Canadian T4 Slip Explained: Every Box, Taxable Benefits, Tips, Rewards, CPP and EI

This guide explains the identification fields, the main numbered boxes and the lower “Other information” codes. It also explains how benefits, gifts, rewards, tips and other compensation may be treated for income tax, CPP/QPP and EI. These are separate tests: a payment can be taxable without being EI-insurable. The guide is for Canadian payroll; Quebec has additional rules.

1. What is a T4 slip?

A T4, Statement of Remuneration Paid, is issued by an employer to report remuneration paid to an employee during a calendar year. The key word is paid: an amount earned in December but paid in January is generally reported on the T4 for the year in which it was paid. A T4 may include salary, wages, overtime, bonuses, commissions, vacation pay, retroactive pay, pay in lieu of notice, controlled tips, taxable benefits and certain retiring allowances.

Employers generally provide T4 slips by the end of February following the calendar year and file the information with the CRA. A T4 is generally required when the employer deducted CPP/QPP, EI, PPIP premiums or income tax, or where remuneration exceeds the CRA reporting threshold. Taxable group term life insurance for a current employee has a special rule and can require a T4 even when remuneration is $500 or less.

A T4 is different from a T4A. A T4 usually reports employment income paid by an employer to an employee. A T4A is commonly used for certain pension, retirement, annuity, scholarship, self-employed or other income payments. The correct slip depends on the legal relationship and the type of payment, not merely the label used by the payer.

2. Understand the top section

Tax year: Shows the calendar year in which the employer paid the amounts. A T4 marked 2026 reports amounts paid from January 1 to December 31, 2026.

Employer name and address: Identifies the employer’s legal or operating name and address. Employee name and address: Identifies the person whose remuneration is reported. Check spelling and address details and ask for a correction if something important is wrong.

Box 10 – Province of employment: Shows the province or territory used for payroll reporting. It is not necessarily the province where the employer’s head office is located or where the employee lives. For example, an employee working in Ontario for a company headquartered in Alberta may have ON in Box 10, depending on the province-of-employment rules. If an employee works in more than one province or territory, separate T4 slips may be required.

Box 12 – Social Insurance Number (SIN): Shows the employee’s SIN. Review it carefully. An incorrect SIN can cause matching and payroll-record problems. Employers should protect this information and employees should avoid sending an unprotected copy of their T4.

3. Explanation of the numbered T4 boxes

Box 14 – Employment income: This is generally the employee’s total employment income before payroll deductions. It is not take-home pay. It normally includes salary, wages, overtime, bonuses, commissions, vacation pay, retroactive pay, pay in lieu of notice, controlled tips, and taxable employment benefits or allowances. Certain special amounts, such as eligible and non-eligible retiring allowances, are reported separately in the Other information section rather than Box 14. The employee generally reports Box 14 on line 10100 of the T1 income tax return.

Box 16 – Employee’s CPP contributions: Shows the employee’s CPP contributions deducted by the employer for employment outside Quebec. It is the employee’s contribution only, not the employer’s matching contribution. The employee uses this amount when calculating the CPP contribution credit and any applicable deduction on the tax return.

Box 16A – Employee’s second CPP contributions (CPP2): Used for CPP2 contributions deducted on pensionable earnings above the first CPP earnings ceiling, up to the second ceiling. This box applies for 2024 and later years where CPP2 applies. Provinces outside Quebec generally use Box 16A; Quebec uses Box 17A for QPP2.

Box 17 – Employee’s QPP contributions: Shows the employee’s Quebec Pension Plan contributions where the province of employment is Quebec. It is the Quebec counterpart to Box 16.

Box 17A – Employee’s second QPP contributions (QPP2): Shows second additional QPP contributions deducted in Quebec on earnings above the first QPP ceiling, up to the applicable second ceiling.

Box 18 – Employee’s EI premiums: Shows the EI premiums deducted from the employee’s insurable earnings. It does not show the employer’s EI contribution. EI premiums are subject to an annual maximum, so employees who change jobs during the year may sometimes have excess deductions that are reconciled through their tax return.

Box 20 – Registered pension plan (RPP) contributions: Shows the employee contributions deducted for a registered pension plan. These contributions are generally deductible on line 20700, subject to the applicable rules. Box 20 is not the employer’s pension contribution. Do not confuse it with Box 52, which is the pension adjustment.

