Taxable Benefits & Tips for T4s

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Taxable Benefits for Employees

The start of 2022 brings with it the end of 2021. For employers this means it’s time to prepare T4 slips for employees. With T4 slips, taxable benefits need to be considered. Sometimes there is more than just the hourly wages and/or salary that needs to be included as income to your employees.

What are taxable benefits?

They are benefits provided to employees that are included as part of their employment income.  The reason is because the employees received something personal in nature and benefited them as individuals instead of the business. 

Examples of taxable benefits

-          Tips

-          Vehicle allowance

-          Board and lodging

-          Personal use of an employer’s automobile

-          Cash gifts and rewards

-          Interest free or low interest loans

-          Employer contribution to RRSP

-          Education benefits if course is not related to work

Where to include these on the T4?

The “Other Information” area at the bottom of the T4 slip. Depending on the type of benefit, there are specific codes.  If there is not a specific code that fits, then include the benefit in Box 40, remembering also that this would get added to their base income for box 14.

If your situation is complex and you require our assistance in preparing T4 slips, we are happy to help.

Tips when preparing T4s

1.       Did your employees move?

Make sure addresses for employees are current.

2.       Do you have employees who are no longer there?

If you have former employees who worked with you in 2021, they need their T4s too.  If you are using a program that can run a payroll report, do not forget to include inactive employees.

3.       Did you pay a bonus to the employees? 

If the bonus was paid before Dec 31, 2021, it is included on the 2021 T4 slip.

4.       Do you have a private health service plan (PHSP)? 

If your employees paid the premiums, don’t forget to include them in Box 85.

5.       What does CRA show as source deduction remittances for 2021?

Compare the source deductions remitted to what CRA has on the account.  If there is a difference, then you should find out why so there won’t be a surprise in the end when CRA sends you a bill.

6.       Are you filing by paper?

If so, please ensure you keep a copy for your records.

7.       When are the 2021 T4 slips due?

T4 slips are to be distributed to the employees by February 28, 2022.

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