When compiling tax returns for your clients that are employees or employers, knowing which T4 tax return forms are needed in which instance – whether they need a T4 summary or slip, a T4A, or T4A-NR form or slip – is your responsibility.
This Canadian tax T4 guide can help you determine what tax forms apply to employees of a business and an employer when it comes to remuneration of pay.
What is a T4?
The T4 Statement of Remuneration Paid should be provided to anyone who has worked and earned an employment income throughout the year by their employer in Canada. All Canadian employers must send out T4 slips to their employees.
Therefore, depending on your clients- whether they are an employee or employer- you will need to tackle the T4 returns a little differently. Employers must send a copy of every T4 slip that they issue to employees, directly to the Canada Revenue Agency CRA. In turn, the employees must file their T4 slips with their personal income tax returns.
It is important to note that any clients who worked and earned an income in Québec will receive another tax form, called the RL-1 slip – Employment and Other Income, in addition to the T4. The RL-1 slip is similar to the T4 slip, detailing the employment income earned and any deductions made to Québec programs, such as the Québec Pension Plan (QPP) and Québec income tax for Québec income tax purposes.
What is on a T4 Slip?
All salaried employees should receive the T4 slip issued by their employers each tax year. This slip is the summary of the individual’s employment earnings and deductions, such as Canada Pension Plan (CPP) or employment insurance, for that year.
Since this slip is one of the most common slips reported on annual tax returns, you will have many clients that require your help with this. On your clients’ T4 return slips, you will find:
- The tax year in question
- Their employer’s name
- Their name, address, and Social Insurance Number (SIN)
When do employers send out the T4 slips?
Employers must send out their employees’ T4 slips by the end of February each year. Therefore, you should always ensure your clients that are employers have completed this important step as part of the tax process each year.
What is a T4A?
The T4A – Statement of Pension, Retirement, Annuity and Other Income tax form acts as an umbrella for all other income and deductions that do not belong on any other tax forms. It is the T4A slip that catches these miscellaneous income and deductions for the CRA.
As the T4A slip reports income from various different sources, it also includes self-employed commissions. However, these slips are typically issued only if the total income paid to the self-employed individual by the payer is more than $500 from the tax year in question.
Furthermore, T4A slips also cover things like RESP educational assistance payments. If your client is a student with a scholarship or bursary income, they should receive this T4A slip with the total amount they received.
Every T4A slip must be reported on your client returns separately, meaning if your client receives more than one slip, each one must be accounted for on their income return.
On top of this Statement of Pension, Retirement, Annuity and Other Income, there are three other types of T4A forms:
- T4A(P) – Statement of Canada Pension Plan Benefits
- T4A(OAS) – Statement of Old Age Security
- T4A-RCA Statement of Distributions from a Retirement Compensation Arrangement
The T4A return is the most extensive of the bunch. Since the T4A slip catches all other instances of income and deductions, the form possesses a multitude of boxes to check in order to cover these various tax scenarios.
T4 vs. T4A tax forms
Where the T4 form directly deals with income earned through employment and deductions made by the employer, the T4A form, on the other hand, covers all other types of income and deductions not incorporated in the T4 slip.
What is a T4A-NR?
For clients that have paid for services of a company or individual that is not headquartered in Canada, will need form T4A-NR Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada. Therefore, discuss with your clients to see what kind of business they have hired from outside of the country, as they would need to provide this T4A-NR slip to the company hired, as well as the CRA come tax season.
Which T4 Forms Does My Client Need?
Since your clients will consist of both employees and employers, it’s important to remember whichT4 slips and returns are needed in either instance.
An employer is responsible for issuing T4 slips to their employees and must summarize these figures in the T4 Summary. Any client of yours that is a resident or non-resident employer who has paid their employees any of the income types below must file this T4 Summary return with the CRA:
- Employment income
- Taxable allowances and benefits
- Payment from a wage loss replacement plan
- Income for special situations
- Any other type of remuneration
Clients that are employers must ensure certain things are taken care of during the end of the tax season. Go over these responsibilities with your clients to ensure that they, as employers, and you as the representative, will:
- Deduct income tax from remuneration, Canada Pension Plan(CPP) or Québec Pension Plan (QPP) contributions, employment insurance (EI) premiums, provincial parental insurance plan (PPIP) premiums.
- Separate these calculated amounts from the operating cash flow of their business for the Canadian government.
- Send the CPP contributions, EI premiums, and federal and provincial income tax to the CRA / send the QPP contributions, PPIP premiums, and Québec provincial income tax to Revenu Québec.
- Fill in the corresponding income and deductions amount on the T4 slips, Statements of Remuneration Paid, as well as the T4 Summary form, Summary of Remuneration Paid, if filing by paper.
- File the correct T4 returns on or before the last day of February of the same calendar year in which the T4 slips apply.
Once filed with the CRA, either your client or you should keep the papers and electronic records of the returns for six years thereafter.
Clients that are employees, on the other hand, may see you filling both T4 and T4A slips, depending on the client’s income situation.
