We’re freshly into a brand new year, which is exciting for resolutioners and business owners alike. As we gear up for tax season and prepare T4 slips for employees, navigating the process requires attention to detail and staying on top of Canadian tax regulations. For a smooth transition into the new fiscal year and to meet the January deadline with confidence, here are some tips for T4 preparation.
Stay Informed
Tax legislation changes can happen, so it’s important to stay on top of news in case the new legislation impacts T4 preparation. If missed, your business could receive penalties for not being compliant.
For instance, beginning January 1, 2024, employers must calculate the second additional CPP contribution (CPP2) on earnings above the annual maximum pensionable earnings. Additionally, new codes have been added for reporting certain types of income for employees registered under the Indian Act.
Keep your employees informed about any changes to the T4 slip process. By following these guidelines and consulting the CRA’s resources, employers can ensure accurate and compliant T4 slip preparation, facilitating a smooth tax season for both the business and its employees.
Start Early and Meet Your Deadlines
There are some pretty significant penalties for missing the deadline for T4 submissions. As an employer, you must have your T4s submitted by the last day of February. It’s important to allow yourself extra time and plan to submit before the deadline in case something happens. Using electronic filing can help speed up the process.
Maintain Accurate Records and Have Efficient Processes
Accurate employee information is crucial for preparing T4 slips. Before starting the process, ensure that all employee details, such as names, addresses, and social insurance numbers, are up to date. This step minimizes errors and reduces the likelihood of discrepancies.
Relying on efficient payroll systems can significantly simplify the T4 preparation process. These systems automate calculations, reducing the risk of human error and saving valuable time for your accounting team. T4 income is based on when the income is paid, not when the work was performed, so paying close attention to detail is necessary.
For employees who were paid any amounts that are eligible for CPP/QPP or EI deductions, you must provide them with a T4. If you have employees over the year with less than $500 in earnings and they are not pensionable or insurable, you do not have to provide them with a T4.
Employees with taxable group term life insurance benefits, even if they never worked during the year, require a T4, and former or retired employees require a T4A. You must provide a T4 for any employee (current, former, or non-resident) for whom you provide security options.
Always Double Check Your Work
Double-check your work when it comes to sensitive employee personal and tax information. Each employee’s situation is unique, so reviewing taxable benefits like company cars and housing allowances and their amounts helps to reduce issues during the tax season crunch.
Refresh Your Skills
If you’re new to being a business owner or accounting isn’t your strong suit, taking a bookkeeping course online can help you navigate tax time a little easier. The Accounting by Sal QuickBooks Online Training is the perfect tool for preparing for tax season and day-to-day bookkeeping tasks.
Enlist the Help of Expert Accounting Services
Take bookkeeping and year-end T4 preparation off your plate with done-for-you accounting services from Accounting by Sal. Our Canadian tax experts can help you get the most out of tax season because it can be challenging without proper planning. We can help put a strategy in place so you can have your T4s submitted with plenty of time to spare. Learn more about our accounting services here.
