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.
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.
Keep your employees in the loop about any changes to the T4 slip process. This transparency fosters trust and allows employees to address any concerns with you.
Maintain Accurate Records and Have Efficient Processes
Accurate employee information is crucial for T4 slip preparation. 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.
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.
Enlist the Help of 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 a challenge 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.