The New RC4120
On October 23, the CRA issued the new RC4120 Employers’ Guide – Filing the T4 slip and Summary, for the 2019 tax year. Here are the 3 changes you need to know about before preparing your 2019 T4 filings.
1. New Rules for Reporting Salary Overpayments Made in Error
The most significant changes are the revisions to the rules regarding T4 reporting of salary overpayments made to employees as a result of an error. See Payroll Compliance Briefing for a complete analysis.
2. Elimination of Code 68 for Indian Exempt Income
Old Rules: Employers used Code 68 – Indian (exempt income) – Eligible retiring allowances, to indicate a retiring allowance (aka, severance pay) paid to an Indian (CRA’s term, not ours) during the year and that’s eligible for transfer to an RPP or RRSP, even if not actually transferred during the year.
New Rules: Starting with 2019 tax year reporting, you no longer need to use code 68. Rules:
- Report the part of the retiring allowance paid in the year that’s eligible for transfer in the “Other information” area of the T4 using code 66;
- Report the part of the retiring allowance paid for an Indian that’s not eligible for transfer in the “Other information” area using code 69; and/or
- Report the part of the retiring allowance paid for an employee other than an Indian that’s not eligible for transfer in the “Other information” area using code 67.
3. Elimination of Code 70 for Legislators’ Non-Accountable Allowances
Old Rules: Municipal corporations or boards used Code 70 – Municipal officer’s expense allowance, to enter the non-taxable portion of expense allowances paid to an elected officer to perform the duties of that office.
New Rules: Starting with the 2019 tax year reporting, use of code 70 will no longer be needed because non-accountable allowances paid to members of legislative assemblies and certain municipal officers will be fully included in their income.