Box 22 – Income tax deducted: Shows the federal and provincial or territorial income tax withheld by the employer during the year. It is a tax prepayment, not the employee’s final tax liability. The final refund or balance due is calculated after the full tax return is prepared.

Box 24 – EI insurable earnings: Shows the amount of earnings used to calculate EI premiums, subject to the annual maximum and applicable rules. Box 24 can be lower than Box 14 because some taxable non-cash benefits are not EI-insurable. It may also differ because of annual maximums, changes in employment or other special payroll situations.

Box 26 – CPP/QPP pensionable earnings: Shows the amount of earnings used to calculate CPP or QPP contributions, including the applicable additional pensionable earnings for CPP2/QPP2 where relevant. It is often the same as Box 14, but not always. For example, a taxable non-cash benefit can be included in Box 14 and Box 26 even though it is not included in Box 24.

Box 28 – Exempt (CPP/QPP, EI and PPIP): Check marks in this area indicate that the employee was exempt from one or more of these contributions or premiums for the full reporting period. The CPP/QPP, EI and PPIP sections are separate. An X in one section does not mean the employee was exempt from all payroll deductions. This box is usually blank where the related earnings or contributions are reported.

Box 29 – Employment code: Used only for certain special employment situations. Common codes include 11 for certain placement or employment agency workers; 12 for self-employed taxi or other passenger-carrying vehicle drivers; 13 for self-employed barbers or hairdressers working in an establishment; 14 for a prescribed salary deferral arrangement withdrawal; 15 for certain Seasonal Agricultural Workers Program employment; 16 for a detached employee under a social security agreement; and 17 for self-employed fishing income. These are specialized categories, not codes that most regular employees need to interpret. Some codes require related income to be reported outside Box 14.

Box 44 – Union dues: Shows eligible union dues deducted by the employer. Employees generally claim eligible amounts on line 21200. The amount should reflect dues qualifying for the deduction; special reporting rules can apply where employment income is tax-exempt.

Box 45 – Employer-offered dental benefits: This is an information code about whether the employee or eligible family members had access to dental insurance or dental-services coverage offered through the employer on December 31. It is not the dollar value of dental treatment, premiums or claims. The codes generally mean: 1 – no access; 2 – employee only; 3 – employee, spouse and dependent children; 4 – employee and spouse; 5 – employee and dependent children. It reports access to coverage, not whether the employee actually used it.

Box 46 – Charitable donations: Shows qualifying charitable donations deducted from the employee’s pay and remitted by the employer. The employee may be able to claim the amount as a charitable donation tax credit, usually on Schedule 9 and line 34900, subject to the normal rules. Keep donation receipts and check that the amount is not claimed twice.

Box 50 – RPP or deferred profit sharing plan (DPSP) registration number: Identifies the registered pension plan or deferred profit sharing plan associated with the employee’s pension information. It is a plan identifier, not a contribution amount.

Box 52 – Pension adjustment (PA): Reports the value of pension benefits accrued by the employee under an RPP or DPSP for the year. It is not additional salary, a tax deduction or the employee’s contribution. The PA generally reduces the employee’s RRSP contribution room for a future year. The CRA normally reflects the resulting RRSP deduction limit in the employee’s Notice of Assessment or CRA account.

Box 54 – Employer’s account number: This is the employer’s 15-character payroll program account number. It is used on the employer’s and CRA’s copies. The CRA instructs employers not to show this account number on employee copies, so an employee may not see Box 54 populated.

Box 55 – Employee’s PPIP premiums: Applies to employees subject to Quebec’s Provincial Parental Insurance Plan (PPIP). It shows the employee premiums deducted.

Box 56 – PPIP insurable earnings: Applies to employees working in Quebec. It shows the earnings used to calculate PPIP premiums, subject to the annual maximum and reporting rules. It is not a normal box for an Ontario-only employee.

Not every T4 will contain every box. A blank box is often normal. For example, an employee working only in Ontario will usually have CPP boxes rather than QPP and PPIP boxes. An employee with no registered pension plan may have no Box 20, Box 50 or Box 52 amount.

4. The “Other information” section at the bottom

The lower section is titled “Other information.” Its small boxes are not pre-numbered. The employer enters a CRA code and the related amount in each available space. These codes provide detail about a particular type of benefit, allowance, deduction or special income. A slip can have up to six entries in this section. If more than six codes apply, the employer uses an additional T4 slip and reports each code only once.

