You’ve hired your first employee, set them up on a progression plan, and they’re thriving in your small business. Great work! Next, you’ll be responsible for reporting your employee’s income to the government. Enter the T4 (and possibly the RL-1) slip.
T4 slips and tax season in general often brings about a collective sigh – people can’t help but dread it. But here’s the thing; it doesn’t have to be a rough time. In fact, the process can be smooth and seamless for all when equipped with the right knowledge and processes.
What Is a T4 Slip?
A T4 slip, formally known as a Statement of Remuneration Paid, is a summary of employment earnings and deductions for the year that you must report to the government.
For most of Canada, you will only need to worry about submitting T4 slips. If your business is based in Quebec, however, you will also need to file an RL-1 slip, which is the provincial income filing form.
Who Needs a T4 Slip?
You’ll need a T4 slip for anyone you’ve paid more than $500 during the year, and if you’ve also made deductions to their pay (like CPP and EI premiums). Basically, any regular employee in your business will need a T4 slip prepared.
Similarly, any Québec-based employees will need to report their income to Revenu Québec on the RL-1 slip.
How To Provide T4 Slips To Your Employees
You can send T4 slips to your employee online, if it’s offered through a secured portal (and you can offer them an equally secure printer). If your employee consents, you can also send them their T4 slip via email.
If you can only provide a paper copy, you will need to give them two copies of the T4 slip, either in-person or through mail.
What Do I Need to Report on a T4?
T4 slips report the amounts you’ve paid to your employees during the year (you’ll often see this referred to as remuneration). A T4 includes:
- Salary and wages
- Tips or gratuities
- Bonuses and commissions
- Vacation pay
- Any taxable benefits or allowances
- Deductions
- Pension amounts, if you offer a pension plan
How To Submit T4 Slips To The CRA
If you’re submitting more than 50 T4 slips, you’ll have to file electronically; it’s also the easiest way to file, regardless of the number of slips you’re submitting.
You can submit directly to the CRA through their portal here.
You can file paper slips, but you’ll also need to prepare a T4 Summary if you do. The T4 Summary provides an overview of all the information you’re submitting across all T4s. You can find the mailing address, and more information about the T4 Summary, on the CRA website.
What Is The Deadline For Filing T4s?
You have to provide both the government and your employees with their year’s T4 slips before the last day of next February. If the due date falls on a weekend, the date is the next business day. For example, T4s for the 2020 payroll year would need to be filed on or by February 28, 2021.
What if I miss the deadline?
As with anything in life, tardiness comes with repercussions. If you miss the deadline to file your T4 slips, you may be subjected to a penalty.
If you don’t give your employees their T4 by the deadline, you could be charged $25 per day (with a minimum charge of $100 and a maximum of $2500).
For filing with the CRA, the penalty scales depending on the number of slips you’re filing: penalties start at $10 per late day, all the way up to $75 per late day. Check the CRA website for more details on late penalties.
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