You may have heard accountants and tax professionals talking about T slips lately, and it may have got you wondering: What is a T slip? and do I have to worry about it?
T4 - reports employment income
The T4 (also known as a Statement of Remuneration Paid) is generated for any Canadian citizen that has received over $500 in income from an employer in the course of a calendar year.
The information on the slip includes the employee's name, social insurance number, total income, and the total withheld. It will also show any other taxable benefits and how much the employee contributed to Employment Insurance (EI), Canada Pension Plan (CPP) or another Registered Pension Plan (RPP)
If you are an employer, you are required to generate a T4 for each of your employees. You must submit the T4 for the previous calendar year to the Canada Revenue Agency (CRA) by February 28 of each year. Meaning that T4's for 2021 must be filed by February 28, 2022. You are also required to send a copy of the T4 to the employee in question.
If you are an employee, you are required to collect T4 slips from any employer you worked for in the calendar year. The information these slips contain will be used to file your tax return.
Any T4 slip that was provided to you by an employer would have already been submitted to the CRA, so they will know if you leave any income off of your return and they will add it for you. If you loose a slip or do not receive one from your employer you can get a copy from the CRA online.
Other T4s of note:
T4A - Statement of self-employment income, retirement, annuity, pensions, or other income
T4A§- Statement of CPP benefits
T4A(OAS) - Statement of Old Age Security benefits
T4RIF - Statement of Registered Retirement Income Fund Income.
T4RSP- Statement of RRSP withdrawals
T5 - Reports investment income
Any income received from investments, which includes interest, dividends, and certain foreign income is reported on a T5 slip.
These slips should be mailed to you, and much like the T4, the information on the slips will be used in filing your tax return.
Who needs to prepare a T5 slip?
Any entity that has made investment return payments of more than $50 to any resident of Canada must prepare and file a T5 . This includes banks and companies that pay their shareholders dividends.
The deadline for T5s to be generated and filed with the CRA is the same as the deadline for T4s - February 28th of the next year.
T3 - Reports income from a trust or estate
A T3 should be filed if there is income or designations from a trust or an estate. The deadline for filing a T3 return is March 31st of the following year.
The rules on who should file this type of slip are a little more complicated. So for more information about T3 slips, you can see the CRA website here.
If you still find the ins and outs of Canadian tax slips confusing, don’t worry you’re not alone. Reach out with any questions regarding personal or business taxes and we’d be happy to help you find the answers.