How to Fill out T4 Returns
The boxes on the T4 slip correspond to lines located on the T1 General Return. When generating your clients’ returns, it is best to have both the T4 and T1 returns in front of you to ensure each amount matches.
The most used T4 boxes and corresponding T1 lines include:
- Box 14: Employment Income – Total employment income before deductions should be reported on Line 10100
- Box 16: Employee’s CPP contributions/ Box 17: Employee’s QPP contributions – Line 30800 and Line 22215
- Box 18: Employee’s EI contributions – Line 31200
- Box 20: RPP contributions – Line 20700
- Box 22: Income tax deductions – Line 43700
- Box 24: EI insurable earnings – Line 45000
- Box 26: CPP/QPP pensionable earnings – Line 44800
- Box 44: Union Dues – Line 21200
- Box 46: Charitable donations – Line 34900
- Box 52: Pension adjustment – Line 20600
- Box 55: Employee’s PPIP premiums / Box 56: PPIP insurable earnings – Clients that are residents of Québec on December 31 of the tax year should use Line 31205 while clients that were a resident of a province or territory other than Québec on December 31 of the tax year should use Line 31200
If using professional software like ProFile to fill in T4 returns, this ProFile T4 tutorial can help you navigate these forms in the program.
What is box 40 on T4?
It is important to note that Box 40 on your client’s T4 form is the amount of Taxable Benefits they have received in that tax year. These refer to the benefits paid by the client’s employer on their behalf, including health insurance and RRSP contributions.
You will not need to report this amount on your client’s return, as the amount has already been accounted for in Box 14.
How to Fill out T4A Slips
When it comes to using the T4A slip to help fill in your client’s T1 General return, there are numerous boxes to choose from covering various tax situations. The most common boxes used for a T4A return, with their corresponding lines on the T1 General return, include:
- Box 016 – Pension or Superannuation – Line 11500
- Box 020 – Self-Employed Commissions – Enter the client’s gross commissions income on line 13899 and their net commissions income on Line 13900
- Box 034 – Pension Adjustment – Line 20600 – this amount is neither an income or deduction
- Box 042 – RESP Educational Assistance Payments – Line 13000 (learn more about RESP)
- Box 048 – Fees for Services – Lines 13500 to 14300
- Box 105 – Scholarships, Fellowships, Bursaries, and Artists’ Project Grants – Line 13010
- Box 107 – Payments from a Wage-Loss Replacement Plan – Line 10400
- Box 117 – Loan Benefits – Line 13000
- Box 118 – Medical Premium Benefits – Line 10400
- Box 119 – Premiums Paid to a Group Term life Insurance Plan – Line 10400
- Box 127 – Veterans’ Benefits – Line 10400
- Box 131 – Registered Disability Savings Plan – Line 12500
- Box 134 – Tax-Free Savings Account (TFSA) Taxable Amount – Line 13000
How to Fill out the T4A-NR Slip
To complete your clients’ T4A-NR slips, you will need these details from them:
The year in which the services were hired
- Box 11 – The recipient code for the individual, corporation, government body, or other
- Box 12 – The Social Insurance Number (SIN) or Individual Tax Number (ITN) of the non-resident (whichever one they hold)
- Box 13 – The recipient’s 15-character account number
- Box 14 – The Foreign Tax Identification Number attached to the non-resident by their country of residence
- Box 16 – The professional or operating name of the recipient hired (f not applicable, leave blank)
- Box 18 – The gross income including fees, commissions, and other amounts the client paid to the non-resident for services rendered (do not include travel expenses here)
- Box 20 – Input any travel expenses your client paid to cover the non-resident’s transportation, accommodations, and meals during the job in which they were hired
- Box 22 – Input the total amount of income tax the client deducted from the recipient during the year the services were provided (leave blank if they did not deduct any income tax)
- Box 23 – If the client has received written authorization by the CRA to reduce or waive the withholding amount on gross payment to the non-resident, enter in code 1. However, if the client and the hired non-resident full out Form R105-S, Simplified Waiver Application, allowing for a reduction or waiver of the withholding tax due, then use code 2
- Box 24 – The city and province where the services were performed
- Box 26 – The number of days the recipient of the slip spent in Canada (continuous or not) during the calendar year they were hired- include all weekends and holidays
- Box 27 – Fill in the appropriate three-letter country code in which the hired recipient is a resident of
- Box 28 – Fill in the correct industry type code for the non-resident’s industry
- The non-resident recipient’s name and address
- Your client, the payer’s name
- Your client, the payer’s 15-character payroll program account number used to send the recipient’s deductions
Filing All T4 Client Returns
Before entering in all of your client’s details in their T4, T4A, and T4A-NR returns, it is best to have all their relevant documents and information organized in front of you. Inputting the relevant information in the corresponding forms and boxes is a straightforward process when you use professional tax software like Intuit’s ProFile to prepare client taxes.
With ProFile tax software you can prepare and electronically file unlimited federal T4 and T4A slips and summaries, as well as unlimited Québec RL-1 and RL-2 online. Find out for yourself why ProFile is trusted by thousands of professionals to process millions of corporate and personal returns every year.
Try it for free for 14 days to streamline your clients’ T4 online tax filing today.
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