If you are an employer or own your own corporation, this blog will help you to get the information necessary to prepare a T4. A T4 slip reports your salary and wages paid by Canadian Corporation to its employees. In order to properly prepare a T4 you can follow these simple steps. You start off with filling in a few boxes.
- Such as employers name, his account number which is located at box 54, and SIN in box 12. Then you would need to fill out some basic information such as the province of employment, and the year in which the employer received the salary.
- The next step would be to determine if an employee is exempt from paying EI. Which is known as employment insurance premiums. Shareholders are exempted from EI if they own 40% of the voting stocks of the company. If an employee is determined to contribute to EI, box 28’s second checkbox will remain blank. The first checkbox under box 28 labelled RPC/RRQ will not be checked if the employee is contributing to the Canada Pension Plan.
- Enter employee’s income earned in the calendar year in box 14.
- Then you can enter the amount of CPP contribution that was taken from the employee’s paycheck during the year.
- Currently, in 2020 the employee and employer contribution rate is %5.25.
- Next in box 18 is the total amount of EI premiums deducted from paycheck in the calendar year.
- The Federal EI Premium rate, as of 2020, is 1.58%.
- Box 22 should read how much Income tax was deducted.
- Box 24, is EI insurable that was earned, which is the gross salary and wages entered in box 14.Basically box 24 should read the same as box 14.
- Finally, complete the T4 summary.
Congratulations! you have now successfully finished completing the T4 paper.