Tax season is on the horizon for business owners and corporations. Many details go into business tax planning; most of the time, they enlist the help of strategic tax advisors. Having the assistance of small business accounting services means you have an expert on your side during this busy time.
During tax season, employers face significant responsibilities beyond their own business tax filings; they must also manage and issue necessary documents for their employees to file personal income taxes. This process includes preparing T4 and T5 slips, which are critical for reporting income and deductions to the Canada Revenue Agency and employees.
What is a T4?
A T4 slip, or Statement of Remuneration Paid, details an employee’s earnings and tax deductions for the year and is required for anyone who has earned more than $500 or had deductions for CPP/QPP contributions, EI premiums, PPIP, or income tax. Employers must provide a T4 for each employee, including those who are inactive or terminated within the tax year, and for each province or territory where employees earn income.
What is a T5?
A T5 Slip, or Statement of Investment Income, details the earnings made from interest, certain foreign income and dividends to Canadian residents. If the amount is less than $50, there is no need to issue a T5, but the individual must still report the income.
Filing Requirements
The year 2020 introduced changes in reporting on T4 slips, requiring employers to use specific codes for reporting employment income and retroactive payments across distinct periods to support the validation of payments made under various government support programs like the CEWS, CERB, and CESB.
Filing requirements for T4 and T5 slips include providing two copies of the T4 to employees, which can be delivered by mail, in person, or electronically, with consent. Employers can file up to 100 T4 slips using the CRA’s Web Forms or must use Internet File Transfer for larger volumes. Similarly, T5 filings follow specific guidelines for electronic or paper submissions, with a T5 summary required for each business account.
Given the complexities introduced by adjustments for 2020 and the need for meticulous reporting, employers are encouraged to seek professional advice or consult the CRA’s guidelines to ensure accurate and timely submissions, avoiding penalties and ensuring compliance.
Deadlines
The deadline for issuing T4 slips for the previous calendar year is the last day of February of the following year. Late filings can attract penalties ranging from $25 per day, with minimums and maximums set by the CRA.
The same deadline applies for T5 slips. The slips are due on the following business day if the date falls on a weekend or holiday.
Small Business Accounting Services From Accounting By Sal
There are many moving parts in a single tax season, and having a team of professionals take care of your small business accounting services can ensure everything is done correctly so you avoid penalties and fines. Tax season can be stressful, and problems can arise without proper planning and organization. With the help of Accounting By Sal, whether you need full done-for-you bookkeeping or training for online accounting services, we can help.
Accounting By Sal offers:
- Done For You Bookkeeping
- We provide remote bookkeeping tailored to your needs. We identify ways to help your business be more profitable and how you can get the most out of your accounts.
- DIY Bookkeeping
- We teach you how to set up and organize your accounts with in-depth QuickBooks Online or FreshBooks training so you can manage your own books.
- Business Mentorship & Coaching
Sal is passionate about helping her clients achieve their dream business. In her mentorship and coaching sessions, she offers her top advice and valuable insights based on experience.
Take tax planning off your to-do list, and contact us today.