Important: many Other information amounts are already included in Box 14. They are repeated as a coded breakdown, not extra income to add again. Do not add Code 30, 34, 36, 38, 40 or 42 to Box 14 a second time when preparing a tax return.

Code 30 – Board and lodging: Used when the employer provides free or subsidized housing, meals or lodging and the benefit is taxable. The amount is also included in Box 14. Whether housing or meals are taxable depends on the circumstances and the applicable remote-work or special-work-site rules.

Code 31 – Special work site: Identifies qualifying board and lodging at a special work site where the employer has completed the required declaration and the conditions are met. This amount is not included in Box 14. Do not treat it as ordinary taxable accommodation without reviewing the special-work-site rules.

Code 32 – Travel in a prescribed zone: Reports qualifying travel assistance provided to an employee living in a prescribed zone. The amount is also included in Box 14.

Code 33 – Medical travel assistance: Identifies the medical-travel portion of the travel assistance reported under Code 32. It helps an eligible northern resident calculate the appropriate deduction. It is not an additional amount to add to Box 14.

Code 34 – Personal use of employer’s automobile or motor vehicle: Reports the taxable benefit for personal use of an employer-provided vehicle, including the applicable standby charge and operating-expense benefit. It is also included in Box 14. This non-cash benefit is generally CPP-pensionable but not EI-insurable.

Code 36 – Interest-free or low-interest loans: Reports the taxable benefit arising from an employer loan with no interest or interest below the prescribed rate, including certain home-purchase or relocation loans. It is also included in Box 14. Special rules can reduce or eliminate the benefit in particular circumstances.

Code 38 – Security options benefits: Reports the taxable benefit arising from employee security options, such as qualifying stock options, and is included in Box 14. The security-options deduction, if available, is shown separately under Code 39 or Code 41. This is a specialized area; treatment can depend on the employer’s status, the option agreement, the exercise date and the legislation.

Code 39 – Security options deduction under paragraph 110(1)(d): Reports the eligible deduction amount for qualifying security options. It is not included in Box 14. The employee generally uses it when completing the security-options deduction section of the tax return.

Code 40 – Other taxable allowances and benefits: The general code for taxable employment benefits or allowances that do not have a more specific code. Examples can include taxable group-term life insurance premiums, certain employer-paid personal expenses, taxable cash allowances, taxable non-cash rewards or taxable loyalty-program benefits. The amount is also included in Box 14.

Code 41 – Security options deduction under paragraph 110(1)(d.1): Reports another type of eligible security-options deduction. It is not included in Box 14. If Code 41 is used, the related total taxable security-options benefit is reported under Code 38.

Code 42 – Employment commissions: Reports commissions paid to an employee who sells property or negotiates contracts for the employer. The amount is included in Box 14. Employees generally report commission income as part of employment income.

Code 43 – Canadian Armed Forces personnel and police deduction: Identifies qualifying employment income earned on certain international operational missions by eligible Canadian Armed Forces personnel or police officers. The amount is included in Box 14 and assists with the related deduction calculation. It does not apply to ordinary employment income.

Codes 57, 58, 59 and 60 – Historical COVID-19 reporting: These codes identified employment income paid during specified periods in 2020 for pandemic-era government benefit administration. They are not normal current-year T4 income codes and should not be expected on an ordinary 2026 T4.

Code 66 – Eligible retiring allowance: Reports the portion of a retiring allowance that may qualify for a direct transfer to an eligible registered pension plan, RRSP or other permitted plan under the special retiring-allowance rules. It is not included in Box 14.

Code 67 – Non-eligible retiring allowance: Reports the portion of a retiring allowance that does not qualify for the special direct-transfer treatment. It is not included in Box 14. Retiring allowances are generally reported as income on the tax return separately from regular employment income.

Code 69 – Indian Act exempt non-eligible retiring allowance: A specialized code for the tax-exempt portion of a non-eligible retiring allowance paid to an employee whose income qualifies for exemption under the Indian Act. It is not included in Box 14.

Code 71 – Indian Act exempt employment income: Reports employment income that is exempt from income tax under the Indian Act. It is not included in Box 14. Special rules determine whether employment income qualifies for the exemption. This is not a general-purpose tax-free income code.

Codes 74 and 75 – Past-service RPP contributions for 1989 or earlier: These specialized codes identify employee contributions for past service in a registered pension plan relating to 1989 or earlier. The amount is also reflected in Box 20. Code 74 applies where the employee was a contributor during the relevant period; Code 75 applies where the employee was not a contributor.

