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Today we’re talking to Knit People's Payroll Senior Accounting Associate Guriqbal ‘Guri’ Singh about a very important form in the world of Canadian taxes: the T4. So what is a T4 tax form? Guri fills us in.
The T4, also known as the Statement of Remuneration Paid, is a slip of information that reveals:
- How much money an employee earned during the entire year; and
- How much was withheld and remitted to the Canada Revenue Agency (CRA) on the employee’s behalf.
The T4 is also the form that employees use to file their taxes each year. Employers have to make sure to send T4 tax forms by the end of February so that employees have time to file their taxes. For employees who have held more than one job, a separate T4 will be issued by each of their employers.
If you’re wondering which boxes are most commonly used on a T4, we’ve included some of them below:
Box 14 - Employment Income
Perhaps the most important part of a T4, box 14 details an employee’s total income before any deductions. This includes not only your wages but also any vacation, bonuses, and taxable benefits.
Box 16/17 - CPP (Canada Pension Plan) or QPP (Québec Pension Plan) contributions
These boxes list the amount of money contributed to CPP or QPP. In most cases, both boxes will not be populated unless the employee worked in Québec and another province.
Box 18 - EI (Employment Insurance) Contributions
This amount is usually 1.63% of Box 24 (EI Insurable Earnings), and only includes the employee’s portion of contributions.
Box 20 - RPP (Registered Pension Plan) Contributions
Box 20 shows the amount of any RPP contributions.
Box 22 - Income Tax Deducted
This box shows the total amount deducted from the employee’s earnings for Income Tax (federal and provincial).
Box 24 - Total EI Insurable Earnings
Box 24 will be the amount in Box 14 up to the maximum EI allowable earnings in the year and less any non-EI insurable taxable benefits.
Box 26 - CPP/QPP Pensionable Earnings (respectively)
Box 26 must be the same as Box 14 up to the maximum CPP/QPP allowable earnings in the year.
Box 40 - Other Taxable Allowances and Benefits
Box 40 shows all taxable benefits (expenses) paid to an employee. This can include things such as parking benefits, cell phone allowances, transit passes, etc. It is important to understand what counts as a taxable benefit and what does not.
Box 44 - Union Dues
Box 44 shows all union dues collected for this tax year.
Box 46 - Charitable Donations
Box 46 contains any charitable donations made through Payroll. For donations made outside the office, the charity must issue the employee a separate tax receipt.
For more information on T4 tax forms, please consult the Canada Revenue Agency website.
Disclaimer: This article provides general information and should not be construed as tax advice. Since tax rules may change over time and can vary by location and industry, please consult a CPA or tax advisor for advice specific to your business.