DELTA BOOKKEEPING Bookkeeping & Payroll Services Your Business in Mind Posted December 15, 2011 Preparing and

filing year-end slips: This article provides an overview of the reporting changes being implemented for the 2011 tax year. T4 Boxes 24 & 26 Now Mandatory Starting the 2011 reporting year, the following boxes on the T4 slip must always be populated with an amount.

Box 24 Insurable earnings: Enter the total amount used to calculate the employees Employment Insurance (EI) premiums to the annual maximum insurable earnings ($44,200 for 2011). If there are no insurable earnings, enter 0 in Box 24. Box 26 Pensionable earnings: Enter the total amount of pensionable earnings used to calculate Canada Pension Plan (CPP) contributions, up to the annual maximum pensionable earnings ($48,300 for 2011). If there are no pensionable earnings, enter 0 in Box 26.

The CRA has implemented several enhancements to the Pensionable and Insurable Earnings Review (PIER) over the past couple of years. As a result of previously implemented changes by the CRA, 20,000 employers received 200,000 fewer PIER discrepancies. The new reporting requirements above are expected to further reduce the number of discrepancies sent to employers. T4 Slip Other information The other information section at the bottom of the T4 slip provides space for employers to enter codes and amounts that relate to other types of income, such as commissions and taxable benefits. The following additions and changes have been made for the 2011 reporting year.

Code 43 - Canadian Forces personnel and police deduction: The CRA has made a clarification on the reporting of income paid to Canadian Forces and police personnel who are deployed on moderate and high risk assignments. The amount paid must be included in the total income reported in Box 14 and reported in the other information section using Code 43. Code 87 Volunteer firefighter exempt payment: A new code has been added to report exempt amounts paid to volunteer firefighters. Exempt payments to volunteer firefighters (up to $1,000) must now be reported on the T4 slip using Code 87. Do not include this amount in Box 14.

The exemption applies if the individual only performed services as a volunteer. If the individual was employed (not a volunteer) to perform the same or similar duties, the whole amount paid is reported in Box 14, and Code 87 should not be used.

A non-refundable tax credit was introduced effective January 1, 2011, for volunteer firefighters who serve at least 200 hours per year. The tax credit 15 per cent of $3,000 may be claimed when volunteers file their income tax and benefit returns. However, they cannot claim this credit and receive exempt income for volunteer services; they must choose the credit or the income exemption. If they choose the exempt payment, this amount is reported in Box 87 of their T4 Slip, and they are not eligible for the federal tax credit. T4A Slip Redesign The T4A slip was redesigned for the 2010 tax reporting year, and Box 048 was added for reporting fees for services. The CRA is currently conducting a review of the types of payments that payers will be required to report in this box. While this reporting requirement may be expanded in the future, it currently applies only to the payers of independent or self-employed contractors, who should report any fees (excluding GST/HST) on the T4A using Box 048 RL-1 Slip Redesign Revenu Quebec will be introducing a redesigned RL-1 slip with four new boxes that will replace the requirement to include footnotes on the RL-1 slip. For example, the footnote, Repayment of salary or wages $_____, will be replaced with Code A-3 and an amount entered in the corresponding box. Revenu Quebec had originally intended for this new slip to be implemented for the 2011 reporting year. However, after consultation with stakeholders, including the CPA, this implementation has been postponed until 2012. This will allow service providers and system analysis sufficient time to program these changes into existing payroll software. Although Revenu Quebec will not require employers who file RL-1 slips electronically to use this new format for the 2011 tax year, it may be mandatory for small business employers who prepare RL-1 slips manually on paper, as paper slips from Revenu Quebec will be in the new format. The CPA strongly encourages members to use electronic filing methods to submit tax slips to Revenu Quebec. RL-1 Slip Reporting Change Box G Pensionable earnings: An amount must always be included in Box G of the RL-1 slip. In prior years, the amount reported was the total pensionable earnings, even if it exceeded the annual maximum. However, Revenu Quebec has now indicated that the amount reported in Box G should be the pensionable earnings up to the annual maximum pensionable earnings ($48,300 for 2011). RL-1 Slip New Footnotes Revenu Quebec has introduced two new footnotes that should be included on the RL-1 slip, if applicable:

Employee-paid medical premiums (similar to T4 Code 85): Amounts an employee has paid for medical and dental coverage will be reported using the

footnote, Contribution paid by the employee to a private health insurance plan $______. On the redesigned RL-1 slip, this is reported using Code 235 and an amount entered in the corresponding box. Security options cash election (similar to T4 Code 86): If an employee is allowed to choose cash payment when exercising stock options and the employer has chosen to forgo claiming and expense deduction in order to allow the employee to claim the 25 per cent stock deduction, the footnote, Securities option election $______, should be used. On the redesigned RL-1 slip, this is reported using Code L-8 and an amount entered in the corresponding box.

Reprinted from The Canadian Payroll Association; www.payroll.ca