What Is a T4 in Canada and How Does It Work?
Understand the purpose of a T4 in Canada, how it reports income and deductions, and what to do if you need to access or correct your tax slip.
A T4 slip is an essential tax document for employees in Canada, summarizing their income and deductions for the year. Issued by employers, it helps individuals and the Canada Revenue Agency (CRA) track earnings, taxes paid, and contributions to government programs like the Canada Pension Plan (CPP) and Employment Insurance (EI).
Understanding how this form works ensures taxpayers file accurate returns and claim eligible benefits or deductions.
Sources That Require a T4
Employers must issue a T4 slip to anyone paid more than $500 in a calendar year if deductions such as income tax, CPP contributions, or EI premiums were withheld. This applies to full-time, part-time, seasonal, and temporary workers, regardless of pay structure. Even short-term employees must receive a T4 if deductions were taken.
Beyond wages, employers must report bonuses, commissions, and taxable benefits, including employer-paid life insurance and personal use of a company vehicle. Retroactive pay increases and severance packages are also taxable and must be included.
Non-profits, registered charities, and government agencies must issue T4 slips if employees meet the income and deduction criteria. Foreign companies with Canadian employees must comply if they have a tax presence in Canada.
Key Boxes and Codes
The T4 slip categorizes income, deductions, and contributions using CRA-assigned codes for accurate tax reporting.
Employment Income
Box 14 reports total employment income, including wages, salaries, bonuses, and taxable benefits. This figure represents gross earnings before deductions. Employees should compare it with their pay stubs for accuracy.
Taxable benefits are included in Box 14 and detailed in other boxes. Employer-paid life insurance premiums appear under Code 40, while personal use of a company vehicle is reported under Code 34. Tips or gratuities controlled by the employer should also be included. Any discrepancies should be addressed with the employer before filing taxes.
Tax Deductions
Box 22 shows the total federal and provincial income tax withheld, based on the employee’s tax bracket and payroll deductions determined by the TD1 form.
CPP contributions appear in Box 16, with a maximum contribution limit set by the CRA. For 2024, the maximum contribution is $3,867.50 on earnings up to $68,500. EI premiums are reported in Box 18, with a maximum contribution of $1,049.12 in 2024. These deductions impact tax refunds or balances owed. Over-withholding may result in a refund, while under-withholding could lead to a tax bill.
Pension Contributions
Employees contributing to a Registered Pension Plan (RPP) through their employer will see these amounts in Box 20. RPP contributions reduce taxable income, similar to RRSP contributions, and impact the employee’s RRSP deduction limit for the following year.
The Pension Adjustment (PA) in Box 52 represents the total value of pension benefits accrued and affects RRSP contribution room. Employer contributions to a Deferred Profit Sharing Plan (DPSP) are reported in Box 41. Unlike RPP contributions, DPSP amounts are not deducted from the employee’s pay but still impact retirement savings.
Digital Access
Employers must provide T4 slips by the last day of February following the tax year. Many now issue them electronically through payroll portals or secure email. Payroll service providers like ADP, Ceridian, and Payworks typically offer self-serve platforms for downloading T4s.
The CRA also provides access through the My Account portal, consolidating all reported income in one place. However, delays may occur if an employer has not yet submitted payroll records.
For security, employees should use strong passwords and enable two-factor authentication for online payroll accounts. When downloading a T4, it is best to use a personal device rather than a shared or public computer. Scammers may send fraudulent emails pretending to be from the CRA, so individuals should verify any communication by logging directly into their CRA account rather than clicking on links in unsolicited messages.
Correcting Errors
Errors on a T4 slip can lead to incorrect income reporting and tax miscalculations. Employees should notify their employer or payroll provider, as they are responsible for issuing a corrected slip. Employers must file an amended T4 with the CRA and provide a revised copy marked “Amended.”
If an employer is unresponsive, individuals can still correct discrepancies when filing their tax return. They should use the correct figures based on pay records and submit a detailed explanation with their return or through the CRA’s My Account portal. If an incorrect T4 has already been filed, a T1 Adjustment Request can be submitted online or by mail. The CRA may request supporting documents, such as pay stubs or bank records, to verify the correction.