Be prepared for the busiest time of year by setting aside time to review and update
Year-end is the busiest time of the year for payroll practitioners, so you need to make sure you are ready. Set aside time to review and update the year-end process, and implement any changes that impact your organization.
While there are many facets to the process, one of the most important is correctly reporting taxable income and statutory deductions to the Canada Revenue Agency (CRA) and Revenu Québec.
To make year-end a smoother process, be vigilant throughout the year.
Reconcile the tax account on a regular basis to ensure payments made to the CRA and Revenu Québec have been posted accurately to the correct payroll account.
Process taxable benefits on a pay period basis. (Both the CRA and Revenu Québec require employers to include taxable benefits in the taxable income of employees “at the time the benefit is received or enjoyed.”) If you need to adjust taxable benefits at year-end, make sure any applicable Canada/Quebec Pension Plan (CPP/QPP) contributions and employment insurance or Quebec Parental Insurance Plan (QPIP) premiums are remitted to the CRA or Revenu Québec on or before the final remittance of the tax year.
Make sure all manual cheques, void cheques and returned deposits are updated to employee year-to-date amounts.
For year-end specifically, the Canadian Payroll Association’s annual year-end checklist will help ensure payroll is accurate, year-end reporting forms are complete and balanced, and everything is accounted for by the end of February 2012.
The Canadian Payroll Association’s 2011 year-end checklist
Get started
•Create a year-end reference file to document filing procedures.
•Download guides required from the CRA’s website: www.cra.gc.ca (T4001 – Employers’ Guide – Payroll Deductions and Remittances, T4130 – Taxable Benefits, RC4120 – Employers Guide Filing the T4 slip and Summary and RC4157 – Deducting Income tax on Pension and Other Income)
•Download guides required from Revenu Québec’s website: www.revenuquebec.ca (TP-1015.G-V – Guide for Employers: Source Deductions and Contributions, RL-1.G-V – Guide to filing the RL-1 slip and IN-253-V – Taxable Benefit)
•Schedule meetings with payroll service provider or in-house system analyst to review reporting requirements.
•Notify key stakeholders about taxation rules and requirements and notify all stakeholders of final year-end payroll schedules and deadlines to submit payment information.
Reconcile and validate
•Run a year-end preview report.
•Ensure earnings, taxable benefits and deductions have been mapped to report in the correct boxes on tax slips.
•Balance year-end preview report to the payroll register.
•Reconcile your payroll tax account and verify remittances have been accurately posted to the correct account.
•Conduct an internal PIER audit to ensure accuracy of C/QPP, EI and QPIP deductions. If a shortage is discovered, remit the employee and employer portions and update the employee record accordingly. Note: An employer may deduct from future wages amounts remitted on an employee’s behalf to recover CPP/QPP, EI or QPIP shortages as long as the amount is deducted within 12 months of the original pay date when the shortage occurred, and the deduction recovered in a subsequent pay period does not exceed the amount that would have been deducted in one pay period.
•Make adjustments to final pay cheques, register and remittances if necessary.
•Validate social insurance numbers (SINs) if required.
•Make necessary adjustments for workers’ compensation awards reimbursed to the organization and ensure proper tax-slip reporting.
•Determine if any miscellaneous payments through accounts payable need to be entered in payroll.
•Review and complete the following for taxable benefits: Check for compliance, ensure the benefits are reported under the correct codes and enter final adjustments as necessary, such as company cars.
•Review reporting requirements for company pension plan: pension adjustment calculations, employee contributions and taxable benefit (employer RRSP contributions)
Conduct year-end procedures
•Choose the method of slip filing: T4 web forms, T4 desktop application, paper or electronic filing.
•Note the deadlines and penalties for non-compliance.
•Determine the last day to amend payroll records without penalty.
•Review internal procedures for cancelling or amending slips and summaries.
Perform provincial year-end reporting
•Compile a list of required provincial reporting and filing deadlines for: Quebec RL-1.S-V (RL-1 summary), workers’ compensation assessments and reporting, provincial health care and education levy/tax annual returns and Northwest Territories/Nunavut Payroll Tax annual return.
Prepare for 2012
•Carry forward accrual balances to 2012 for savings bonds, loan balances, garnishments, time owed and vacation accruals.
•Review 2012 schedule to determine if there are any conflicts in dates for processing payroll or paydays (statutory holidays): If bi-weekly and weekly payroll, determine if there are 27 and 53 pays, respectively, in 2012.
•Determine how the annual C/QPP pay period exemption be handled.
•Send a notice to all employees to file new TD1 forms (federal and provincial) and TP-1015.3-V (for Quebec) if their personal situations have changed.
•Send a notice to all commission employees to request a new TD1X/TP-1015.R.13.1-V by Jan. 31, 2012.
