Transcript

Host: Welcome to the segment called Introduction to T4 and T4A information returns, part of the Preparing T4 and T4A Information Returns – Slips and Summaries video.

This segment mentions webpages where you can get more information. You can find links to these webpages in the Related links for this video.

I'm Karen Davis.

With me is John Kelly. Welcome John.

Subject matter expert: Thank you Karen.

Host: Before I get started, what are employers responsible for when it comes to their payroll?

Subject matter expert: To answer your question, we need to first take a look at the payroll cycle.

Employers have to deduct Canada Pension Plan, or CPP, contributions; employment insurance, or EI, premiums; and income tax from their employees' pay. Employers must remit these deductions and employer contributions to the CRA.

However, employers with employees in Quebec have to deduct contributions for the Quebec Pension Plan, or QPP, instead of the Canada Pension Plan if the employment is pensionable under the QPP. These employers also have to take deductions for the Quebec Parental Insurance Plan, or QPIP, premiums, and employment insurance if the employment is insurable. Employers with employees in Quebec remit the QPP, QPIP, and Quebec provincial income tax deductions to Revenu Québec and send employment insurance and federal tax deductions to the CRA. Once these employers have remitted the deductions, they report the income and deductions to the CRA on the appropriate form.

The information that I've gathered will focus on the reporting phase, where information returns are prepared and filed with the CRA. For more information on deducting and remitting, refer to the CRA's video series called Payroll Information for a New Small Business.

Host: What does an information return consist of?

Subject matter expert: In general, an information return is made up of two things: information slips, such as T4 or T4A slips, for each employee or individual; and a corresponding summary totaling up the data from all of the information slips. Depending on the type of income you pay, you might have to file more than one type of return.

Host: So, what are information slips used for?

Subject matter expert: Information slips are used to report remuneration, which is an amount paid to an employee or recipient. Generally, you need to complete a T4 slip if you are an employer and you paid employment income, commissions, taxable allowances and benefits, fishing income, or any other amount to your employees.

Host: Are there different types of information slips?

Subject matter expert: There are actually many different types, but we'll only be discussing the two most common types of information slips: theT4, which is the Statement of Remuneration Paid, and the T4A, which is the Statement of Pension, Retirement, Annuity, and Other Income. For more information on other types of information slips, go to the webpage on information slips.

Host: So, if I'm an employer, when do I have to prepare a T4 slip?

Subject matter expert: You have to give your employees a T4 slip to report items such as salary, wages, tips, bonuses, vacation pay, employment commissions, and all other remuneration you paid to them during the year, including taxable benefits or allowances.

The T4 slip also reports deductions you withheld during the year, such as CPP contributions, EI premiums, and income tax. It's also used to report taxable benefits or allowances that you gave to your employees, retiring allowances, or contributions to the employees' company pension plan.
Generally, you don't prepare a T4 slip when payments to the employees are less than $500 and no deductions had to be withheld. An exception is if you provide employees with taxable group term life insurance benefits. In that case, you always have to prepare T4 slips, even if the benefits are $500 or less.
For more information, go to the webpage on completing and filing information slips and select "T4 – Information for employers."

Host: When is it necessary to prepare a T4A slip?

Subject matter expert: You give a T4A to individuals to report items such as:

• certain lump-sum payments;
• pension or superannuation payments;
• annuities;
• patronage allocations;
• fees for services;
• accumulated income payments;
• educational assistance payments;
• research grants;
• certain payments under a wage-loss replacement plan;
• death benefits; and
• certain benefits paid to partnerships or shareholders.

As with T4 slips, you generally don't prepare a T4A slip when payments are $500 or less and no income tax was withheld. However, if you provided former employees or retirees with group term life insurance taxable benefits, you always prepare T4A slips.

For more information, go to the webpage on information slips and select "T4A – Information for payers." Also see Guide RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary.

Host: That is great. So let's say I prepared all the necessary T4 or T4A slips. What's the next step?

Subject matter expert: The next step is to add up all the values from those slips and enter them on a T4 or T4A Summary. The totals you report on your summary have to equal the amounts you reported on all the corresponding information slips that accompany the summary.

Errors or omissions can cause processing delays and trigger penalties in some cases. Also, keep in mind that the CRA does not consider the return complete unless all slips and the summary are filed together.

For more information, see the segment of this video called Completing T4 and T4A slips and summaries.

Host: Thank you John.

This concludes the segment called Introduction to T4 and T4A information returns, part of the CRA's Preparing T4 and T4A Information Returns – Slips and Summaries video.

Thank you for watching.