How to prepare T4 slip

What is a T4 Slip? 

A T4 slip is a document that employers must issue to employees at the end of each tax year. It summarizes: 

✔ Total salary and wages paid
✔ CPP (Canada Pension Plan) contributions
✔ EI (Employment Insurance) premiums
✔ Federal and provincial tax deductions 

Deadline: Employers must file T4 slips and T4 summaries with the CRA by the last day of February following the end of the tax year. 

Step-by-Step: How to Prepare a T4 Slip 

Step 1: Enter the Employer’s Information 

• Write the company name and business number (BN) in Box 54. 

• Ensure the employer’s payroll account number is correct. 

Step 2: Enter the Employee’s Details 

• Employee’s full name and address 

• Employee’s Social Insurance Number (SIN) (Box 12) 

Step 3: Enter the Province of Employment 

• Specify the province where the employee worked during the tax year. 

Step 4: Enter the Tax Year 

• Write the year the salary was paid (e.g., 2023). 

Step 5: Determine EI (Employment Insurance) Exemptions 

• Employees who own more than 40% of the company’s voting shares are exempt from EI premiums. 

• If the employee must contribute to EI, leave Box 28 blank. 

Step 6: Determine CPP (Canada Pension Plan) Exemptions 

• Most employees must contribute to the CPP unless they are under 18 or over 70. 

• If the employee must contribute, leave Box 28 blank. 

Step 7: Report Gross Salary or Wages (Box 14) 

• Enter the total earnings the employee received in the tax year. 

💡 Example: If the employee earned $50,000, enter “$50,000” in Box 14. 

Step 8: Calculate CPP Contributions (Box 16) 

Formula:
➡️ (Gross salary – CPP exemption) × CPP rate 

💡 Example: Employee earns $50,000. CPP exemption is $3,500. 

• CPP rate (2024): 5.95% 

• CPP contribution: ($50,000 – $3,500) × 5.95% = $2,776.75 

• Enter $2,776.75 in Box 16. 

Step 9: Calculate EI Premiums (Box 18) 

Formula:
➡️ Gross salary × EI rate 

💡 Example: EI rate (2024) is 1.66%. 

• EI premium: $50,000 × 1.66% = $830 

• Enter $830 in Box 18. 

Step 10: Enter Total Federal & Provincial Tax Deducted (Box 22) 

Use the CRA Payroll Deductions Calculator to determine tax deductions. 

💡 Example: If total tax deducted from the employee’s salary is $8,500, enter “$8,500” in Box 22. 

Step 11: Enter Insurable Earnings (Box 24) 

• This amount must match Box 14 (Gross salary). 

💡 Example: If the gross salary is $50,000, enter “$50,000” in Box 24. 

Step 12: Complete the T4 Summary 

• The T4 Summary consolidates all T4 slips for your employees. 

• Submit the summary to CRA electronically via My Business Account or file a paper return. 

Avoid Common T4 Filing Mistakes 

🚫 Missing the deadline – Late T4 filings can result in CRA penalties.
🚫 Incorrect payroll numbers – Ensure all CPP, EI, and tax deductions match actual payments made.
🚫 Not reporting taxable benefits – If you provide car allowances, stock options, or health benefits, report them in the appropriate T4 boxes. 

Final Thoughts: Why Accurate T4 Slips Matter 

Accurate T4 reporting is essential for both employees and employers. Employees need T4 slips to file their personal income tax returns, and businesses must comply with CRA regulations to avoid audits and penalties. 

For expert payroll support, tax planning, and compliance guidance, partner with GYTD CPA Professional Corporation. Our team ensures your T4 slips are filed accurately and on time. 

📞 Need help with T4 preparation? Contact GYTD CPA Professional Corporation today!