Follow these tips to ease year-end pressures
Year end is fast approaching and to ensure a smooth transition Canadian HR Reporter, along with the Carswell Payroll Hotline, has prepared the following checklist and helpful hints for payroll practitioners.
For federal reporting to the Canada Revenue Agency
Before submitting T4s and T4As, ensure that the following items have been checked:
•No employee has contributed more than $1861.20 in Canada Pension Plan (CPP) contributions for 2005.
•No employee has contributed more than $760.50 in Employment Insurance (EI) premiums for 2005.
•Manual cheques have been included and cancelled cheques have been excluded from all year-to-date earnings totals and deductions totals that are reported on the T4 and T4A slips.
•All taxable benefits have been included as employment income and the corresponding source deductions totals have been updated. The latter is especially important for individuals below the yearly pensionable (CPP) earnings. Non-cash taxable benefits are not insurable, with the exception of board and lodging benefits provided in the same pay period that an employee receives cash earnings and an employer’s contribution to an employee’s registered retirement savings plan.
•Group term life insurance taxable benefits for current employees have been reported using code 40 in the “Other Information” area of the T4. For former employees, report the benefit in box (28) of the T4A with a footnote code (19) in box (38) (the $500 threshold for reporting does not apply). Multi-employer plan administrators or trustees that provide taxable benefits from group term life insurance to former employees or employees of such a plan are required to prepare a T4A slip only if the benefit is more than $25.
•Box (24) on the T4 (EI insurable earnings) is left blank if there are no insurable earnings, if the earnings are the same as the amount reported in box (14) (employment income), or if the insurable earnings are over the maximum for the year ($39,000 for 2005).
•Box (26) (CPP/QPP pensionable earnings) on the T4 slip is completed only if the amount is different from the amount reported in box (14). Otherwise, leave the box blank.
•You have prepared two T4 slips for employees who made contributions to both the CPP and QPP: one showing the QPP deducted and the applicable pensionable earnings and remuneration the employee earned in Quebec, and the other showing the CPP deducted and the applicable pensionable earnings and remuneration the employee earned in any other jurisdiction.
•You have not adjusted the CPP contribution and EI premium amounts you reported on the T4 if you over-deducted employee contributions. The Canada Revenue Agency will credit the employees when they file their tax return. To apply for a refund of your CPP or EI overpayment, complete form PD24, “Application for a Refund of Overdeducted CPP Contributions or EI Premiums” and mail it with your T4s.
•All retiring allowances paid to terminated employees have been reported on a T4A, not a T4. Employers are required to enter the amount of a retiring allowance that is eligible for tax-free transfer to a Registered Pension Plan (RPP) or Registered Retirement Savings Plan (RRSP) in box (26) of the T4A and the amount that is not eligible for transfer in box (27) of the T4A. No footnotes are required unless the payment was made to a Status Indian.
•Employers who contribute to registered pension plans or deferred profit-sharing plans for their employees have reported a pension adjustment (PA) in box (52) of the T4 slip. Enter only the dollar amount (no cents). Leave the box blank if the PA is zero or a negative amount, if the employee died in the year, or if the employee is all paid up.
The maximum limits for 2005 are: $18,000 for a money purchase plan; and $9,000 for a deferred profit sharing plan.
Other matters
•Each employee receives a separate T4 for each province or territory in which she worked for the employer. If an employee is receiving more than one T4 slip, you should ensure that the PA (if applicable) is reported proportionately on each T4. If this is not possible, report the PA on one slip.
•Negative dollar amounts are not reported. To adjust amounts reported in previous years, send in an amended form for the year(s) concerned.
•Amounts are reported in Canadian currency.
•Top-up amounts paid to employees receiving workers’ compensation benefits are reported on the T4. The actual benefits are not reported on the form. With the exception of Quebec, workers’ compensation benefits are reported by the provincial/territorial boards on form T5007, “Statement of Benefits.” For Quebec, CSST benefits are reported by the Commission de la santé et de la sécurité du travail on form RL-5, “Prestations et indemnités.”
•The Business Number (BN) you use to send in employee deductions is shown on all forms except copies of information slips that are provided to employees.
•A separate set of information slips and related summaries has been prepared for each payroll deductions account.
•The totals you report on the summary forms match the totals you reported on the information slips.
•You have entered all relevant information in the “Other Information” area at the bottom of the T4.
•You have entered all relevant footnotes and footnote codes on the T4A slips.
•Employees have a valid social insurance number.
•You have not changed the headings of any of the boxes.
•You have not entered the dollar sign ($) on the forms.
•You have prepared the slips clearly and in alphabetical order. If the form is computer generated or typed, use the standard 10 or 12 font size.
