Tips for successfully filing T4 and RL-1 information returns in Canada, Quebec
For payroll professionals, December is about more than the holidays. It’s also time to finish preparing for the 2018 tax year and year-end reporting.
With T4 and RL information returns due by Feb. 28, payroll staffers have a lot to do in a short period. The following tips can help you stay on top of 2017 year-end reporting requirements:
Prepare T4s for employees who received remuneration during the year, where Canada/Quebec Pension Plan (C/QPP) contributions, employment insurance (EI) premiums, Quebec Parental Insurance Plan (QPIP) premiums or income tax were required to be deducted or if their remuneration exceeded $500. Besides wages and salary, remuneration includes bonuses, commissions, taxable benefits and allowances, and other payments.
Complete T4As to report pension or superannuation payments, lump-sum payments, self-employed commissions, or other income described in the Canada Revenue Agency’s (CRA) guide Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary (RC4157) if the amount was more than $500 or you deducted income tax.
If you paid amounts to non-residents for services rendered in Canada that they did not perform in the ordinary course of employment, report them on a T4A-NR. If you paid or credited pensions, annuities or investment income to non-residents, trusts or corporations, use form NR4 to report the amounts. The filing deadline for NR4s is April 3 since the normal March 31 due date falls on a Saturday; however, as a best practice, try to submit the slips by March 29.
Employers with Quebec payrolls must also prepare a year-end information return for Revenu Québec. It requires employers to complete RL-1 forms for employees who reported to work at their place of business in Quebec or who were paid from their business in Quebec if they were not required to report to work. Use RL-2s to report retirement and annuity income.
When completing forms, report earnings based on the year paid, not on the year the employee earned them.
For T4 boxes 16 and 17, the 2017 maximum employee CPP contribution is $2,564.10. For QPP, it is $2,797.20. On an RL-1, report QPP contributions in box B. Do not report CPP contributions in box B. Instead, enter code B-1 in one of the boxes in the Renseignements complémentaires area, followed by the amount of CPP contributions.
For T4 box 18, the maximum employee EI premium for 2017 is $836.19 for employees in all parts of Canada, except Quebec. For Quebec employees, it is $651.51. On an RL-1, use box C to report EI premiums.
In T4 box 24, report the total amount used to calculate the employee’s EI premiums, up to $51,300, the maximum insurable earnings for 2017. If the employee had no insurable earnings, enter “0.”
In T4 box 26, enter the employee’s C/QPP pensionable earnings for the year, up to $55,300, the maximum for 2017. On the RL-1, report the employee’s QPP pensionable earnings, up to $55,300, in box G. If the employee had no pensionable earnings, enter “0.”
If the employee contributed to both the CPP and the QPP, complete two T4 slips, one for the CPP and one for the QPP. On an RL-1, enter code G-2 in one of the boxes in the Renseignements complémentaires area, followed by the total amount of CPP pensionable earnings reported in T4 box 26.
Report the employee’s QPIP premiums on a T4 in box 55. In box 56, enter the total amount of insurable earnings used to calculate the premiums, up to $72,500, the maximum for 2017. Leave the box blank if there are no insurable earnings, the insurable earnings are the same as employment income reported in box 14, or the insurable earnings are over the maximum for the year.
For an RL-1, report employee QPIP premiums in box H. The maximum employee premium for 2017 is $397.30. Leave the box blank if you did not deduct premiums. Report the total amount of insurable salary or wages from which you deducted QPIP premiums in box I, up to the $72,500 maximum for 2017.
If you over-deducted CPP contributions or EI premiums, do not adjust the amounts reported on the T4. The CRA will credit employees with the over-contribution when they file their personal tax return. To apply for a refund for the employer overpayment, submit form PD24, Application for a Refund of Overdeducted CPP Contributions or EI Premiums.
If you issued manual cheques during the year, include them in all year-to-date earnings and deductions totals reported on the forms. If there are cancelled cheques, exclude the amounts from the year-to-date earnings and deductions totals.
Include all taxable benefits and allowances in employment income and ensure that corresponding source deduction totals have been updated.
Report retiring allowances in the “Other Information” area of the T4. Use code 66 for the amount eligible for tax-free transfer to an RPP or RRSP (code 68 for Status Indians). Use code 67 to report the non-eligible amount (code 69 for Status Indians). For Quebec, report the total amount of the retiring allowances in box O on an RL-1, using code RJ.
Report a pension adjustment (PA) in T4 box 52 if the employer contributed to an RPP or a deferred profit-sharing plan for the employee. Enter only the dollar amount. Leave the box blank if the PA is zero or a negative amount, the employee died in the year or the employee is all paid up.
If a worker served in more than one jurisdiction during the year, complete a separate T4 for each.
Ensure that each employee has a valid social insurance number and that you have correctly reported it on the forms.
Report all amounts in Canadian currency. For RL-1s, if this is not possible, enter “200” in one of the blank boxes in the Renseignements complémentaires area, followed by the type of currency used.
The CRA requires employers using paper T4s, T4As, T4A-NRs or NR4s to also file a related summary form. For Revenu Quebec, employers must complete an RL-1 summary form.
Beginning with 2017 year-end reporting, employers may distribute T4s to employees electronically without their prior consent. To do so, employers must provide employees with a secure portal and site to access and print their T4s. They must also give employees the option to receive paper copies of their T4 if they request it. The new rules apply only to T4s and not to other year-end forms.
Revenu Québec has implemented similar electronic distribution rules for RL-1s. Employers who are distributing paper forms must give employees copy 2 of the form.
Employers with up to 50 information slips of one type to file for a calendar year may file their returns with the CRA and Revenu Québec on paper or online.
Employers with more than 50 information slips of one type to file must file online. Both the CRA and Revenu Québec can penalize employers who fail to do this, with penalties ranging from $250 to $2,500.
To change information on a form after submitting a return to the CRA or Revenu Québec, file an amended form by following the procedures in the CRA’s Employers’ Guide – Filing the T4 Slip and Summary (RC4120) and Revenu Québec’s Guide to Filing the RL-1 Slip: Employment and Other Income (RL-1.G-V).
If employees lose their paper T4, employers may give them a replacement slip. Mark the slip as “DUPLICATE” and keep a copy for your records. Do not send a copy to the CRA. Revenu Québec follows a similar procedure.
Carefully following the rules and checking the forms before submitting them may help to avoid a CRA Pensionable and Insurable Earnings Review (PIER) report. The CRA issues it if it determines that the deductions reported for C/QPP contributions and/or EI premiums do not match the amounts required.
Besides having to check and correct the errors shown on the PIER report, payroll staff may also have to remit an outstanding balance to the CRA, which could include interest charges.
Note: Tips are based on information available in early November.
