Preparing for year-end? Consider these tips

With 2018 winding down, it is time for payroll professionals to get ready for year-end reporting.

Although the deadline for distributing T4s and RL-1s and filing year-end returns is not until Feb. 28, getting ready in advance can help the process go smoothly.

Here are some tips to help you stay on top of 2018 year-end reporting:

• Prepare T4s for employees who received remuneration during the year if Canada/Quebec Pension Plan (C/QPP) contributions, employment insurance (EI) premiums, Quebec Parental Insurance Plan (QPIP) premiums, or income tax had to be deducted or if their remuneration exceeded $500. Remuneration includes salary, wages, bonuses, commissions, and taxable benefits and allowances, as well as other payments.

• Complete T4As to report pension or superannuation payments, lump-sum payments, self-employed commissions, and other income described in the Canada Revenue Agency’s (CRA) guide Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary (RC4157) if the total amount was more than $500 or you deducted
income tax.

• Use a T4A-NR to report amounts paid to non-residents for services rendered in Canada that they did not perform in the ordinary course of
employment. 

• If you paid or credited pensions, annuities, or investment income to non-residents, trusts, or corporations, use form NR4 to report the amounts. The filing deadline for NR4s is April 1 since the normal March 31 due date falls on a Sunday; however, as a best practice, try to submit the slips by Friday, March 29.

• Employers with Quebec payrolls must also prepare forms for Revenu Québec. It requires employers to complete RL-1s for employees who reported to work at their place of business in Quebec or who were paid from their business in Quebec if they were not required to report to work. Use RL-2s to report retirement and annuity income. The forms are only available in French, but Revenu Québec provides an English translation of the box names.

• When completing these forms, ensure earnings are reported based on the year paid, not on the year the employee earned them.

• If an employee worked in more than one province/territory during the year, complete a separate T4 for each
jurisdiction.

• Ensure that each employee has a valid social insurance number and that it is correctly reported on the forms. 

• Report amounts in Canadian currency. For RL-1s, if this is not possible, enter “200” in one of the blank boxes in the Renseignements complémentaires area, followed by the type of currency used. 

• For T4 boxes 16 and 17, the 2018 maximum employee CPP contribution is $2,593.80. For QPP, it is $2,829.60. On an RL-1, report QPP contributions in box B. Do not report CPP contributions in box B. Instead, enter code B-1 in one of the boxes in the Renseignements complémentaires area, followed by the amount of CPP contributions.

• For T4 box 18, the maximum employee EI premium for 2018 is $858.22 for employees in all parts of Canada, except Quebec. For Quebec employees, it is $672.10. Report premiums in box C on an RL-1.

• In T4 box 24, report the total amount used to calculate the employee’s EI premiums, up to the 2018 maximum insurable earnings, $51,700.

• In T4 box 26, enter the employee’s C/QPP pensionable earnings for the year, up to the 2018 maximum, $55,900. On the RL-1, report the employee’s QPP pensionable earnings, up to $55,900, in box G. 

• If the employee contributed to both the CPP and the QPP, complete two T4 slips, one for the CPP and one for the QPP. On the RL-1, enter code G-2 in one of the boxes in the Renseignements complémentaires area, followed by the total amount of CPP pensionable earnings reported on the T4.

• Report the employee’s QPIP premiums on a T4 in box 55. In box 56, enter the total amount of insurable earnings used to calculate the premiums, up to the 2018 maximum, $74,000. Leave the box blank if there are no insurable earnings, the insurable earnings are the same as employment income reported in box 14, or the insurable earnings are over the annual maximum.

• For an RL-1, report employee QPIP premiums in box H. The maximum employee premium for 2018 is $405.52. Leave the box blank if you did not deduct premiums. Report the total amount of insurable salary or wages from which you deducted QPIP premiums in box I, up to $74,000.

• If you over-deducted CPP contributions or EI premiums, do not adjust the amounts reported on the T4. The CRA will credit employees with the over-contribution when they file their personal tax return. Apply for a refund for the employer overpayment using form PD24.

• Include all taxable benefits and allowances in employment income and ensure that corresponding source deduction totals have been updated. For current employees, report the taxable benefit from employer-paid group term life insurance premiums in box 14 on the T4 and under code 40. For former or retired employees, report the benefit on a T4A, using code 119; however, beginning in 2018, employers do not have to report it if it is the only amount they would be reporting on the T4A and the premium paid does not exceed $50.

• Report retiring allowances on a T4. Use code 66 for the amount eligible for tax-free transfer to a registered pension plan (RPP) or registered retirement savings plan (code 68 for Status Indians). Use code 67 to report the non-eligible amount (code 69 for Status Indians). For Quebec, report retiring allowances in box O on an RL-1, using code RJ.

• Report a pension adjustment (PA) in T4 box 52 if the employer contributed to an RPP or a deferred profit-sharing plan for the employee. Enter only the dollar amount. Leave the box blank if the PA is zero or a negative amount, the employee died in the year, or the employee is all paid up. 

• The CRA requires employers using paper year-end forms to also file a related summary form. For Revenu Quebec, employers must complete an RL-1 summary form.

• Employers may distribute 2018 T4s and RL-1s to employees electronically without needing their consent as long as they provide employees with a secure portal and site to access and print them and they give employees the option to receive a paper copy upon request. Otherwise, employers must provide employees with two paper copies of the T4 and copy 2 of the RL-1(for Quebec), unless they already have their consent to deliver the forms electronically. Employers must also provide paper copies of the forms if employees request it or if, at the time the employer issues the form, the employee is on an extended leave or is no longer employed by the employer, or the employee cannot reasonably be expected to have access to an electronic T4/RL-1.

• Employers with up to 50 information slips of one type to file for a calendar year may file their returns with the CRA and Revenu Québec on paper or over the internet.

• Employers with more than 50 information slips of one type to file must file over the internet. The CRA and Revenu Québec can penalize employers who fail to do this. 

• To change information after submitting a return to the CRA or Revenu Québec, file an amended form by following the procedures in the CRA’s Employers’ Guide — Filing the T4 Slip and Summary (RC4120) and Revenu Québec’s Guide to Filing the RL-1 Slip: Employment and Other Income (RL-1.G-V).

• If employees lose their paper T4, employers may give them a replacement slip. Mark it as “DUPLICATE” and keep a copy for your records. Do not send it to the CRA. Revenu Québec follows a similar
procedure.

For more year-end reporting information, see https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/completing-filing-information-returns.html (CRA) and https://www.revenuquebec.ca/en/businesses/rl-slips-and-summaries/ (Revenu Québec).