us – the drinks and food are on us!

Register

Preparing for year end – a handy checklist

Resolutions by mt23 https://www.flickr.com/people/32961941@N03/
Resolutions by mt23 

Before you take time off for the holidays, take a few moments to ensure your company payroll is complete for the year. We’ve compiled a handy checklist you can use to make the process much easier.

Download PDF checklist:  Year End Checklist- PaymentEvolution

Payroll year end checklist

  1. Check that CPP, QPP, EI, QPIP, federal and provincial income tax amounts do not exceed 2014 maximum limits.
    1. Employee’s Portion:
      • CPP: $2,425.50; EI: $913.68;
      • Quebec QPP: $2535.75; EI: $743.58; QPIP: $385.71;Employer’s Portion:
      • CPP: $2,425.50; EI: $1279.15;
      • Quebec QPP: $2535.75; EI: $1041.01; QPIP: $539.58;
  2. Address employees’ C/QPP contributions, who turned 18 or 70 in the year
  3. Verify active employee data (names and addresses); Validate social insurance numbers (SINs), especially for those who are non-residents or citizens (ie SIN beginning with the number “9” and/or those with an expiry date)
  4. Verify your Business Number (BN) or Québec Enterprise Number (NEQ) and address
  5. Make adjustments (any bonus or commissions have not been paid out) to last two final pay cheques and remittances
    • Generate/edit T4 and RL-1 (QC)
      • Make sure Box 24 and Box 26 of the T4 are completed even if they are zero; enter “0.00” in Box 24 and 26 if zero
      • Make sure Box 24 not exceed the annual maximum insurable earnings ($48,600.00)
      • Make sure Box 26 not exceed the annual maximum pensionable earnings ($52,500.00)
      • Make sure Box G and I of the RL-1 are completed even if they are zero; enter “0.00” in Box G and I if zero
      • Make sure Box G not exceed the annual maximum pensionable earnings ($52,500.00)
      • Make sure Box I not exceed the annual maximum insurable earnings ($69,000.00)

    If there is no amount or code to report in a box leave it blank, do not fill or enter the word “Nil”

  6. Report RPP or DPSP registration number in Box 50 of the T4
  7. Since 2011 (for the 2010 tax year) retiring allowances are reported on the T4 slip instead of the T4A slip; using code 66 for eligible amounts and code 67 for non-eligible amounts.
  8. Review any manual cheques amounts are accurate and have been issued
  9. According to your company policy, check any vacation accrual and loan payments and carry forward to the following year
  10. Balance WSIB/WSB, EHT(ON), MSP(BC), HE Levy(MB), HAPSET(NL) and Northwest Territories(NT)/Nunavut(NU) payroll tax rates, if applicable
    • Review Revenue Quebec annual summary:
      • Health Service Fund (HSF)
      • Compension Tax
      • Commission des normes du travail (CNT)
      • Workforce Skills Development and Recognition Fund (WSDRF)
      • Commission de la santé et de la sécurité du travail (CSST)
  11. Balance your payroll journal

If you aren’t using a modern payroll system to make the year-end process simple – sign up for PaymentEvolution Payroll.

Preparing for year end – tax slips

IMG_20141202_170727With year end fast approaching, businesses have to make sure that they are well prepared for the upcoming tax season. It is important to make sure that your payroll account is all in order to issue the T4 and RL-1 slips to employees and contractors before the deadline.

The good news is that your PaymentEvolution Payroll account will automatically generate the required T4, T4A and RL-1 slips for your staff. It’ll even create the required company summaries for filing with the Canada Revenue Agency and Revenu Québec. Even if you haven’t run payroll with PaymentEvolution yet, there’s still time to carryover your year-to-date information to create these tax slips.

What are T4 Tax Slips?

A Canadian T4 tax slip, or Statement of Remuneration Paid, is prepared and issued by an employer to advise employees how much employment income they were paid during a tax year and the amount of income tax that was deducted. Québec employees will receive a RL-1, Employment and Other Income Slip, as well a T4 tax slip.

Who in your company should be given a T4 slip?

T4 slips should be issued for each employee who received remuneration with respect to employment where:

  • Deductions for Canada/Quebec Pension Plan contributions, Employment Insurance, Quebec Parental Insurance Plan premiums and/or income tax were required.
  • The remuneration was $500.00 or more
  • Any amount of group term life insurance was provided.

Employment income includes salary, bonuses, vacation pay, controlled tips, commissions, payroll deductions, taxable allowances, the value of taxable benefits and payment in lieu of notice.

What is the Deadline for issuing T4 slips?

T4 tax slips must be completed and issued by the last day of February the year after the calendar year to which the T4 tax slips apply. For payments you made in 2014, the deadline is March 2, 2015 (Feb 28, the typical deadline, falls on a Saturday) .

Note that employees who work in more than one province during the year must have a separate T4 slip for the earnings and payroll deductions for each province in which they were employed. For example, an employee who worked in both Alberta and Ontario will need a separate T4 for the remuneration paid in each province.

As well, an employee must receive a separate T4 from each employer they worked for in a calendar year. For more information regarding T4 slips or to view a sample visit the Canada Revenue Agency website.

