Payroll preparation for the end of the year

Handy checklist to help payroll prepre for year-end

With year end fast approaching; to ensure a smooth transition, we have prepared the following checklist with some helpful hints.

Canada Revenue Agency (federal reporting)

Before submitting T4s and T4As, ensure important items below have been checked:

•No employee has contributed more than the 2004 Canada Pension Plan maximum of $1831.50.

•No employee has contributed more than $772.20 in Employment Insurance premiums, the 2004 EI maximum.

•Manual cheques have been included and cancelled cheques have been excluded from all year-to-date earnings total 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. (Note: Remember that 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 (the $500 threshold for eporting does not apply).

•Box (24) of the T4 (EI insurable earnings) is left blank if there are no insurable earnings, the earnings are the same as the amount reported in box (14) (Employment income), or the insurable earnings are over the maximum for the year ($39,000 for 2004).

•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 (CRA) will credit the employees with the over-contribution when they file their tax return. To apply for a refund of your CPP and/or EI overpayment, complete form PD24, Application for a Refund of Overdeducted CPP Contributions or EI Premiums. Send it with your T4s.

•All retiring allowances paid to terminated employees have been reported on a T4A and not 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 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 (RPPs) or deferred proft- sharing plans (DPSPs) 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 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 or she remains a member of the plan).

Maximum limits for 2004:
Money Purchase Plan: $16,500
Deferred Profit Sharing Plan: $ 8,250

•Each employee receives a separate T4 for each province/territory in which he or she preformed work at an establishment of 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 only in Canadian currency.

•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.

•Employees have a valid social insurance number.

The deadline for filing T4, and T4A information slips and summary report is February 28, 2005.

Employers must complete and issue the appropriate RL form (s) (e.g., RL-1s) 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.

Revenu Québec (provincial reporting)

Similar to the Federal reporting, before submitting RL-1s, verify that:

•No employee has contributed more than the 2004 Quebec Pension Plan maximum of $1,831.50.

•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. The latter is especially important for individuals below the yearly pensionable (QPP) earnings.

•Insurable earnings are not reported on the RL-1.

•The federal portion of 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 completed if the amount is different form the amount reported in box (A) (Employment income). Leave the box blank if the full amount of the employee's remuneration entered in box (A) constitutes pensionable earnings and no amount is indicated in boxes (Q) or (U).

•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 in question. Either obtain a slip saying "modifié (RL-1.M) from Revenu Québec or enter the correct information on a regular RL-1 and write "Amended" on the front of it.

•A separate a 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 RL-1 information slip and summary report is February 28, 2005.

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