When Employees Must Receive Their 2010 Slips
If you are an employee, businesses are supposed to prepare and file the necessary slips and provide or mail their employees these slips prior to or postmarked by February 28, 2011. Because some mail their slips at the last minute, employees may not receive the slips until the first week of March. However, T3, T5013, and T5013A slips do not have to be sent before the end of March so you may want to wait until April 1st before you bring all of your slips to your accountant, or file your 2010 Income Tax Return if you are expecting these slips other than your basic T4/T4A/T5 slips.
When Businesses Must Prepare a T4 Slip
Most amounts paid to an individual are referred to as remuneration. You have to complete a T4 slip to report the following:
* salary, wages (including pay in lieu of termination notice), tips or gratuities, bonuses, vacation pay, employment commissions, gross and insurable earnings of self-employed fishers, and all other remuneration you paid to employees during the year (go to Box 14 – Employment income for a detailed list);
* taxable benefits or allowances;
* retiring allowances;
* deductions you withheld during the year; and
* pension adjustment (PA) amounts for employees who accrued a benefit for the year under your registered pension plan (RPP) or deferred profit sharing plan (DPSP).
You have to report income on a T4 slip for the year during which it was paid, regardless of when the services are performed or rendered. For example, if a pay cheque dated in January covers income earned in the last days of December, report the income on the T4 slip for the year that starts in January.
You have to complete T4 slips for all individuals who received remuneration from you during the year if:
* you had to deduct CPP/QPP contributions, EI premiums, PPIP premiums, or income tax from the remuneration; or
* the remuneration was more than $500.
If you provide employees with taxable group term life insurance benefits, you always have to prepare T4 slips, even if the total of all remuneration paid in the calendar year is $500 or less.
If you provide former employees or retirees with such benefits, you have to prepare a T4A slip.
What is Box 14 Employment Income?
Enter in box 14 the total employment income before deductions. Include the following:
* salary and wages (including pay in lieu of termination notice);
* vacation pay;
* tips and gratuities;
* director’s fees;
* management fees;
* executor’s and administrator’s fees received to administer an estate (as long as the administrator or executor does not act in this capacity in the regular course of business);
* director’s fees paid to a non-resident director for services rendered in Canada (a non-resident director is not considered to be employed in Canada when he or she does not attend any meetings or perform any other functions in Canada);
* commissions, taxable allowances, the value of taxable benefits (including any GST/HST or other applicable taxes), and any other payments you paid to employees during the year;
* amounts paid under a supplementary unemployment benefit plan (SUBP) (such as employer-paid maternity, parental, and compassionate care top-up amounts) that do not qualify as a SUBP under the Income Tax Act;
* payments out of an employee benefit plan (EBP) and amounts that a trustee allocated under an employee trust. If the trustee allocates the income, but you do not pay it immediately, include it in the income of the employee. Do not report it when you make the payment. For information, see IT-502, Employee Benefit Plans and Employee Trusts, and its Special Release; and
* amounts paid to emergency volunteers (such as firefighters or ambulance technicians) that are greater than $1,000. If you employed the individual (other than as a volunteer) for the same or similar duties, the whole payment is taxable and should be included in box 14.
If you are paying amounts to placement or employment agency workers, drivers of taxis or other passenger-carrying vehicles, barbers or hairdressers, or fishers (self-employed), go to Box 29.
A deduction from taxable income can be claimed for the amount of employment income earnings (including taxable allowance) by certain Canadian Forces personnel and police. Go to Code 43.
From The RC4011 T4 Guide
Mandatory electronic filing
You must file information returns by Internet File Transfer in eXtensible mark-up language (XML) if you file more than 50 T4 information returns (slips) for a calendar year. Mandatory electronic filing relates to the date of filing, not the tax year of the returns being filed. If you are filing for a prior year with more than 50 T4 information returns (slips), they must also be filed electronically.
Reporting of retiring allowances
Starting in January 2011 (for the 2010 taxation year), use theT4 slip instead of the T4A slip to report eligible and non-eligible retiring allowance amounts (including those amounts paid to Status Indians). This will reduce the burden of filing both a T4 slip and a T4A slip for many filers. The T4A slip will still be used to report these types of income for 2009 and prior years. For more information, see page 23.
Code 86 – Security options election
Under proposed changes, when the employer elects not to claim a stock option cash-out as an expense, the amount should be reported in the “Other information” area at the bottom of the T4 slip using code 86. For more information, see page 15.
Upcoming CPP reform
The CPP changes for working beneficiaries announced May 25, 2009 will be implemented in January 2012. In preparation for the upcoming changes, starting in
January 2012 (for the 2011 taxation year), box 26, “CPP/QPP pensionable earnings” will have to be completed on the T4 slip at all times.
Reporting change for insurable earnings
Starting in January 2012 (for the 2011 taxation year), box 24, “EI insurable earnings” will have to be completed on the T4 slip at all times.
From the RC4157 T4A Guilde
T4A slip redesign
The T4A slip has been redesigned in a more generic style using identifier codes to report the different types of income amounts, similar to the T3, T4, T4E, and T5 slips. Income types previously reported under “Box 28 – Other income” and identified with footnote codes have, in most cases, been replaced by specific box numbers. For more information, see “Other information” on page 16.
Reporting of retiring allowances
Starting in January 2011 (for the 2010 taxation year), use the T4 slip instead of the T4A slip to report eligible and non-eligible retiring allowance amounts (including those amounts paid to Status Indians). This will reduce the burden of filing both a T4 slip and a T4A slip for many filers. The T4A slip will still be used to report these types of income paid in 2009 and prior years for amended or late filed T4A slips.
Tables on Diskette
As of January 2011, the Canada Revenue Agency will no longer produce the Tables on Diskette. We recommend that you use our Payroll Deductions Online Calculator (PDOC) instead. For information on this option and for other ways to calculate your payroll deductions, see page 8.
Mandatory electronic filing
You must file information returns by Internet File Transfer in eXtensible mark-up language (XML) if you file more than 50 T4A information returns (slips) for a calendar year. Mandatory electronic filing relates to the date of filing, not the tax year of the returns being filed, so if you are filing prior year returns with more than 50 T4A information returns (slips), they must also be filed electronically.
Code 135 – Recipient-paid premiums for private health services plans
A recipient can claim, as a qualifying medical expense, premiums he or she paid to a private health services plan. The use of code 135 is optional; however, if you do not use this code, we may ask the recipient to provide supporting documents.
T5 Filing Requirements
If you file from 1 to 50 information slips, we encourage you to file over the Internet in eXtensible Markup Language (XML) format by Internet file transfer. However, you can file up to 50 T5 slips on electronic media (DVD, CD, or diskette) or on paper.
Effective January 1, 2010, if you file more than 50 T5 slips for a calendar year, you must file the T5 information return over the Internet. If you do not, you are liable to a penalty. For more information, see Failure to file an information return over the Internet.
All T4’s T4A’s and T5’s can now be printed on regular plain paper. Most laser printers can print the image of the flat slips on the plain paper, but you an always order forms online from Canada Revenue Agency