All Canadian employers have to submit the T4 slip to the Canada Revenue Agency annually to report employee earnings and deductions. This procedure ensures that workers pay the appropriate income tax and obtain the correct credit for their contributions to the Employment Insurance and the Canada Pension Plan.
Let's face it, though: preparing and filing the T4 tax return can be a daunting task for many employers. It's simple to make mistakes that result in fines or employee complaints when there are numerous boxes, unclear line codes, and CRA deadlines.
The good news? The process goes much more smoothly if you know how T4s operate, what information they contain, and how to calculate tax return from t4. You'll also avoid expensive errors at year's end.
From what T4 tax slips in Canada mean to detailed filing instructions, box and line explanations, deadlines, and expert advice for smooth compliance, this comprehensive guide has all the information you need.
Key Takeaways:
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Employers use the T4 tax slip, also known as the Statement of Remuneration Paid, to report an employee's yearly income and deductions. It provides an overview of the employee's earnings and the amounts of taxes, CPP, and EI withheld throughout the year.
The CRA uses this data to confirm that employers have sent the appropriate number of deductions and that workers are reporting the correct income.
If you paid, you have to provide a T4 slip:
Pay, commissions, bonuses, or salary
Vacation or overtime compensation
Allowances or benefits that are taxable, such as gifts, health insurance, and company cars
Any additional payments connected to employment that are deductible
An employee must receive a T4 for the time period in which income was paid, even if they worked for only a few weeks.
Pro Tip: Each employee should have their own T4 prepared and filed, not a single combined T4 for all staff.
T4 returns must be filed by all Canadian employers who pay compensation. This comprises:
Businesses that employ employees include corporations, partnerships, and sole proprietors.
Charities and non-profits
Government agencies and establishments
Payroll outsourcing companies and accounting firms work for customers
If you only paid contractors who received T4A slips, for instance, and you made no payments subject to deductions, you do not need to issue a T4.
Accurately filing your T4 is important for credibility, financial hygiene, and compliance. These slips are used by the CRA for:
Check employee earnings and tax deductions.
Compare reported amounts with employer remittances.
Find differences that might lead to audits.
Keep thorough records of your CPP and EI contributions.
Depending on the quantity of slips and the submission date, CRA penalties for missing or incorrectly filed T4s can range from $100 to $7,500.
This displays the total income before deductions, which includes commissions, bonuses, taxable allowances, regular pay, and vacation pay. It serves as the basis for the worker's income tax return.
For Example: Each employee should have their own T4 prepared and filed, not a single combined T4 for all staff.
The total amount of CPP contributions withheld is displayed in this box. The maximum CPP contribution for 2026 is $3,867.50 per year. To prevent inconsistencies, confirm this amount using the CRA's official tables.
Pro Tip: Box 16 should not contain entries from employees who are exempt from CPP (for example, under 18, over 70, or already receiving CPP benefits).
Shows the total amount of EI premiums withheld over the course of the year. There is an annual cap (roughly $1,002.45). The CRA reimburses over-contributions when the employee files their taxes.
Among the most important boxes is this one. It shows all income taxes, both federal and provincial, that have been withheld and sent in. Your CRA payroll remittance records must precisely match the amount.
Caution: The CRA may issue a notice of discrepancy if Box 22 does not match your payroll deductions summary.
Provides a list of the earnings used to calculate EI premiums. Unless the annual EI maximum is applied, it is typically equal to employment income (Box 14).
Shows the amount that is used to determine QPP or CPP contributions. Similar to EI, this is capped at the maximum pensionable earnings threshold set by the CRA each year.
Includes non-monetary or ancillary benefits such as:
Using the company car for personal purposes
Insurance premiums paid by the employer
Housing, food allowances, or gift cards
For instance, if you gave a $500 gift card to an employee as a bonus, that $500 is taxable and needs to be reported in Box 40.
Reports that employee pay has been withheld for union dues. Workers are able to deduct this from their personal tax returns.
