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064 | The Boxes on a T4 Slip

In this post, we are going to run through some of boxes on a T4 slip, what they mean, and how to calculate them.


Box 14 — Employment Income

Employment income is amounts the employer paid to an employee for the calendar year of the T4. It could include any of the following:

  • Salary

  • Wages

  • Commissions

  • Bonuses

  • Tips and gratuities

  • Honoraria (thank you or gift payment)

  • Vacation Pay

  • Directors’ Fees

It should reported as the gross income, not the net. That means all income before deductions.


Box 16/17 — Employee’s CPP/QPP Contributions

These boxes refer to Canada Pension Plan and Quebec Pension Plan contributions. An employer must deduct CPP or QPP contributions from an employees’ pay, and make a matching contribution. The contributions each year are calculated as a percentage of all pay between an exempt minimum allowance ($3,500 for 2021) and a maximum cap.

For 2021, the rates are:

  • 5.45% for CPP, up to a maximum of $3,166.45

  • 5.90% for QPP, up to a maximum of $3,427.90

Box 18 — Employee’s EI Premiums

For us in Canada, most work performed by an employee for an employer is considered “insurable work.” Like other forms of insurance, premiums must be paid in order to make a claim later. Both the employer and employee must pay EI (Employment Insurance) premiums.


In this box, enter the EI premiums that were deducted from the employee earnings. If no premiums were deducted, leave Box 18 blank.


Box 24 — Total EI Insurable Earnings

Box 24 must be filled in. It cannot be left blank. The employee’s total insurable earnings for the year must be recorded here—or 0 if the employee earned no insurable earnings. Often, Boxes 14 and 24 will have the same number.


Types of insurable income include:

  • Salary and Wages

  • Commissions

  • Bonuses, Gratuities and Tips

  • Overtime

  • Pay in Lieu of Notice

  • Statutory Holiday Pay

  • Vacation Pay

Box 26 — CPP/QPP Pensionable Earnings

Like Box 24, Box 26 must be filled. Pensionable earnings are types of payment paid to the employee. Qualifying earnings include:

  • Salary

  • Wages

  • Commission

  • Bonuses

  • Overtime

  • Statutory sick pay

  • Statutory maternity pay

  • Ordinary or additional statutory paternity pay

  • Statutory adoption pay

Expenses, such as allowances for food or travel, are not pensionable earnings.


The pension contribution made by the employer is calculated as a percentage of qualifying earnings under the maximum allowance for the year ($61,600 for 2021). For this box, record all pensionable earnings up to the maximum allowance amount. If there are no pensionable earnings, enter 0.


Box 29 — Employment Code

Certain types of employment are handled differently in Canada. If an employee falls under one of the following categories, enter the following two-digit code into Box 26:

  • 11 – Placement or employment agency workers

  • 12 – Taxi drivers or drivers of other passenger-carrying vehicles

  • 13 – Barbers or hairdressers

  • 14 – Withdrawal from a prescribed salary deferral arrangement plan

  • 15 – Seasonal Agricultural Workers Program

  • 16 – Detached employee – Social security agreement

  • 17 – Fishers – Self-employed

If you use code 11,12,13 or 17, don’t fill in Box 14 — Employment Income.


If an employee does not fall into one of the above categories, then Box 29 should be blank.


Box 40 — Other Taxable Allowances and Benefits

Box 40 is used to record benefits paid to an employee (other than income)—such as parking expenses, cell phone or food allowances.


 

We hope you found these explanations useful. As always, if you need assistance we are here to help!


#bigrose #bookkeeping #t4 #payroll


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