•You have not used hyphens or dashes between numbers or names.
•Where no amount is entered in a box, leave the box blank.
The deadline for filing T4 and T4A information slips and summary reports is Feb. 28, 2006.
Provincial reporting to Revenu Québec
Employers must complete and issue the appropriate RL form(s) to employees and other individuals to whom they paid remuneration in the year. Employers must also send copies of the forms, as well as the matching summary, to Revenu Québec by the last day of February every year.
Similar to federal reporting, before submitting RL-1s, verify that:
•No employee has contributed more than $1861.20 in Quebec Pension Plan (QPP) contributions for 2005.
•Manual cheques have been included and cancelled cheques have been excluded from all year-to-date totals and deductions totals that are reported on the RL-1.
•All taxable benefits have been included as employment income and the corresponding source deduction totals have been updated. The latter is especially important for individuals below the yearly pensionable (QPP) earnings.
•Insurable earnings are not reported on the RL-1.
•Federal income tax is not reported on the RL-1.
•Retiring allowances have been reported in box (O) (code RJ) on the RL-1.
All footnotes have been entered in the centre of the RL-1 slips. If there is not enough space for all of the notes, attach a separate sheet.
•If any amounts have been reported in box (O), the appropriate alphabetic code has been entered in the code box to indicate the type of payment.
•Box (G) (QPP pensionable earnings) is only to be completed if the amount is different from the sum of the amounts reported in boxes (A), (Q) (deferred salary or wages) and (U) (salary or wages deemed paid under a phased retirement plan). If the amount of pensionable earnings for QPP equals the sum of the amounts reported in boxes (A), (Q) and (U), leave the box blank. Enter “0” if the employee did not have to make any QPP contributions.
•All amounts entered on the slips should be reported in Canadian currency. If this is not possible, identify the currency used in the centre of the slip.
•Negative dollar amounts are not reported. To adjust amounts reported in previous years, submit an amended slip for the year(s) in question. Either obtain a slip stamped “Modifié” (RL-1.M) from Revenu Québec or enter the correct information on a regular RL-1 and write “Amended” on the front.
•A separate set of RL-1s and summaries are required for each Revenu Québec employer account number.
•The totals you report on the summary match the total amounts reported on the RL slips, where applicable.
The deadline for filing is Feb. 28, 2006.
For more information, please contact the Carswell Payroll Hotline at 1-800-661-6828.
For federal reporting to the Canada Revenue Agency
Before submitting T4s and T4As, ensure that the following items have been checked:
•No employee has contributed more than $1861.20 in Canada Pension Plan (CPP) contributions for 2005.
•No employee has contributed more than $760.50 in Employment Insurance (EI) premiums for 2005.
•Manual cheques have been included and cancelled cheques have been excluded from all year-to-date earnings totals and deductions totals that are reported on the T4 and T4A slips.
•All taxable benefits have been included as employment income and the corresponding source deductions totals have been updated. The latter is especially important for individuals below the yearly pensionable (CPP) earnings. Non-cash taxable benefits are not insurable, with the exception of board and lodging benefits provided in the same pay period that an employee receives cash earnings and an employer’s contribution to an employee’s registered retirement savings plan.
•Group term life insurance taxable benefits for current employees have been reported using code 40 in the “Other Information” area of the T4. For former employees, report the benefit in box (28) of the T4A with a footnote code (19) in box (38) (the $500 threshold for reporting does not apply). Multi-employer plan administrators or trustees that provide taxable benefits from group term life insurance to former employees or employees of such a plan are required to prepare a T4A slip only if the benefit is more than $25.
•Box (24) on the T4 (EI insurable earnings) is left blank if there are no insurable earnings, if the earnings are the same as the amount reported in box (14) (employment income), or if the insurable earnings are over the maximum for the year ($39,000 for 2005).
•Box (26) (CPP/QPP pensionable earnings) on the T4 slip is completed only if the amount is different from the amount reported in box (14). Otherwise, leave the box blank.
•You have prepared two T4 slips for employees who made contributions to both the CPP and QPP: one showing the QPP deducted and the applicable pensionable earnings and remuneration the employee earned in Quebec, and the other showing the CPP deducted and the applicable pensionable earnings and remuneration the employee earned in any other jurisdiction.
•You have not adjusted the CPP contribution and EI premium amounts you reported on the T4 if you over-deducted employee contributions. The Canada Revenue Agency will credit the employees when they file their tax return. To apply for a refund of your CPP or EI overpayment, complete form PD24, “Application for a Refund of Overdeducted CPP Contributions or EI Premiums” and mail it with your T4s.
