Ah, February! What’s not to love about the doldrums of winter and the anticipated arrival of Cupid for his Hallmark-a-versary? T4s and T4As you say?
Well, you may not love them in a romantic sense, T4s and T4As are an essential business function. But fear not, you don’t have to be so bogged down in paperwork that you can’t come up for Valentine’s chocolate. Read on to learn more…
Let’s start with the basics — what’s a T4?
Formally a T4 is a Statement of Remuneration paid. But to bring that down to earth, a T4 represents income earned by an employee in a calendar year. Employees need a T4 to file their mandatory Personal Income Tax return with our friends at the Canada Revenue Agency (CRA). Here’s a closer look at the amounts on the T4 and T4A tax forms.
The employer’s responsibilities
Each year employers must create T4s for each of their employees. In turn, they must then submit copies of the T4s to the Canada Revenue Agency as well as provide copies to the employees themselves.
T4s are due at the end of February
The Canada Revenue Agency filing due date for 2019 T4s is March 2, 2020, and T4s must be available to employees by the last day in February.
To make things a little more perplexing, CRA also requires a T4 Summary to accompany the T4s filed. If your head is spinning with jargon then it's time to put payroll year-end into perspective.
Fun Fact: T4s are typically due to the Canada Revenue Agency by February 28 each calendar year. This date changes to February 29 in a leap year. Should Feb 28 or 29 fall on a weekend the T4 filing to Canada Revenue Agency is due the next business day. Hence, March 2, this year. Happy Leap Year, everyone!
You can’t just send a T4 by email
You can’t send T4s to employees via email without their written consent. Refer to Canada Revenue Agency guidelines on how to distribute your T4 slips.
This is another reason why we love the secure dedicated employee portalWagepoint has to ensure paystubs and T4s are securely provided to employees. Not to mention this entire process is paperless! Stick with me people, we’re saving trees and eventually… the world!
How to review T4s in Wagepoint
While saving the world is a long-term goal, here’s a short-term fix on how to review your T4s in Wagepoint:
Step 1. Log intoWagepoint and proceed to “Reports” and select “More” (Not — “Moore,” no many how many times I ask. 😉)
Step 2. Select “Year-End Review” from the drop-down menu
Step 3. In the “Year-End Review” section select the down arrow to review each employee's T4 and the T4 Summary.
With this section, you can make adjustments to the T4 for additional income types or changes to each box, etc.
Note: Any changes you make could impact Canada Pension Plan (CPP), Employment Insurance (EI), and other tax amounts previously filed with CRA and subject to a Pensionable and Insurable Earnings Review (PIER).
Additional amounts may also be due to CRA with applicable penalties and interest.
It is recommended to make any changes prior to January 15 to ensure adequate time to send an additional remittance to CRA or capture the variance on the T4 Summary and remit accordingly.
Step 4. Wagepoint will automatically file T4s by the filing due date providing that the default setting "Autosubmit" is enabled. If you have reviewed the T4s for accuracy and wish to submit the T4s early you can do so by selecting "Submit".
Step 5.Wagepoint will send the T4s to the CRA within two business days.
Step 6. Once filed you can select "T4 Files" from the drop-down menu to review the T4 Files issued.
Step 7. Both the Employer and Employee T4s along with the T4 Summary are available for download in a PDF format. Employees will be notified via email when their T4 is available in their Employee Portal.
Step 8. But what about reviewing T4A slips in Wagepoint you ask? Not to worry. It is the same process as above. Sit back and feel like a payroll superhero!
But wait there’s "Moore"! What about TD1 forms?
While we are getting all lovey-dovey with forms. Let’s talk aboutTD1 forms (Personal Tax Credit Return.).
Generally, it's a best practice to provide employees with TD1 forms each calendar year to ensure their regular payroll is calculated to match their tax situation.
Since we are getting into the details, let’s be clear. There are two TD1 forms. A federal and another for provincial tax calculations. Essentially your employees should complete both a federal and a provincial TD1 form each calendar year.
Since TD1 forms contain personal information it's a best practice for you to
Give your employees the link to this webpage.
Ask them to fill out the form and then scan it and send it to you online or give you a printed copy.
Create federal and provincial or territorial Forms TD1, following the instructions at Electronic Form TD1, and have your employees send them to you online
Wagepoint makes it simple to update the TD1 forms. Simply log in and go to the "Employee" section and make your updates in the "Tax Info" section. Tada! Payroll really can be this sweet.
Our experience in easing payroll pain
As small business owners, payroll can pose a real challenge after hauling in a 13 hour day. Frankly who has time for payroll, let alone ensuring the T4s are correct for employees?
After implementing Wagepoint at Moore Details Inc., we noticed a significant reduction in our clients’ payroll anxiety levels. Our old workflow made it difficult to get T4s early to our clients’ employees and made the regular payroll process frankly a pain.
Now we are able to get employees their T4 and T4a slips much sooner!
Happy employers + happy employees = winning!
By providing employees with their T4 early they are able to work with their accounting professionals to strategize their tax situation and determine how much in RRSPs they need to purchase. Or perhaps they just want to file their tax return early to get that much-needed refund after the holiday shopping credit card bill arrives.
In other words, switching to Wagepoint has not only made our clients happier — it’s also made our clients’ employees happier too. We call this a definite “win-win.”
*In order to qualify for complimentary T4s with Wagepoint (included as part of your standard fees), a business must run a minimum of two payrolls in the current calendar year.
So, we’ve covered a lot of ground in one short article. Below you’ll find some helpful resources from Wagepoint if there’s more you want to know.
Get further insights into payroll year-end and this T4 thing with this webinar recap.
Stay on top of your payroll deadlines for 2020 with this fun, illustrated payroll calendar.
If you’re considering switching payroll providers, here’s a helpful how-to article so that you don’t cause yourself headaches at T4 time next year.
We hope that you’ve enjoyed our little banter and punny play on mundane T4 forms. Although these forms certainly don’t resemble anything from Cupid. They are just as meaningful and heartfelt to your employees.
About Jennie Moore
After 14 years of building a boutique bookkeeping practice (Moore Details Inc.), Jennie Moore is pursuing another endeavor. She's on a mission to help small business owners and accounting professionals adopt Financial Technology with her Fintech Details Initiative along with her life and business partner Brian Moore.
A common pain point is determining which accounting software to use. Small business owners are often overwhelmed with options and frankly, accounting pros also are struggling to keep up with the latest rapid changes.
Social media is our new learning environment to gain valuable information to streamline bookkeeping systems for our clients.
The Fintech Details Initiative is a safe place for small business owners and accounting professionals to have conversations about financial technology and learn from each other.
Join the conversation today! I can’t wait to meet you.