The T4 slip, formally called the Statement of Remuneration Paid, is a key payroll document in Canada. Employers use it to report employment income and the amounts deducted for income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI). Employees use the information on their T4 to complete personal income tax returns. This guide explains what a T4 includes, deadlines, filing methods, how to correct errors, and practical tips to avoid costly mistakes.
A T4 slip reports annual employment income and statutory deductions for each employee. If you employ staff and pay wages, salaries, bonuses, taxable benefits or allowances during the year, you generally must prepare a T4 for each employee. Employers are also responsible for filing a T4 Summary with the Canada Revenue Agency (CRA) reporting totals for all slips issued.
Understanding the main boxes on the T4 helps both employers preparing payroll and employees reviewing their slips. Box 14 shows employment income; Box 22 reports income tax deducted at source; Boxes 16 and 18 report CPP contributions and EI premiums respectively. Taxable benefits, pension adjustments and other items appear in designated boxes. Accurately populating these boxes ensures correct income reporting and reduces the risk of reassessments.
Box 14: Employment income before deductions. This is typically the largest amount on the slip. Box 16: Employee CPP contributions. Box 18: Employee EI premiums. Box 22: Income tax deducted. Other boxes: Report taxable benefits (e.g., employer-paid life insurance), pension adjustments, and other specific items as required by CRA guidance.
Employers must provide T4 slips to employees and file T4 slips and the T4 Summary with the CRA by the end of February following the calendar year in which the earnings were paid. Missing the deadline can result in penalties. The CRA also requires electronic filing for certain employers; for example, organizations that prepare more than a preset number of information slips are required to submit them electronically. Check the current CRA guidance for the threshold and electronic filing options.
Begin by reconciling your payroll records: verify gross pay, taxable benefits, taxable allowances and statutory deductions for each employee. Ensure year-to-date payroll totals match your general ledger and payroll reports. Generate T4 slips using payroll or accounting software certified to produce CRA-compliant slips, or use CRA Web Forms for small volumes. Prepare the T4 Summary with totals that match individual slips and submit both the slips and summary to the CRA by the deadline.
You can file T4 slips electronically through the CRA’s Internet file-transfer systems or authorized third-party payroll providers. Paper filing remains possible for very small volumes, but electronic filing is faster, reduces errors and is mandatory for employers who exceed the CRA’s threshold. Retain supporting payroll records for the statutory retention period in case of review.
If you discover an error after filing and distributing T4 slips, act promptly. For minor mistakes, you may issue an amended T4 slip and file an amended return with the CRA. The process differs slightly depending on whether the error affects totals reported to the CRA or only the employee copy. Document the reason for the change and keep records. If the correction affects tax withheld or CPP/EI contributions, you may need to remit additional amounts or claim adjustments.
The CRA can impose penalties for late filing, failing to file, or filing incorrect T4 slips. Penalties escalate with the length of the delay and the number of slips affected. In addition to monetary penalties, incorrect reporting can trigger reassessments for employees and employers, leading to interest charges or further compliance reviews. Prioritize accurate payroll reconciliation, timely filing and proactive corrections to minimize risk.
Employers frequently make a handful of repeatable errors when preparing T4 slips. Common mistakes include incorrect reporting of taxable benefits, omitting amounts from Box 14, miscalculating CPP/EI contributions, and failing to include severance or retroactive pay correctly. Another frequent issue is mismatched totals between individual T4 slips and the T4 Summary due to late payroll adjustments or bookkeeping errors.
To avoid these mistakes, reconcile payroll before year-end, close out final pay periods promptly, and run exception reports for unusual payments such as bonuses, commissions or third-party reimbursements. Use payroll software that flags common errors and update employee information early in the year to prevent incorrect social insurance numbers or addresses from being printed on slips.
Tip: Run a year-end payroll reconciliation at least two weeks before the last pay period of the year. This gives you time to correct discrepancies and communicate with employees before issuing T4 slips.
Example 1: An employee received a year-end bonus in December. Include the bonus in Box 14 for the year it was paid and ensure CPP and EI contributions are applied where applicable. Example 2: A taxable benefit such as an employer-paid personal phone plan must be calculated and entered into the appropriate box for taxable benefits so the employee can report the correct income on their return.
Keep payroll records, T4 slips, T4 Summaries and supporting documentation for at least six years after the end of the tax year to which they relate, unless CRA guidance specifies a longer retention period. These records support any adjustments, audits or employee inquiries and simplify future year reconciliations.
Employees should check their T4 for correct name, social insurance number, and employment income. Verify that Box 14 reflects total employment income and that tax withheld and CPP/EI amounts match pay statements. If you spot an error, contact your employer immediately. Employers can issue corrected slips and submit amended returns to CRA.
If your payroll includes complex items such as employer-sponsored pension adjustments, non-standard taxable benefits, cross-border employment, or large-scale corrections, consult a payroll specialist or tax advisor. Professional help can reduce the risk of costly mistakes and ensure compliance with current CRA rules.
Before issuing T4 slips, ensure employee information is accurate, reconcile year-to-date payroll totals, confirm taxable benefits are correctly calculated, prepare and verify the T4 Summary, and choose the correct filing method. Issue employee copies and file with CRA by the end of February to avoid penalties.
For definitive guidance, consult the Canada Revenue Agency’s website or speak with a registered tax professional. CRA publications provide detailed instructions for each box and examples for specific types of compensation.
Accurate and timely T4 preparation is essential for payroll compliance and employee tax filing. With disciplined year-end procedures, reliable payroll software, and a clear review process, most employers can meet CRA requirements and minimize errors. When in doubt, document your calculations and seek expert advice to protect your business and your employees.
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