Understanding T4 and T5 Slips for Calgary Employers

If your Calgary business has employees or pays certain types of income, you have year-end reporting obligations to CRA. The two most common information returns are T4 slips (for employment income) and T5 slips (for investment income). Here is what you need to know.

T4 Slips: Employment Income

You must prepare a T4 slip for every employee to whom you paid employment income during the calendar year. The T4 reports the employee's total earnings, income tax deducted, CPP contributions, EI premiums, and other relevant amounts. T4 slips must be filed with CRA and provided to employees by February 28 of the following year.

What Goes on a T4

• Box 14: Total employment income
• Box 16: Employee CPP contributions
• Box 18: Employee EI premiums
• Box 22: Income tax deducted
• Box 40: Taxable benefits (company vehicle, health spending account, etc.)
• Box 44: Union dues (if applicable)

T5 Slips: Investment Income

T5 slips report investment income paid to shareholders or investors. If your corporation paid dividends to shareholders during the year, you must issue T5 slips. The T5 reports the actual amount of dividends paid, the taxable amount (grossed up), and the associated dividend tax credit. T5 slips are also due by February 28.

T4A Slips: Contract Payments

While not T4 or T5, it's worth mentioning T4A slips. If your business paid fees, commissions, or other amounts to self-employed contractors, you may need to issue T4A slips for amounts over $500. This is an area many Calgary businesses overlook.

Penalties for Late or Incorrect Filing

CRA charges penalties for late T4 and T5 filing: $100 for the first day, then $25 per day up to a maximum of $2,500. Filing incorrect information can also result in penalties. Given these stakes, accuracy and timeliness are essential.

Let Castle Handle Your Year-End

Castle Bookkeeping prepares and files T4, T5, and T4A slips for our payroll clients. We ensure all amounts are correct, slips are delivered to recipients on time, and filings are submitted to CRA before the deadline. Contact us for a free consultation.