Employees translate their T4 information onto their personal tax returns using CRA line codes. Here is a thorough breakdown of the most important ones you need to be aware of:
This represents the sum of all employment income before deductions. It’s pulled directly from Box 14 of the T4 slip. It forms the basis of the employee’s taxable income.
If you offer a pension plan, the employee’s contribution is recorded here. It reduces their taxable income and helps calculate RRSP limits.
Shows total EI deductions, it is claimable as a deduction to lower taxable income.
It is calculated by subtracting all the allowable deductions from total income (Line 15000). It is used to determine federal and provincial tax rates, credits, and benefits.
The total tax deducted at source. If more tax is withheld than owed, the employee will receive a refund; if less, they’ll owe additional taxes.
Pro Tip: If you’re reviewing employee T4 data before filing, double-check that these line references match CRA specifications; even minor mapping errors can cause reassessments.
Canadian employers should ensure that they file their tax return T4 properly. It makes sure that your payroll records comply with the CRA requirements and that the income, deductions, and benefits of your employees are correctly reported by the year. This step-by-step guide will assist you in ensuring that you remain compliant and organized, whether you do the payroll or not through an accountant.
Begin with gathering the total payroll information of all the employees who received remuneration within the tax year. Make sure that the following information is valid and is similar in all the records:
Full name and address of employee and Social Insurance Number (SIN).
Start and termination date of employment (where applicable)
Gross income (Box 14) -salary, wages, bonuses, and taxable allowances.
CPP/QPP contributions (Box 16/17)
EI premiums (Box 18)
Income tax deducted (Box 22)
Any other benefits that are taxable (Box 40), like car, housing, or medical benefits.
Pro Tip: Compare your payroll register with CRA remittance reports to identify discrepancies early. Minor discrepancies may result in fines or a review of a CRA.
All the advantages that you grant to us that are of a financial nature should be reported in the T4 slip. In the case of CRA, the benefits offered to an employee other than his or her salary are taxable benefits.
This can include:
Insurance contributions made by employers.
Vehicle or fuel benefits
Bonuses, housing allowances, and gifts.
Personal expenses Reimbursements.
All the advantages are associated with a particular box in the T4. Check the T4130 guide from the CRA to ensure the appropriate box codes and descriptions. It is essential to report all the taxable items to avoid cases where the employer and employee are not in compliance.
After verifying all the data and benefits, you will have to create:
T4 summarizes the income, deductions, and benefits of every employee.
A T4 Summary -- adding up all the slips of your business number.
They can be created using your payroll or accounting software, or completed by hand with the forms of CRA. Ensure:
The related information about the employer (legal name, address, business number) is accurate.
Box totals are equal to your payroll and remittance records (CRA).
Quick Check: Box 14 (Employment Income), 22 (Income Tax Deducted) and 26 (CPP Pensionable Earnings) are the most commonly inspected by CRA - make sure they all match with each other perfectly well.
You may either file your T4 return in either of the two ways:
Send the T4 XML file of your payroll software using the Internet File Transfer service of the CRA. It is safe, quick, and appropriate for a high volume.
With smaller business entities (less than 50 employees), CRA Web Form is to be used with information being entered manually and submitted online.
Deadline: T4 slips and summaries should be delivered to CRA - and copies sent to employees - by the end of the month of February of the tax year.
This step is not negotiable because employees should submit personal T4 income tax return using their T4 slips. Provide them:
Electronically (thru secure email address or portal, with agreement), or
Copies were mailed out to their address.
Ensure that every employee receives his/her T4 before February 28 (29 in leap years).
Pro Tip: Submit T4s a couple of days ahead of time so that, should there be some mistakes on the part of an employee, there is time to amend and file on time.
Keep all remittance payroll, T4, and CRA records for at least half a year after filing. This contains T4 slips, summary, employee benefit calculations, and evidence of CRA payment. In case of a mistake that occurred after filing:
Submit an Amended T4 slip in the Internet File Transfer or Web Forms of CRA.
Make it very clear that it is amended and re-file with CRA.
Send the revised copy to the aggrieved employee(s).
