5 Changes to T4 Filing Requirements

It’s time for payroll to gear up for year-end processing. Here are the 5 changes that will make T4 processing in 2011 slightly different from previous years.

1. New CPP Deduction Rules for the 60-Something Set

 

Previously, you had to stop deducting CPP contributions from the pensionable earnings of 60- to 70-year-old employees upon getting proof, e.g., an HRSDC letter, that the employee is receiving CPP (or QPP) retirement benefits.  But starting January 1, 2012, employees ages 60 to 70 will have a 10-year window to receive CPP benefits and not only keep working but accrue more CPP pensionable service. Ditto for employees who reach the normal “take-up” age of 65. If you have employees in this situation, you’ll need to apply the new CPP deduction rules:

 

CPP Contributions: Starting Jan. 1, employees who work and receive a CPP (or QPP) pension must contribute to CPP if they’re:

 

• 60 to 65 years of age;

• 65 to 70 and have not filed an election with you or another employer to stop paying CPP contributions via a signed Form CPT30, Election to Stop Contributing to the CPP, or Revocation of a Prior Election; or

• 65 to 70 and have revoked their election to stop paying CPP contributions in 2013 or later (also via the Form CPT30).

CPP Source Deductions: Also starting Jan. 1, you must deduct CPP contributions from a 60- to 70-year-old employee who’s in pensionable employment and receiving pensionable earnings under 1 of 2 conditions:

 

• The employee is 60 to 65 and is currently receiving a CPP or QPP retirement pension (even if means deducting from someone who was not contributing in a previous year because he was getting a CPP/QPP pension); or

• The employee is 65 to 70, currently receiving a CPP or QPP retirement pension and hasn’t given you a signed CPT30 election or revocation of election form.

 

As with any other source deduction, failure to deduct and remit CPP contributions can lead to tax penalties and interest charges.

2. Reporting Changes for Pensionable Earnings

 

Starting Jan. 1, 2012 (for the 2011 tax year), you must complete box 26 of the T4 slip “CPP/QPP pensionable earnings” at all times up to the maximum pensionable earnings for the year ($48,300 in 2011). In most cases, boxes 14 and 26 will be the same amount. If there are no pensionable earnings, you must enter “0” in box 26. If employment is exempt, enter “0” in box 26 and “X” under “CPP/QPP” in box 28 only if the earnings were exempt for the entire reporting period.

3. Reporting Changes for Insurable Earnings

 

The box 24 “insurable earnings” of the T4 must also be completed at all times starting Jan. 1, 2012 (for the 2011 tax year). Enter the total amount used to calculate the employee’s EI premiums up to the maximum amount ($44,200 for 2011). Do not include the unpaid portion of any earnings from insurable employment that you didn’t pay because of bankruptcy, receivership or non-payment of remuneration for which the employee has filed a legal complaint. Enter “0” if there are no insurable earnings. If employment is exempt, enter “0” in box 24 and “X” under “EI” in box 28 only if the earnings were exempt for the entire reporting period.

 

4. Reporting of Exempt Payments to Volunteer Firefighters

 

The 2011 federal budget includes a new 15% non-refundable tax credit based on an amount of $3,000 for volunteer firefighters who perform at least 200 hours of volunteer service during the tax year. (Individuals who claim the credit aren’t eligible for the current $1,000 exemption for other emergency volunteers, such as ambulance technicians. In other words, they must choose between the 2.)

T4 Reporting: Don’t include the first $1,000 of payments to volunteer firefighters in box 14. But if you employed the individual for the same or similar duties, the entire payment is taxable and must be included in box 14. You must also report exempt payments of up to $1,000 to qualifying volunteer firefighters using code 87 in the “Other Information” area of the T4.

5. Electronic Filing Changes

 

Starting Jan. 1, you can use the CRA Web Forms application to electronically file an information return of up to 50 T4RSP or T4RIF slips in a single submission. The service enables you to:

 

• Create an electronic T4 information return;

• Validate data in real time via the use of prompts that enable you to spot and correct errors before you file;

• Calculate totals for the Summary;

• Print out and save T4 slips; and

• Securely submit encrypted returns over the Internet.

Conclusion

 

One final note on electronic filing: You can also file information returns online using the “File a return” service listed under the “Payroll” tab and selecting the “Web Forms” option by registering or logging in at:

 

• www.cra.gc.ca/representatives, if you’re an authorized representative or employee; or

• www.cra.gc.ca/mybusinessaccount, if you’re the business owner.