Code 77 – Workers’ compensation benefits repaid to the employer: Reports qualifying workers’ compensation benefits that the employee repaid to the employer. It is not included in Box 14. The employee may be able to claim the related deduction on line 22900, subject to the rules.

Codes 78, 79 and 80 – Fishing income: These codes relate to special reporting for self-employed fishers: Code 78 is gross fishing income, Code 79 is the net partnership amount, and Code 80 is the shareperson amount. These amounts are not Box 14 salary. They are used in applicable business or fishing-income reporting, generally with the relevant employment code and Form T2121.

Code 81 – Placement or employment agency worker gross income: Reports gross income paid to a qualifying self-employed placement or employment agency worker. It is not included in Box 14. Box 29 should generally show employment code 11 where this reporting applies.

Code 82 – Taxi drivers and drivers of other passenger-carrying vehicles: Reports gross income paid to a qualifying self-employed driver. It is not included in Box 14. Box 29 generally shows code 12, and the recipient uses the information in business-income reporting.

Code 83 – Barbers or hairdressers: Reports gross income paid to a qualifying self-employed barber or hairdresser working in an establishment. It is not included in Box 14. Box 29 generally shows code 13.

Code 85 – Employee-paid premiums for a private health services plan (PHSP): Shows eligible premiums paid by the employee toward a PHSP. It is not included in Box 14. This code is optional in certain reporting situations and can help the employee identify eligible medical expenses.

Code 87 – Emergency services volunteer exempt amount: Identifies the qualifying tax-exempt amount, up to the permitted limit, paid by a government, municipality or public authority to an eligible volunteer firefighter or search-and-rescue volunteer. It is not included in Box 14 where the exemption applies. The employee may need the amount when claiming the applicable volunteer-related tax credit or deduction.

Code 88 – Indian Act exempt self-employment income: Identifies qualifying self-employment income exempt under the Indian Act for certain fishers, taxi or passenger-vehicle drivers, and barbers or hairdressers. It is not included in Box 14 and is used with the related special employment code.

Codes 90, 91 and 92 – Transitional security-options codes: These codes were permitted under CRA administrative policy for certain 2024 and 2025 security-options reporting. For 2026 and later calendar years, employers must use Codes 38, 39 and 41 instead. Do not assume Codes 90–92 are valid for a 2026 T4.

Code 94 – Indian Act exempt RPP contributions: Reports qualifying registered pension plan contributions related to Indian Act tax-exempt employment income. It is not included in Box 14 and is a specialized First Nations payroll-reporting code.

Code 95 – Indian Act exempt union dues: Reports qualifying union dues relating to Indian Act tax-exempt employment income. It is not included in Box 14. Union dues relating to fully taxable employment income are generally reported in Box 44 instead.

Code 96 – Eligible personal support worker (PSW) income: A new code for 2026 through 2030 that certifies eligible earnings of a qualifying personal support worker employed by an eligible health-care establishment. The amount is included in Box 14, or under Code 71 where it is tax-exempt, or may appear in both where income is partly tax-exempt. It supports the personal support worker tax credit. For electronic filing, CRA says not to use Code 96 before January 11, 2027.

Some older T4s or special forms may show other legacy entries, such as Code 35 for reasonable per-kilometre allowances or older stock-option codes. Code 35 is only valid for taxation years 2000 and earlier. Always use the CRA code list for the particular tax year rather than assuming every code on an old sample applies to a current T4.

5. Which benefits and compensation are included in a T4?

A payment or benefit provided because of employment may be taxable even if the employee did not receive cash. The employer must determine whether the item is taxable, whether it is pensionable for CPP/QPP, whether it is insurable for EI, and where it belongs on the T4. These are separate tests. A taxable benefit is not automatically subject to both CPP and EI.

Salary, wages, overtime, bonuses and commissions: Generally taxable, CPP-pensionable and EI-insurable when paid in insurable employment. Report in Box 14. Commissions may also be identified by Code 42. The associated earnings generally feed into Box 24 and Box 26, subject to annual maximums and special rules.

Cash bonuses, cash rewards and cash gifts: Generally taxable and subject to income-tax withholding, CPP/QPP and EI where the employment is pensionable and insurable. Report in Box 14 and usually Code 40 for taxable allowances or benefits; include in Box 24 and Box 26 where applicable. A performance reward is generally taxable even if the employer calls it a gift or recognition award.