•All retiring allowances paid to terminated employees have been reported on a T4A, not a T4. Employers are required to enter the amount of a retiring allowance that is eligible for tax-free transfer to a Registered Pension Plan (RPP) or Registered Retirement Savings Plan (RRSP) in box (26) of the T4A and the amount that is not eligible for transfer in box (27) of the T4A. No footnotes are required unless the payment was made to a Status Indian.
•Employers who contribute to registered pension plans or deferred profit-sharing plans for their employees have reported a pension adjustment (PA) in box (52) of the T4 slip. Enter only the dollar amount (no cents). Leave the box blank if the PA is zero or a negative amount, if the employee died in the year, or if the employee is all paid up.
The maximum limits for 2005 are: $18,000 for a money purchase plan; and $9,000 for a deferred profit sharing plan.
Other matters
•Each employee receives a separate T4 for each province or territory in which she worked for the employer. If an employee is receiving more than one T4 slip, you should ensure that the PA (if applicable) is reported proportionately on each T4. If this is not possible, report the PA on one slip.
•Negative dollar amounts are not reported. To adjust amounts reported in previous years, send in an amended form for the year(s) concerned.
•Amounts are reported in Canadian currency.
•Top-up amounts paid to employees receiving workers’ compensation benefits are reported on the T4. The actual benefits are not reported on the form. With the exception of Quebec, workers’ compensation benefits are reported by the provincial/territorial boards on form T5007, “Statement of Benefits.” For Quebec, CSST benefits are reported by the Commission de la santé et de la sécurité du travail on form RL-5, “Prestations et indemnités.”
•The Business Number (BN) you use to send in employee deductions is shown on all forms except copies of information slips that are provided to employees.
•A separate set of information slips and related summaries has been prepared for each payroll deductions account.
•The totals you report on the summary forms match the totals you reported on the information slips.
•You have entered all relevant information in the “Other Information” area at the bottom of the T4.
•You have entered all relevant footnotes and footnote codes on the T4A slips.
•Employees have a valid social insurance number.
•You have not changed the headings of any of the boxes.
•You have not entered the dollar sign ($) on the forms.
•You have prepared the slips clearly and in alphabetical order. If the form is computer generated or typed, use the standard 10 or 12 font size.
•You have not used hyphens or dashes between numbers or names.
•Where no amount is entered in a box, leave the box blank.
The deadline for filing T4 and T4A information slips and summary reports is Feb. 28, 2006.
Provincial reporting to Revenu Québec
Employers must complete and issue the appropriate RL form(s) to employees and other individuals to whom they paid remuneration in the year. Employers must also send copies of the forms, as well as the matching summary, to Revenu Québec by the last day of February every year.
Similar to federal reporting, before submitting RL-1s, verify that:
•No employee has contributed more than $1861.20 in Quebec Pension Plan (QPP) contributions for 2005.
•Manual cheques have been included and cancelled cheques have been excluded from all year-to-date totals and deductions totals that are reported on the RL-1.
•All taxable benefits have been included as employment income and the corresponding source deduction totals have been updated. The latter is especially important for individuals below the yearly pensionable (QPP) earnings.
•Insurable earnings are not reported on the RL-1.
•Federal income tax is not reported on the RL-1.
•Retiring allowances have been reported in box (O) (code RJ) on the RL-1.
All footnotes have been entered in the centre of the RL-1 slips. If there is not enough space for all of the notes, attach a separate sheet.
•If any amounts have been reported in box (O), the appropriate alphabetic code has been entered in the code box to indicate the type of payment.
•Box (G) (QPP pensionable earnings) is only to be completed if the amount is different from the sum of the amounts reported in boxes (A), (Q) (deferred salary or wages) and (U) (salary or wages deemed paid under a phased retirement plan). If the amount of pensionable earnings for QPP equals the sum of the amounts reported in boxes (A), (Q) and (U), leave the box blank. Enter “0” if the employee did not have to make any QPP contributions.
•All amounts entered on the slips should be reported in Canadian currency. If this is not possible, identify the currency used in the centre of the slip.
•Negative dollar amounts are not reported. To adjust amounts reported in previous years, submit an amended slip for the year(s) in question. Either obtain a slip stamped “Modifié” (RL-1.M) from Revenu Québec or enter the correct information on a regular RL-1 and write “Amended” on the front.
•A separate set of RL-1s and summaries are required for each Revenu Québec employer account number.
•The totals you report on the summary match the total amounts reported on the RL slips, where applicable.
The deadline for filing is Feb. 28, 2006.
For more information, please contact the Carswell Payroll Hotline at 1-800-661-6828.
