If you are involved in processing payroll, the ending of the calendar year will usually cause anxiety over one thing – T4′s! Not only is it imperative that all information on the T4 be accurate, one must also ensure payroll record amounts match those filed with the CRA. In addition, it would be wise to follow up with staff to ensure all personal information including name and address changes which may have occurred over the year are properly reflected on the T4 forms. The staff at Five Star Accounting can help you with the task of preparing T4s should you require it.
There is, however, one new number those preparing T4′s will have to be aware of. Effective January 1, 2013, the CRA announced that the EMPLOYER PAID PORTION of premiums for Critical Illness and AD&D will be classified as a taxable benefit. What this means is that all premiums paid by your employer for Critical Illness and AD&D Insurance for those employees with such coverage, will have to be reported in Boxes 14 and 40 on the T4.
One thing to note, however, is that it is important to know what kind of plan your business participates in. You should contact your insurance provider to get clarification on whether your type of insurance is considered a “periodic basis wage loss replacement plan” (WLRP). If certain conditions are met with your plan, the employer paid portion of premiums may not be considered a taxable benefit to employees. Therefore, you do need to be familiar with your type of plan.
If you do not have a WLRP, hopefully your insurance provider has separated the AD&D/Critical Illness costs. You should be able to identify the employer versus employee portion of these monthly insurance premium remittances for all staff affected. For those employees getting a T4 and wondering what box 40 represents, see your payroll department for an explanation. And, if you know your employer pays these premiums on your behalf but do not see any amount in box 40, you should also see your payroll department. A simple oversight at their end will not exempt you from having to possibly amend your tax return to include such amounts.
For more detailed information, please see the following CRA websites:
http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-13e.pdf page 22, Group Sickness/Accident Plans
http://www.cra-arc.gc.ca/E/pub/tg/t4001/t4001-12e.pdf page 36, Wage Loss Replacement Plans