Non-cash gifts and awards: Certain non-cash gifts for a special occasion and certain non-cash awards recognizing an employee’s overall contribution may qualify for the CRA administrative policy. If all conditions are met, up to $500 in eligible non-cash gifts and awards per year may be non-taxable. A qualifying non-cash long-service award has a separate $500 limit and generally must be given at least five years after the previous long-service award. Small items of nominal value, such as a logo mug or plaque, may be excluded from the limit. The policy does not apply to cash or near-cash gifts, and it does not shelter performance-related rewards.

If part of a non-cash gift or award is taxable, the taxable portion is generally included in Box 14, Box 26 and Code 40, but not Box 24 because a non-cash benefit is generally not EI-insurable. For example, if eligible non-cash gifts total $700 and the full amount meets the policy conditions, the taxable portion is generally $200 after the $500 limit.

Gift cards and prepaid cards: Do not assume every gift card is tax-free. Cards that can be converted to cash or used broadly may be near-cash and taxable. CRA administrative rules can treat certain cards restricted to a specific retailer or group of retailers as non-cash if the conditions and record-keeping requirements are met. The card’s terms, restrictions and documentation matter.

Employer-paid group term life insurance: The taxable value of employer-paid group term life insurance coverage is generally a taxable employment benefit. For a current employee it is commonly reported in Box 14 and Code 40. It is generally CPP-pensionable but not EI-insurable. This benefit can require a T4 even where total remuneration is $500 or less.

Employer-paid health and dental coverage: Employer contributions to a qualifying private health services plan are generally not a taxable benefit for employees outside Quebec. Quebec may have different provincial tax treatment. Box 45 is an access-to-dental-coverage indicator; it is not a report of the dollar value of the health or dental plan. Employee-paid qualifying PHSP premiums may appear under Code 85.

Company car or employer vehicle: Personal use of an employer-provided vehicle can create a taxable standby charge and/or operating-expense benefit. Report the benefit in Box 14 and Code 34; it is generally CPP-pensionable but not EI-insurable. Business-only use supported by adequate records is treated differently from personal use.

Car allowance or mileage reimbursement: A reasonable per-kilometre allowance for employment-related travel, calculated using CRA’s prescribed rates and supported by business kilometres, can generally be non-taxable. A flat monthly allowance or an unreasonable or excessive allowance is generally taxable. A taxable cash allowance is normally reported in Box 14 and Code 40 and is generally subject to both CPP and EI. A reimbursement of actual business expenses, supported by receipts and meeting the rules, is generally not employment income.

Interest-free or low-interest employee loans: An employee may have a taxable interest benefit when the employer lends money at no interest or below the prescribed rate. Report the amount in Box 14 and Code 36. CPP treatment generally applies; EI treatment depends on the benefit classification and CRA rules.

Employer-paid personal expenses, parking, memberships and subscriptions: If the employer pays a personal expense for the employee, the payment may be a taxable benefit. Examples can include personal parking, club dues, personal-use subscriptions or certain personal expenses. The taxable amount is generally reported in Box 14 and Code 40. The exact result depends on the nature of the expense and whether it primarily benefits the employer.

Meals, board and lodging: Free or subsidized meals and accommodation may be taxable unless an exception applies, such as qualifying overtime meal conditions, remote-work or special-work-site rules, or other CRA exceptions. Taxable board and lodging is generally reported in Box 14 and Code 30. Qualifying special-work-site amounts may instead be reported under Code 31 and excluded from Box 14.

Tuition and professional training: Employer-paid courses or training that primarily benefit the employer and maintain or improve employment-related skills are often non-taxable. Payments for an employee’s personal education or certain family members’ education may be taxable. Review the purpose and arrangement before deciding whether to include the amount on the T4.

Travel and accommodation: Reasonable business travel reimbursements supported by records are generally not taxable. A personal vacation, personal travel benefit or payment of an employee’s personal travel costs may be taxable. Prescribed-zone travel and medical travel have special reporting codes, including Codes 32 and 33.

Loyalty points, air miles and reward programs: Where the employer collects or controls points earned on employer-reimbursed business expenses, the employee may have a taxable benefit when the points are redeemed. A taxable non-cash or near-cash benefit is generally reported in Box 14, Box 26 and Code 40, but not Box 24. Cash rewards are generally also included in Box 24. Under CRA administrative policy, points personally collected by the employee may be non-taxable when the points are not controlled by the employer, are not converted to cash, and the arrangement is not an alternative form of remuneration or a tax-avoidance arrangement.