How to start your year-end and T4 process

Follow our handy guide on how to complete your year-end and generate your T4, T4A and RL-1 slips.

Holiday bonuses and gifts

Gift giving season is here – where employers are looking for ways to make their employees happy and employees are waiting anxiously to see how the year closes for them. Every business is looking for a way to reduce their taxes and show their employees a little appreciation for their loyalty and hard work. Giving out employee gifts is a great way to do that. Your staff get something awesome, and your business gets a bit of a tax break. Before you start handing out the expensive gifts, you need to know a few rules.

A reason to give employee gifts –  A holiday, birthdays, the birth of a baby, or a wedding are all acceptable excuses to get generous and show your appreciation for employees. Another good reason is a work anniversary gift if the employee has worked for your company for at least 5 years, and they have not had a previous work anniversary gift within the past 5 years. Once you have picked your reason, don’t start handing out the goodies just yet. While cash is usually a one-size-fits-all kind of thing, in the case of employer tax-free gifting, it is a no-no. Holiday Gifts

Know your limit – An employer can give an employee up to $500 a year in non-cash gifts before the gift becomes taxable. Anything over that $500 limit, or any form of cash is considered a tax benefit, leaving the employee with additional gift taxes to pay at the end of the year.

Not sure if your gift fits the criteria? –  The Canada Revenue Agency has an easy to use tool that can help you determine if your gift is tax free or not. Use the link http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/gfts/txblbnft/ntrdctn-eng.html to check it out!

Some examples of other taxable and non-taxed employee gifts? The Canada Revenue Agency has a cool chart here.  The chart also shows you that inexpensive items with a company logo (like t-shirts, pens, and coffee mugs) aren’t taxable and aren’t even counted in the $500 annual limit.

Some things you’d think would be non-taxable are actually taxable. Here is a list of some tricky gifts that will have your employees covering the tax:

  • Gift Cards and Gift Certificates: These are treated the same as cash when it comes to taxable gifts. Gift cards and certificates in any amount are unfortunately taxable. Get around this by giving them the actual item, and not what they would have bought with the gift card. For example, instead of giving Cindy a $100 certificate to her favorite candle store, give her a gift basket from the store valued at $100.
  • Stocks and Securities: Just like gift cards, stocks are considered cash and will leave your employees coughing up the tax.
  • Gold Nuggets: Don’t laugh! The Canada Revenue has this listed as a taxable gift item. Therefore, if you happen to have a stash of gold nuggets sitting around in your office, you should keep them (or even lock them up in a safe at home) and come up with something else to give to those you employ.
  • Lavish parties: Most businesses assume throwing a party for employees (such as a Christmas party) is not taxable, but it really depends on the value of the party. Any party that costs the employer more than $100 per person is taxed. Keep parties simple and budget friendly to avoid coughing up extra tax money later. For example, rent a cheap Santa suit instead of hiring an actor, and serve affordable finger foods instead of a five-course meal with steak and lobster. Your employees will thank you later!
  • Meals: Think buying your employee dinner isn’t taxed, you’re wrong. The only time a meal is not taxed is when the employee has worked at least 2 hours of overtime on top of their normal shift, and then the meal must be $17 or less in value.
  • Tuition: One would think a scholarship wouldn’t be taxed, but if the class or course is not related to the job, it is a taxable gift. If the scholarship is given to an employee’s child for secondary education, the child is responsible for the taxes.

Track these gifts appropriately: You can easily track these bonuses and gifts in your payroll account – use our handy reference on how to track them. So, what are you planning on giving your staff this year?

TaxCycle integration for your tax returns

Our friends at TaxCycle have announced a cool integration with PaymentEvolution Payroll that seamlessly brings in your year-end tax slips (ie T4 slips) so your accountant can prepare your personal tax return. You don’t need to hang onto paper slips just so you can do your taxes – with TaxCycle, you can import your slip electronically and avoid data re-entry errors.

“Reducing data re-entry is critical to running an efficient, profitable tax practice,” states CEO & Founder Cameron Peters of Trilogy Software (makers of the TaxCycle suite). “PaymentEvolution already offers electronic delivery of T4 slips to employees. Now these employees can provide that electronic file to the tax professional preparing their personal tax return in TaxCycle T1. No need to print the slip, so there’s no data re-entry.”

The TaxCycle team has created some of the best tools for document management and professional tax preparation. If you haven’t tried TaxCycle yet, you can get a free trial at http://TaxCycle.com

TaxCycle

Improving the workflow of tax preparers is the mission of Cameron and the TaxCycle team. He says, “Data integration like this one is especially important for preparers during busy tax season. A quick export of an XML file for drag-and-drop import into a TaxCycle T1 return not only saves precious time but prevents critical data re-entry errors. Every minute a tax preparer spends on data entry, or reviewing re-entered data, is one that could have been spent providing tax expertise to their clients.”

The PaymentEvolution T4 import will be available in early 2015 for preparing 2014 T1 personal tax returns. TaxCycle users will be able to drag and drop XML files onto the TaxCycle window to quickly add the slip data to the personal tax return.

See the press release announcement here: Drag-and-drop import of PaymentEvolution T4 slips into TaxCycle T1 personal tax returns