Year-end reporting: What you need to know

It is that time of year again. While many people’s thoughts turn to snow and holiday shopping in December, for payroll, the month is a time to gear up for year-end reporting while preparing for January changes. T4s, T4As, T4A-NRs are RL-1s are due Monday, March 2, 2015 (since Feb. 28 is a Saturday).

Most payroll professionals are well aware of all that is involved in year-end reporting, but it never hurts to have reminders.

The following tips are provided to assist payroll departments with preparations for 2014 year-end reporting.

Before completing T4s and T4As, ensure that the following items have been checked:

• T4s have been completed for all individuals who, in the ordinary course of an office or employment, received remuneration during the year, where C/QPP contributions, EI premiums, QPIP premiums or income tax were required to be deducted or where remuneration was more than $500.
• T4As have been completed for all individuals who received the following types of remuneration, if it was more than $500 or you deducted income tax from it: pension or superannuation; lump sum payments; self-employed commissions; annuities; patronage allocations; or other income described in the Canada Revenue Agency’s (CRA’s) guide Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary (RC4157).
• No employee has contributed more than the 2014 CPP maximum of $2,425.50.
• No employee has contributed more than $913.68 in EI premiums, the 2014 EI maximum for employees in all parts of Canada, except Quebec. The maximum EI premium for Quebec employees is $743.58.
• 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 deduction totals have been updated. The latter is especially important for individuals below the yearly pensionable earnings.
• Group term life insurance taxable benefits for current employees have been reported using code 40 in the "Other Information" area of the T4. For retired employees, report the benefit on a T4A in the "Other Information" area, using code 119 even if the total amount of all benefits paid in the calendar year is $500 or less. 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 (EI insurable earnings) on the T4 has been completed. In the box, report the total amount used to calculate the employee’s EI premiums, up to the annual maximum insurable earnings ($48,600 for 2014). If the employee had no insurable earnings or was exempt from EI, enter "0".
• Box 26 (CPP/QPP pensionable earnings) on the T4 slip has been completed. In the box, report the employee’s pensionable earnings for the year, up to the annual maximum pensionable earnings ($52,500 for 2014). If the employee had no pensionable earnings or was exempt from, enter "0".
• Two T4 slips have been prepared for employees who contributed 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.
• The CPP contribution or EI premium amounts reported on the T4 have not been adjusted if you over-deducted employee contributions. The CRA will credit the employee with the over-contribution when he or she files a personal income tax return. To apply for a refund for the employer overpayment, complete form PD24, Application for a Refund of Overdeducted CPP Contributions or EI Premiums. Send it in with your T4s if filing on paper. If filing electronically, send the form in separately by mail.
• All retiring allowances paid to terminated employees have been reported on 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 the "Other Information" area of the T4, using code 66 and the amount that is not eligible for transfer using code 67. For Status Indians, use code 68 for the eligible amount and code 69 for the non-eligible portion.
• Employers that contribute to RPPs or deferred profit-sharing plans (DPSPs) for their employees have reported a pension adjustment (PA) in box 52 of the T4. Enter only the dollar amount (no cents). 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 (i.e., the employee no longer accrues new pension credits in the year, although he remains a member of the plan). The maximum limit for 2014 for money purchase plans is $24,930 and for DPSPs, it is $12,465.
• Each employee receives a separate T4 for each province/territory in which she performed work at an establishment of the employer. If an employee is receiving more than one T4 slip, you should ensure the PA (if applicable) is reported proportionately on each. If this is not possible, report the PA on one slip.
• Negative dollar amounts are not reported. To adjust amounts reported in previous years, send in an amended form for the year(s) concerned.
• Amounts are reported only in Canadian currency.
• Top-up amounts paid to employees receiving workers’ compensation benefits are reported on the T4. The actual workers’ compensation benefits are not reported on the form. With the exception of Quebec, workers’ compensation benefits are reported by the provincial/territorial boards on form T5007, Statement of Benefits.
• The 15-character Account Number used to send in employee deductions is shown on all forms except copies of information slips that are provided to employees.
• A separate set of information slips and related summaries (if filing on paper) has been prepared for each payroll deductions account.
• If filing on paper, the totals reported on the summary forms match the totals reported on the information slips.
• All relevant information (i.e., the codes and amounts that relate to employment commissions, taxable allowances or benefits, and deductible amounts that apply) has been reported in the "Other Information" area at the bottom of the T4 and the T4A.
• Employees have a valid social insurance number.
• The headings of the boxes have not been changed.
• The dollar sign ($) has not been printed or typed on the forms.
• The forms have been completed clearly and in alphabetical order. If the form is computer-generated or typed, use a standard 10 or 12 characters per inch (CPI) font.
• No hyphens or dashes have been inserted between numbers or names.
• Where no amount is entered in a box, leave the box blank. Do not enter "nil".
• Amounts paid to non-residents for services rendered in Canada that they did not perform in the ordinary course of employment have been reported on a T4A-NR.
• If pensions, annuities or investment income were paid or credited to non-residents, trusts or corporations, this was reported on form NR4.

Employers with Quebec payrolls also have to file RL-1s with Revenu Québec. Before completing RL-1s, verify that:

• The amounts reported on the RL-1 pertain to remuneration paid to and amounts deducted at source from employees who report to work at their employer’s place of business in Quebec and to those who are not required to report to work, but who are paid from the employer’s business located in Quebec.
• All salaries and wages have been reported regardless of the amount and whether deductions at source have been taken.
• No employee has contributed more than the 2014 QPP maximum of $2,535.75.
• No employee has contributed more than $385.71 in QPIP premiums, the 2014 maximum.
• 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 RL-1.
• All taxable benefits have been included as employment income and the corresponding source deduction totals have been updated.
• Insurable earnings reported on the RL-1 pertain to the Quebec Parental Insurance Plan.
• The federal portion of income tax is not reported on the RL-1.
• Retiring allowances have been reported in box O (using code RJ).
• The "Renseignements complémentaires" boxes in the centre of the slip have been used to report additional information relating to amounts reported in other boxes on the form.
• 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.
• In box G, you have reported the employee’s QPP pensionable salary or wages for the year up to the annual maximum pensionable earnings ($52,500 for 2014).
• In box H, you have reported the total amount deducted for QPIP premiums. Leave the box blank if you did not deduct any premiums. Do not adjust the amount if you deducted too much.
• In box I, you have reported the total amount of salary or wages from which the employer deducted QPIP premiums, up to the annual maximum insurable earnings ($69,000 for 2014).
• All amounts entered on RL-1s should be reported in Canadian currency. If this is not possible, enter "200" in one of the blank boxes in the centre of the RL-1 slip, followed by the type of currency used.
• Negative dollar amounts are not reported. To adjust amounts reported in previous years, submit an amended slip for the year in question.
• 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.