Stock options: Employee stock-option benefits can be taxable when the employee exercises or otherwise realizes the benefit, depending on the option and employer. The taxable benefit is generally reported in Box 14 and Code 38. An eligible deduction may be shown under Code 39 or 41. The reporting and deduction rules are technical and have changed for certain years, so employees should review the stock-option agreement and current CRA guidance.

Termination pay and severance: Salary continuance, pay in lieu of notice and certain wage-loss payments may be regular employment income included in Box 14. A retiring allowance, which can include qualifying severance, is generally reported separately under Code 66 for the eligible portion and Code 67 for the non-eligible portion. These categories have different CPP/EI and withholding rules; do not treat every severance payment the same way.

6. Tips and gratuities: controlled tips versus direct tips

Tips are taxable income to the employee, but the T4 and payroll treatment depends on who controls the tips. This distinction is important in restaurants, hospitality, salons, transportation and other service businesses.

Controlled tips: Tips are controlled when the employer possesses or controls them and then pays them to employees. Examples include a mandatory service charge added to the bill, an employer-run tip pool or allocation formula, tips turned over to the employer for redistribution, or tips deposited into the employer’s account and then paid out. Controlled tips are generally included in Box 14, Box 24 and Box 26. The employer generally withholds income tax, CPP and EI.

Direct tips: Tips are direct when customers pay the employee and the employer has no control over the amount or distribution. Examples include cash left on a table and kept by the server, or tips shared under an arrangement decided by the employees rather than the employer. Direct tips are not reported on the employer’s T4 and the employer does not withhold income tax, CPP or EI on them. The employee must still report direct tips on line 10400. An employee may elect to make CPP contributions on eligible direct tips by filing Form CPT20. Quebec has a separate declared-tips system for regulated hospitality employees.

Example: An Ontario server receives $40,000 salary, $3,000 in employer-controlled tips and $2,000 in direct tips. Assuming all salary and controlled tips are ordinary insurable and pensionable earnings and no special limits change the result, Box 14 includes $43,000, Box 24 includes $43,000 and Box 26 includes $43,000. The $2,000 direct tips do not appear on the T4; the employee reports them separately on line 10400.

7. Worked example: salary, commission and benefits

Assume an Ontario employee receives $60,000 salary, a $5,000 cash bonus, $2,000 employment commission, $3,000 controlled tips and a $1,000 taxable non-cash company-car benefit. Assume all amounts relate to the same employment and no special exemption applies.

• Box 14 – $71,000: $60,000 salary + $5,000 bonus + $2,000 commission + $3,000 controlled tips + $1,000 taxable car benefit.

• Code 42 – $2,000: identifies the commission already included in Box 14.

• Code 34 – $1,000: identifies the personal-use vehicle benefit already included in Box 14.

• Box 24 – $68,900 for 2026: the cash remuneration and controlled tips are assumed EI-insurable, but the 2026 EI insurable earnings ceiling caps the reported amount at $68,900. The $1,000 non-cash company-car benefit is generally not EI-insurable. For another tax year, use that year’s EI maximum.

• Box 26 – generally $71,000: the salary, bonus, commission, controlled tips and taxable vehicle benefit are assumed CPP-pensionable, subject to annual pensionable earnings limits and CPP2 rules.

• Box 16 and possibly Box 16A: show the employee’s actual CPP and CPP2 contributions deducted, not the employer’s share.

• Box 18: shows the actual EI premiums deducted on insurable earnings, subject to the annual maximum.

• Box 22: shows income tax withheld from payroll.

This example demonstrates why Box 14, Box 24 and Box 26 can differ. A taxable benefit can increase Box 14 and Box 26 without increasing Box 24. Actual payroll calculations must apply the rules for each payment type, annual maximums, exemptions and the employee’s circumstances.

8. Taxable, CPP-pensionable and EI-insurable are three different questions

When reviewing compensation, do not ask only whether it is taxable. Ask three questions separately: (1) Is it employment income for income-tax purposes? (2) Is it pensionable for CPP/QPP? (3) Is it insurable for EI? The answer can be yes to all three, yes to income tax and CPP but no to EI, or another combination under a specific rule.

