Whether you are a student, shareholder, employee or, employer chances are that you will receive T4, T4A and T5 payroll slips. Most of you must be familiar with these slips, however, students might not be fully aware of their purpose. So, let us clear one thing in the beginning that all of these three slips are used to complete your income tax return. All three slips are different. But their information should always be included in the tax software to complete your tax return.
So, what is the difference between these three slips?
T4 Slip:
The official name for this slip is the T4 Statement of Remuneration Paid. It means that if you were working somewhere, you will receive a T4 slip from your employer. The slip includes your salary earned in the year. It reports all sorts of income earned from the employer minus any deductions. If you have had multiple jobs throughout the year, you will receive a separate T4 slip from each employer.
The T4 slip includes your name, address and SIN number. Other than that, the year box shows the year in which you received the salary. Your employer name and details would be mentioned on the top. It is always recommended to consult a tax expert or hire professional income tax services before filing your income taxes. Otherwise, you should always keep a check of the following boxes in the T4 slip.
• Box 14: Highlights the income earned in the year from the specific employer
• Box 16: Shows the amount contributed to the Canada Pension Plan
• Box 18: Shows the yearly Employment Insurance (EI) premium that was deducted from your pay and remitted to the CRA
• Box 22: Highlights the amount of income tax deducted from your pay for the year
• Box 44: If you are part of a union, it shows the deducted union dues paid
• Box 46: Shows any donations or charities paid
T4 A Slip:
The T4 A slip reports all sorts of income earned from the self-employed commission, pensions, scholarships or other income. It looks quite similar to the T4 slip but is usually issued when the payment made is above $500. If you are a student receiving a scholarship fund, you are most likely to receive this slip. It will report the income you have received while you were enrolled in the institution. The slip will mention your name, address and other details along with the payer’s details.
The important things to note in your T4 A slip are as follow
• Box 20: Shows the self-employed commission earned during the year
• Box 22: Highlights the amount of yearly taxes deducted from your pay and remitted to the CRA
• Box 105: Highlights any scholarships, fellowships or study grants received by students from their respective institutions
T5 Slip:
The T5 slip is issued to the residents of Canada on their various types of investments. It reports the investment income, interest income or dividend income earned by the Canadians. It means that all business people have to report their investment income in the T5 slip to complete their income tax returns.
Most business owners do not have time to report all of their personal and corporate incomes. Therefore, hiring a tax expert or corporate tax services to manage all of your taxes is a need of the time. This will save you from the stress of filing taxes.
If you are personally preparing for your taxes, you should note these important boxes in your T5 slip.
• Box 10/24: This shows the dividend received from the company. Box number varies depending upon the company you are receiving the amount from.
• Box 11/25: Highlights the taxable amount of your dividends earned
• Box 13: Highlights the interest income you may have received from the Canadian Banks
• Box 27: Mentions the currency in which all the T5 slip income was received. It should always be converted to the national currency, Canadian Dollars.
All the three T4, T4 A and T5 slips represent the income you have earned in a year as an employee, through commission, interest or a scholarship fund. All slips are compulsory to include to completely file your tax return. In case you forget to attach any of these slips, the CRA will know it already. The CRA has a copy of these slips to cross-reference it with your tax return. Thus, you should always prepare and complete your taxes professionally.