By outsourcing your T4 process to companies such as Aone Outsourcing Solutions, you can reduce the stress of filing, avoid costly errors, and ensure your business is fully compliant with CRA requirements.
Even senior payroll experts commit minor mistakes that may result in CRA notices or a slowdown. The following are the most popular errors in filing T4 tax returns - and the ways of avoiding them:
A bad or absent Social Insurance Number (SIN) may delay the filing of employee and CRA returns.
Solution: It should be a requirement to get and confirm the SIN of each employee at the time of onboarding. Keep a secure record.
Employers usually fail to record non-cash benefits, such as vehicle allowances or insurance cover, in Box 40.
Solution: Turn to the list of taxable and non-taxable benefits in the CRA and file it.
CRA balances your T4 Summary with your monthly remittances or quarterly remittances.
Solution: Reconcile CPP, EI, and income tax remittances and submit them.
This is because each payroll account associated with your business number will have a specific suffix (e.g., RP0001).
Solution: Ensure you are under the correct account,, or the system will not accept you.
T4 slips should be delivered to both CRA and employees in time.
Solution: Schedule automatic reminders in your accounting system in mid-February to mail slips.
CRA may request T4 backup at any time within the past 6 years.
Solution: Have digital and physical copies of any T4s, summaries, and supporting documents.
Pro Tip: Two weeks before final submission, you should run a T4 Preview Report in your payroll system. This will assist in identifying small inconsistencies in your reporting.
Submission of a T4 tax return form in Canada is not merely an annual compliance chore, but about keeping your business transparent, correct and reliable in the minds of CRA. Every detail counts from reporting earnings and deductions of employees and delivery of slips at the proper time. Any mistakes, failure to meet deadlines, or wrong numbers may result in expensive fines and wasted time and effort but through the proper process (and implementation tool), it is a smooth sailing sail.
When you are a small business or HR manager or an accountant handling several payrolls, T4 season can be daunting. That is why most Canadian enterprises are now sending their T4 reporting, and filing to professionals specializing in CRA-conformable reporting. It saves time, lowers risk and provides you with the freedom of knowing that all of the slips (and all the numbers) are correct.
Prep your T4 way ahead of time. Balance your payroll information on a monthly rather than end of year basis. The practice will guarantee a cleaner book and a day of rest come February during the T4 filings.
Concisely, accuracy, organization, and timeliness are the three tenets of an impeccable T4 reporting. Regardless of whether you do it in-house or outsource it, it is always good to be proactive so that your employees, CRA, as well as your business finances are happy.
A T4 slip ( Statement of Remuneration Paid ) is a statement of the total income, deductions, and benefits that an employee received in a given calendar year. The employers are required to submit it to the CRA and make a copy available to employees to be incorporated into their respective tax returns.
Even in a situation where there was only one employee, any employer who paid salary, wages, bonuses, or taxable benefits to an employee in the year should file T4 slips and a T4 Summary with the CRA.
The calendar year ends on February 28 (or 29 in a leap year), and it is then due. Failure to submit a filing in time may result in CRA fines.
T4 slip entails employment income, CPP/QPP contributions, EI premiums, income tax deducted, and other taxable benefits, e.g., car or housing allowances.
You can file through:
CRA Internet file transfer (XML upload) or
CRA Web Forms (manual entry)
You also have to make copies available to the employees before time runs out.
You will require employee information, payroll summaries, CRA remittance records, benefit calculations and your CRA business number (BN) using the appropriate program account (RP).
The key line codes are used to compute:
Line 15000 - Total income (line 15000 tax return on t4)
Line 20700 - RPP contributions (line 20700 tax return on T4)
Line 23500 - EI premiums (line 23500 tax return on T4)
Line 23600 - Net income (line 23600 tax return on T4)
Line 43500 - Total tax deducted (line 43500 tax return on T4)
These lines will be used to calculate taxable income and tax refund.
Yes! Firms may outsource the T4 filing to professional firms such as Aone Outsourcing Solutions that will prepare and reconcile and submit it to the CRA and distribute it to the employees in a wholesome manner that will not be discredited.