A common pattern is that cash remuneration such as salary, cash bonuses, cash allowances and controlled tips is generally taxable, pensionable and insurable in ordinary employment. A taxable non-cash benefit such as personal use of a company car or employer-paid group life insurance is often taxable and CPP-pensionable but not EI-insurable. Direct tips are taxable to the employee but are not included on the employer’s T4 and are not subject to source CPP or EI deductions. Always check the specific CRA benefit rule.

The employer’s payroll records should preserve the nature of each payment, supporting documents, business purpose, dates, valuation and the reason for its tax, CPP and EI treatment. A label such as gift, reimbursement, allowance, points or bonus does not decide the tax result by itself.

9. Common T4 mistakes employees should watch for

1. Treating Box 14 as take-home pay. Box 14 is generally employment income before source deductions, not the amount deposited in the bank.

2. Adding Code 40 or another benefit code to Box 14 again. Many lower codes simply identify amounts already included in Box 14.

3. Assuming Box 24 and Box 26 must equal Box 14. Some taxable benefits are CPP-pensionable but not EI-insurable, and annual maximums can also cause differences.

4. Assuming every gift card or reward is tax-free. Cash, near-cash and performance-related rewards are generally taxable. Only qualifying non-cash gifts and awards may benefit from CRA’s administrative policy.

5. Assuming tips do not need to be reported if they are missing from the T4. Direct tips are usually not on the T4, but the employee still reports them on line 10400.

6. Confusing Box 45 with the value of dental coverage. Box 45 reports access to employer-offered dental coverage, not the amount of premiums paid or claims received.

7. Confusing Box 52 with a tax deduction. Box 52 is a pension adjustment that affects future RRSP room; it is not the employee’s RPP contribution.

8. Ignoring a missing or incorrect slip. If employment income, a benefit or deductions are wrong, contact the employer and request an amended T4. Do not simply change the amount yourself without keeping supporting records.

10. What should you do when you receive your T4?

Compare Box 14 with your year-end payroll summary and pay statements. Check your SIN, name, province of employment, CPP/QPP contributions, EI premiums and income tax deducted. Review Box 20, Box 44, Box 45, Box 46 and Box 52 where applicable. Read every code in the Other information section and determine whether it is already included in Box 14 or is a separate item. Compare the slip with your own records for bonuses, commissions, controlled tips, company-car benefits, taxable insurance premiums, awards and allowances.

If you changed employers during the year, you may receive more than one T4. Add the applicable income amounts across the slips when preparing your return, while taking care not to duplicate information codes. If you have direct tips or other income not reported on a T4, report those separately on the correct tax-return line.

11. Official CRA references

For the most current rules and year-specific reporting instructions, consult the CRA publications below. Payroll treatment can change and a benefit can have exceptions based on the facts.

• T4 slip – Information for employers: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/completing-filing-information-returns/t4-information-employers/t4-slip.html

• T4 slip – Statement of Remuneration Paid (employee guide): https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/tax-slips/understand-your-tax-slips/t4-slips/t4-statement-remuneration-paid.html

• Employers’ Guide – Filing the T4 Slip and Summary (RC4120): https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4120/employers-guide-filing-t4-slip-summary.html

• Employers’ Guide – Taxable Benefits and Allowances (T4130): https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4130/employers-guide-taxable-benefits-allowances.html

• CRA benefits and allowances chart: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/benefits-allowances-chart.html

• CRA tips received by employees: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/calculating-deductions/determining-tax-treatment/tips.html

• CRA tips and gratuities – CPP and EI treatment: https://www.canada.ca/en/revenue-agency/services/tax/canada-pension-plan-cpp-employment-insurance-ei-rulings/cpp-ei-explained/tips-gratuities.html

• CRA gifts, awards and long-service awards: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/gifts-awards-social-events/gifts-awards-long-service-awards.html

• CRA loyalty or other points programs: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/loyalty-points-programs.html

Final takeaway

A T4 is more than a salary summary. It reports employment remuneration, source deductions, pensionable and insurable earnings, pension information and specific benefits or special amounts. Box 14 is the starting point, Boxes 24 and 26 explain different payroll earnings bases, and the Other information codes provide essential detail. The most important payroll principle is to classify each payment correctly for income tax, CPP/QPP and EI rather than assuming that every taxable amount is treated the same way.

This article is general information for Canadian employees and employers and is not a substitute for advice on a specific payroll arrangement. For unusual benefits, Quebec employment, stock options, First Nations tax exemptions, retiring allowances or special work-site arrangements, review the current CRA guidance or obtain professional advice.