Tax rules, thresholds and administrative procedures can change. Confirm current official requirements and obtain advice for material transactions or unusual facts.
T4 preparation starts with reconciliation
Do not begin by typing year-to-date numbers into slips. Begin with the payroll register, general ledger, CRA remittance account and employee records. Employment income, taxes deducted, CPP/QPP, second additional contributions, EI, pensionable earnings and insurable earnings should be reconciled.
Employee-by-employee review
Confirm legal name, address, SIN, province of employment, exemption status and employment dates. Review employees who turned 18 or 70, started receiving CPP, changed province, exceeded annual maximums or had multiple payroll systems.
Missing or invalid SIN information should be resolved promptly and documented.
Taxable benefits
Review automobile benefits, allowances, gifts, group insurance, parking, personal use of employer property and other non-cash benefits. Some benefits affect income tax, CPP/QPP, EI or GST/HST differently. Waiting until slips are prepared can require an additional payroll run or amended remittance.
Reconcile to remittances
Total employee deductions and employer contributions should be compared with amounts remitted. Differences may arise from timing, prior adjustments, penalties or incorrect account postings. The balance in the payroll liability accounts should be explained, not simply cleared.
T4 Summary control totals
The total of individual slips should agree with the summary and the payroll records. Keep a working paper showing each box total and adjustments. If a payroll provider prepares the slips, the employer should still review control totals and employee details.
Distribution, filing and corrections
Use current CRA filing methods and deadlines. Provide employee copies securely. If an error is found after filing, determine whether an amended or cancelled slip is required and preserve the original and correction trail.
The employer remains responsible for accurate and timely reporting even when a third party prepares the slips.
This article provides general Canadian tax information and is not a substitute for tax, legal, financial or investment advice based on complete circumstances.