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Year End and T4 Preparation - Overview
This article is intended for the payroll team and those involved in completing the year end process. If you are an admin that requires access to the areas discussed, please contact our support team.
For 2023 T4s - the approval deadline is February 16, 2024.
IBEX Payroll will be presenting a Year End and T4 Preparation webinar on Thursday, December 7th, 2023. [register here]
The Year End and T4 Preparation involves several processes that can be categorized into the following sections:
1. Year End Prep
The following processes can be done before the year ends (aka before you run your last payroll for the year) to help ensure your T4 data is as accurate as possible.
Review Employee Data
Employee data that will be on the T4s and should be reviewed includes:
|Name||the Legal name will appear on the T4 slips|
the latest address is important, especially if you will be sending your employee's T4 by mail
|Social Insurance Number||
CRA utilizes the SIN to sum up all earnings for the employee and to match it with their tax filing - make sure you have correct SINs entered for your employees.
Tip: If you see 111-111-118 or 999-999-998, these are dummy SIN numbers and need to be updated.
aka Employer's account number
This will be masked on the actual slip printed for employees.
However, and especially for accounts that have multiple RPs, review your employee's remittance account settings to ensure their earnings are being assigned to the appropriate account.
These settings will affect how CRA calculates your employee's tax filing and could result in a PIER for your company if set incorrectly.
CPP exempt employees - unless they are under 18 or over 70, will have Box 28 checked. The amounts, if any, in Box 16 (CPP deduction) and Box 26 (Pensionable earnings) will be prorated only to the eligible earnings and may not match Box 14 amount.
EI exempt employees - if this is checked in Box 28, the amounts, if any, in Box 18 (EI deduction) and Box 24 (insurable earnings) will be prorated only to the eligible earnings and may not match Box 14 amount.
Tax exempt - there is no box on the T4 slip that indicates this, however, you will see a reduced or no amount in Box 22 if the employee is exempt in their profile.
|Date of Birth||
This box does not appear on the T4 but an accurate date of birth in the employee profile will impact their CPP calculations throughout the year.
Ensure this is accurate during employee setup.
Throughout the year, you can use the Employee Tax and Compensation Report (Reports > Base Reports) or the PIER Review (see below) to review the information above.
There are ways to update this data later in the T4 Preparation stage but it is recommended to information beforehand to minimize your work.
Review Potential Deficiencies in CPP and EI - PIER Review
When your data is received by CRA, they conduct a Pensionable and Insurable Earnings Review to assess that the correct CPP and EI amounts have been deducted and paid.
Our system has replicated this process via the PIER Reivew tool (under the Payroll tab) that will help you review your data in preparation for year end and the government PIER review.
If you have any questions regarding any deficiencies or overpayments, please contact our support team.
Review Box Mappings for Payroll Instructions
At IBEX, we do a box mapping review when you implement onto our system and also do our best to review these settings when a new payroll instruction is created. But double checking never hurts, right?
Throughout the year, you can run these two reports to ensure your pay information will be accounted for accurately.
Payroll Instructions Information
Go to Reports > Standard Reports > click Payroll Instructions Information under the Payroll Reports heading.
This report will list all your payroll instructions, what type they are and if they are Taxable, Pensionable, Insurable.
If your payroll instruction is set to True under:
- Taxable - amounts from this payroll instruction will automatically be accounted for in Box 14 as part of YTD Gross Taxable Earnings if it is an earning or as part of YTD Taxable Benefits if it is a benefit
- Pensionable - amounts from this payroll instruction will automatically be accounted for in Box 26 as part of YTD Pensionable Earnings
- Insurable - amounts from this payroll instruction will automatically be accounted for in Box 24 as part of YTD Insurable Earnings
Go to Reports > Base Reports > click T4 Mapping under the Payroll Reports heading
This report will list all YTD (Year to Date) accruals and any special box mappings attached to them. The accruals you want to pay attention to are those that typically need to be mapped somewhere other than Box 14 such as pension amounts, union deductions, charity etc.
Note: Not all rows will have a box mapping and that is okay!
For example, in the above photo, you will see that Reg Hourly Pay is marked as Taxable, which means it is already included in the YTD Gross Taxable Earnings. On our T4 Mapping report, you will not see a box mapping attached to it but YTD Gross Taxable Earnings is mapped to Box 14. If we once again add a mapping to Reg. Hourly Pay - it will double the amount on the T4s.
If you are unsure about some of your box mappings or payroll instruction settings, please contact our support team for assistance.
Review Employee Pay Data
There are multiple reports that you can use throughout the year to review your employee's pay data.
Each pay period, the Pay Runs report (Reports > Base Reports > under Payroll Reports heading) can be used to review the calculations on the input sheet.
For a report that offers a summary of the earnings and benefits to be reported, you can use the Employee Accruals Balance Report (Reports > Base Reports > under Payroll Reports heading).
Set the year pre filter to the one of interest, and under Accrual Policy Filter, select only those that begin with YTD and that are of interest (i.e. select only the taxable earnings and benefits, do not select any hours, or Mileage/Reimbursements as it is not reported on T4s).
This report will show you balance for the year for the employee. Note that an employee may appear in more than one row if they moved between several RP accounts.
Add Other Earnings and Taxable Benefits
Did you have any earnings or taxable benefits that were not tracked in payroll?
If you have not completed the last pay run of year, we suggest adding these amounts in one of your last pay runs so that the employee has earnings which can offset any taxes that these additional earnings/benefits may trigger.
If you have already completed your last pay run, but have not closed the year, you can use an ad hoc to insert these additional earnings/benefits. However, taxes may calculate on these amounts which need to be adjusted via a deduction so that you are not withdrawing money from the employee's account. **Please contact our support team so we can assist you with this process.
If your year has already been closed, there is still a way to insert these additional earnings/benefits - see T4 Preparation section.
2. Closing the Year
The following process occurs when you have completed your last payroll for the year. It is required to start your first pay run of the new year.
Note: Closing the year does not directly impact schedule creation. Schedules for the new year may be created before the payroll year is closed.
Once your year is closed, your T4 drafts will be created. Note that your T4s do not need to be approved at the same time you close the year. You have until the posted deadline to review and make any adjustments.
3. T4 Preparation
The following processes can be done anytime after your year has been closed.
Your approval is required for us to file your T4s with CRA.
For 2023 T4s - the approval deadline is February 16, 2024.
This allows our team time to file the T4s and correct any submission errors that may arise, as well as ensures you have sufficient time to distribute your employee T4s before the month ends.
We know this only happens once a year, so if you need any assistance, please don't hesitate to connect with our support team.