Understanding T4 Payroll: A Guide for Employers in Canada

 

For businesses operating in Canada, complying with payroll requirements is crucial to maintaining a smooth employer-employee relationship and staying on the right side of the law. One of the key components of payroll compliance is issuing T4 slips to employees and ensuring other obligations like RRSP deductions and Employer Health Tax (EHT) are met on time.

What Is a T4 Slip?

The T4 slip (Statement of Remuneration Paid) is a tax document that employers must issue annually to each employee who received remuneration during the year. It summarizes the employee’s earnings and the taxes deducted, such as:

• Employment income
• Canada Pension Plan (CPP) contributions
• Employment Insurance (EI) premiums
• Income tax deducted
• And other benefits or deductions

Employers must also submit a copy to the Canada Revenue Agency (CRA) by the last day of February following the calendar year to which the slips relate. Accounting services for monthly prepaid expense allocation gives you a clear idea regarding your actual balance.

When Should You Issue T4 Slips?

Employers are required to issue T4 slips on or before the last day of February every year. For instance, for the 2024 tax year, the T4 must be issued by February 28, 2025. Delays or errors can lead to penalties, so it's essential to be prompt and accurate.

 

RRSP Deductions: What Employers Need to Know

A Registered Retirement Savings Plan (RRSP) is a retirement savings plan registered with the CRA. It allows employees to save for retirement in a tax-efficient way. Some employers offer Group RRSPs, where contributions are deducted directly from the employee’s salary.

Key points to remember:

• Employer and employee contributions may be made.
• Deductions must be reported correctly on the employee’s T4 slip (Box 20 or 52, depending on the plan).
• RRSP contributions reduce the employee’s taxable income, making it beneficial for both retention and long-term financial wellness.

 

Understanding Employer Health Tax (EHT)

The Employer Health Tax (EHT) is a payroll tax that Ontario-based employers (and some other provinces with similar rules) must pay based on the total annual payroll.

Important details:

• Due monthly if your total Ontario remuneration exceeds a certain threshold.
• Due date: The 15th of the month following the payroll period. For example, EHT for July must be paid by August 15.
• Annual EHT return is also required.

This tax helps fund Ontario’s health care system and is calculated as a percentage of total remuneration paid.

 

Summary of Employer Responsibilities

Task	Frequency	Due Date
Issue T4 Slips	Annually	Last day of February
Submit T4 Summary to CRA	Annually	Last day of February
Deduct and Remit RRSP (if applicable)	Per payroll	With each pay cycle
Pay Employer Health Tax (EHT)	Monthly	15th of the following month

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Final Thoughts

Managing payroll involves more than just paying salaries. From issuing T4 slips to making timely EHT payments and facilitating RRSP deductions, employers must stay organized and informed. Using professional payroll software or outsourcing to payroll experts can ease the burden and ensure full compliance with Canadian tax regulations and Support for tracking revenue loss in financial closing

If you’re an employer, it’s essential to set up reminders and conduct regular audits to avoid penalties and maintain accurate payroll records.

 

Talk to Payroll Experts at AcServ Global

Need help preparing and filing T4
Let us take care of your year-end payroll tasks—accurately, on time, and with full CRA compliance.

Contact us today at contact@acservglobal.com or you can also visit www.acservglobal.com to schedule a