How to Prepare a T4 Slip in 12 Easy Steps - A Comprehensive Guide

Written by: Jack W. (CPA)

What is a T4 slip?

A T4 slip reports the salary and wages paid by Canadian companies to its employees. To prepare a T4 slip, follow these steps .

Step 1/12: Fill in the Employer’s Information

Fill in your Employer’s information :

Enter your Employer’s name; and
Enter the Employer’s payroll account No. in box#54

Step 2/12: Fill in the Employee’s Information

Fill in the employee’s detail:

Write the address and name of the employee
provide the social insurance number of employee in box#12

Step 3/12: Enter the Province of Employment

Enter the name of the province where the employee work. For example. If the employee is working in BC Or ON provinvce, then enter the name of province “British Columbia” or “Ontario”.

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Step 4/12: Specify the Year of Salary Received

Step 5/12: Determine Employment Insurance (EI) Exemption

Decide whether or not the employee is exempt from paying Employment Insurance (EI) premiums. Typically, shareholders and their family members that hold more than 40% of the company’s voting rights are EI-exempt. Every person other than employee has to contribute to the Employment Insurance program.

Step 6/12: etermine Canada Pension Plan (CPP) Contribution

Decide whether or not the employee is exempt from contributing to the Canada Pension Plan. Most Canadians must contribute to the Canada Pension Plan, so box#28 must be checked in the given example.

Step 7/12: Enter Gross Salary or Wages Paid (Box 14)

in box# 14, provide the detail of total amount of gross salary or wages paid to the employee. In the given example, let’s assume that the employee earned thirty five thousand dollars in that calendar year.

Step 8/12: Calculate CPP Contributions Deducted (Box 16)

Enter provide the detail of CPP contributions amount, deducted from the employee’s paychecks during the specific year.

The CPP contribution rate is 4.95% of the employee’s salary in excess of three thousand five hundred dollars as per CCP chart.

CCP CHART LINK :

For the EI chart, click here.

Step 9/12: Enter Employment Insurance (EI) Premiums Deducted (Box 18)

in box#18, type the total EI (Employment Insurance) premiums subtracted from the employee’s paychecks during the specific calendar year. The EI contribution rate is 1.63% of the employee’s salary and wages. In the given an example, the employee earned thirty-five thousand dollars, so his EI premium is 570$

For the EI chart, click here.

Step 10/12: Enter Income Tax Deducted (Box 22)

in box 22, Now provide the detail of the total amount of income tax deducted from the employee’s pay cheque during the specific year. I recommend using the CRA’s online payroll calculator to calculate the CPP, EI, and income tax to be deducted from each pay cheque issued to an employee.

For CRA Payroll Celender, click here.

Step 11/12: Enter EI Insurable Earnings (Box 24)

in box 14, provide the detail of the Insurable Earnings(EI) amount. In the given example, the amount equals the sum of gross salary and wages, which is already entered, (35,000 dollars) … (Box 14 = Box 24).

Step 12/12: Complete the T4 Summary

Now, fill in the T4 summary detail. The T4 summary details all the amounts reported in each T4 slip. A company may issue multiple T4 slips if it has various employees. Do not forget to mention the year and the payroll account number of your company in the T4 summary form.

Disclaimer

The information provided by Veracity Accounting’s CPA is intended to provide general information. Ensure accurate reporting of salary and wages by following these 12 easy steps to prepare a T4 slip. File T4 slips and summary to the CRA for processing. Consult accounting and financial professionals personal tax accountant like Veracity Accounting, a CPA Firm in Toronto for personalized guidance.