T4 Slips: What Canadian Employees Should Know

Provinces which currently levy this tax are British Columbia, Manitoba, Newfoundland and Labrador, Ontario, Quebec and the Northwest Territories and Nunavut. In the Northwest Territories and Nunavut, this levy takes on the form of a standard payroll tax amounting to 2% of the employee’s salary. Health tax contributions in the other provinces vary between 1.95% and 4.3% (top rates). It’s worth noting that income tax and certain contributions are based on the employee’s total taxable income, which may include taxable benefits. What counts as taxable benefits differs from province to province and territory to territory, as does the applicable taxable rate, so you should seek local expertise before proceeding.

• However, under CRA’s existing policies, there are certain circumstances where an employer provides overtime meals or allowances, or a subsidized meal and the employee would not receive a taxable benefit.
• The necessary report is the T4 form – Quebec has a different return form (RL-1).
• An employer-provided parking spot would not be considered a taxable benefit when the regular place of employment is closed due to COVID-19.
• If you have access to your CRA account, you can check the same there, it should appear there.
• The CRA’s Web Form is a free and secure way to file your returns electronically.
• These boxes refer to Canada Pension Plan and Quebec Pension Plan contributions.

In such a case, you should seek assistance from a reputable corporate tax accountant or a professional tax preparation service. Any payments to non-residents is an important and slightly complex tax area that needs professional tax advice from a corporate tax accountant The Canadian Employers Guide To The T4 properly licensed in Canada. We do not recommend it doing it on your own, at least for the first time. T4A-NR is filed by the employers in Canada (Resident or Non-Resident) if they pay amounts to Non-Residents for the services provided by them in Canada.

Frequently asked questions about running payroll in Canada

Depending on your local entity’s location, you may also need to register with provincial tax authorities like Revenu Québec and Workplace Safety and Insurance Boards like Ontario’s. If you are expecting a T4A and do not get it, it does not mean that you can skip the inclusion of your income. Penalties for not filing T4, T4A or other information return from employers are listed here. If you need to amend or cancel a paper return, clearly identify the slips as amended or cancelled slips by writing “AMENDED” or “CANCELLED” at the top of each slip. Of course, you can always skip the filing entirely and have Knit do it on your behalf. If you are filing on paper, you must keep the information from the T4 slips and the T4 Summary or a copy of these forms for your files.

Alternatively, you can follow us on social media or sign up for our email subscriptions to get regular tax updates. If you are an individual tax preparer you should not ask someone to send the same by email. If you are an accountant providing services to business, you should not send the processed T4s by email to the employer. T5018 which is an information return for the construction businesses making payments to subcontractors is due six months after the reporting date chosen by the business. You have to file T4A information return if you are a payer of other amounts related to employment.

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The file is exported to the file path entered in the File to be Exported screen. Select whether the employees should be contacted in English or French. The CRA will check your remitter status each year and inform you of any changes. There’s so much to think about, in particular the drastically different regulations across provinces and territories. But this shouldn’t dissuade you from tapping into Canada’s highly educated talent pool.

An EOR employs your chosen talent for you, taking care of payroll, administration, and compliance, so you can focus your efforts on more important tasks instead. Get expert guidance from the Lano team to find the best payroll setup for your business. If you are looking to hire our services, you can start the process here.

T4 Slips: What Canadian Employees Should Know

Contractors do not fall under the same regulations, and employers may end their contracts much more simply and without notice. Accordingly, independent contractors are given little to no protection according to the Canada Labour Code. (2) commuting costs incurred by an employee to travel to their regular place of employment for any purpose, such as to retrieve equipment or supplies, that enables them to perform their duties from home.

When you pay for or reimburse the cost to your employee’s cell phone service plan or home internet service plan, CRA’s policy states that the portion used for employment purposes is not a taxable benefit. However, if part of the use of the cell phone or internet service is personal, then the personal use would generally be a taxable benefit to your employee. It is the employer who withholds income tax from employee salaries and wages and remits the withheld amounts to the federal tax authorities. Except for Quebec, federal and provincial taxes are calculated in one single process and collected through the federal tax authority which is the Canada Revenue Agency. Qualifying non-resident employers may be exempt from withholding income tax from wages and salaries paid to non-resident employees. Federal income tax rates range from 15% to 33% while provincial income tax rates go up to 25.75% – plus an additional surcharge levied by some provinces.

How to Pay Income Tax if You’re Self-Employed in Canada

The transfer fees, though, including exchange rate fees, can be quite high. If you have a branch of your company in Canada with access to local bank accounts, it should be easy to pay independent contractors. However, are still tax https://kelleysbookkeeping.com/tax-credits-vs-tax-deductions/ forms required that you should be aware of and fill out correctly and on time. Labor and employment protection laws in Canada vary according to province. Federal law dictates rules for all workers and employees across the country.