Janet Spence is the manager of compliance programs and services at the Canadian Payroll Association in Toronto. She can be reached at [email protected].
While there are many facets to the process, one of the most important is correctly reporting taxable income and statutory deductions to the Canada Revenue Agency (CRA) and Revenu Québec.
To make year-end a smoother process, be vigilant throughout the year.
Reconcile the tax account on a regular basis to ensure payments made to the CRA and Revenu Québec have been posted accurately to the correct payroll account.
Process taxable benefits on a pay period basis. (Both the CRA and Revenu Québec require employers to include taxable benefits in the taxable income of employees “at the time the benefit is received or enjoyed.”) If you need to adjust taxable benefits at year-end, make sure any applicable Canada/Quebec Pension Plan (CPP/QPP) contributions and employment insurance or Quebec Parental Insurance Plan (QPIP) premiums are remitted to the CRA or Revenu Québec on or before the final remittance of the tax year.
Make sure all manual cheques, void cheques and returned deposits are updated to employee year-to-date amounts.
For year-end specifically, the Canadian Payroll Association’s annual year-end checklist will help ensure payroll is accurate, year-end reporting forms are complete and balanced, and everything is accounted for by the end of February 2012.
The Canadian Payroll Association’s 2011 year-end checklist
Get started
•Create a year-end reference file to document filing procedures.
•Download guides required from the CRA’s website: www.cra.gc.ca (T4001 – Employers’ Guide – Payroll Deductions and Remittances, T4130 – Taxable Benefits, RC4120 – Employers Guide Filing the T4 slip and Summary and RC4157 – Deducting Income tax on Pension and Other Income)
•Download guides required from Revenu Québec’s website: www.revenuquebec.ca (TP-1015.G-V – Guide for Employers: Source Deductions and Contributions, RL-1.G-V – Guide to filing the RL-1 slip and IN-253-V – Taxable Benefit)
•Schedule meetings with payroll service provider or in-house system analyst to review reporting requirements.
•Notify key stakeholders about taxation rules and requirements and notify all stakeholders of final year-end payroll schedules and deadlines to submit payment information.
Reconcile and validate
•Run a year-end preview report.
•Ensure earnings, taxable benefits and deductions have been mapped to report in the correct boxes on tax slips.
•Balance year-end preview report to the payroll register.
•Reconcile your payroll tax account and verify remittances have been accurately posted to the correct account.
•Conduct an internal PIER audit to ensure accuracy of C/QPP, EI and QPIP deductions. If a shortage is discovered, remit the employee and employer portions and update the employee record accordingly. Note: An employer may deduct from future wages amounts remitted on an employee’s behalf to recover CPP/QPP, EI or QPIP shortages as long as the amount is deducted within 12 months of the original pay date when the shortage occurred, and the deduction recovered in a subsequent pay period does not exceed the amount that would have been deducted in one pay period.
•Make adjustments to final pay cheques, register and remittances if necessary.
•Validate social insurance numbers (SINs) if required.
•Make necessary adjustments for workers’ compensation awards reimbursed to the organization and ensure proper tax-slip reporting.
•Determine if any miscellaneous payments through accounts payable need to be entered in payroll.
•Review and complete the following for taxable benefits: Check for compliance, ensure the benefits are reported under the correct codes and enter final adjustments as necessary, such as company cars.
•Review reporting requirements for company pension plan: pension adjustment calculations, employee contributions and taxable benefit (employer RRSP contributions)
Conduct year-end procedures
•Choose the method of slip filing: T4 web forms, T4 desktop application, paper or electronic filing.
•Note the deadlines and penalties for non-compliance.
•Determine the last day to amend payroll records without penalty.
•Review internal procedures for cancelling or amending slips and summaries.
Perform provincial year-end reporting
•Compile a list of required provincial reporting and filing deadlines for: Quebec RL-1.S-V (RL-1 summary), workers’ compensation assessments and reporting, provincial health care and education levy/tax annual returns and Northwest Territories/Nunavut Payroll Tax annual return.
Prepare for 2012
•Carry forward accrual balances to 2012 for savings bonds, loan balances, garnishments, time owed and vacation accruals.
•Review 2012 schedule to determine if there are any conflicts in dates for processing payroll or paydays (statutory holidays): If bi-weekly and weekly payroll, determine if there are 27 and 53 pays, respectively, in 2012.
•Determine how the annual C/QPP pay period exemption be handled.
•Send a notice to all employees to file new TD1 forms (federal and provincial) and TP-1015.3-V (for Quebec) if their personal situations have changed.
•Send a notice to all commission employees to request a new TD1X/TP-1015.R.13.1-V by Jan. 31, 2012.
Janet Spence is the manager of compliance programs and services at the Canadian Payroll Association in Toronto. She can be reached at [email protected].
