Payroll year-end: a checklist for Canadian employers

Payroll year-end is a reconciliation dressed up as a filing deadline. The work is confirming that what you remitted equals what the slips say you withheld; after that, it is administration.

Work out your own date with the slip deadline calculator.

Related: A PIER report landed. Your payroll math is being questioned..

Step 1 — Reconcile remittances to the payroll register

Add up every remittance the corporation actually sent to its payroll (RP) account for the calendar year and compare it to the total of income tax, CPP and EI in your payroll records, employee and employer portions together. Differences usually come from a bonus run that was never remitted, a payment applied to the wrong program account, or a remittance posted to the wrong year. Sort these before the slips are produced, not after.

If you are not sure what should have been remitted in the first place, start with how the RP account and source deductions work.

Step 2 — Check the taxable benefits

Benefits are where clean payroll goes wrong. Employer-paid life insurance premiums, personal use of a company vehicle, gift cards, allowances and reimbursements that do not meet the CRA’s conditions all belong in employment income and should have had deductions taken through the year. Anything discovered in January has to be added to the slips and the shortfall remitted, which is precisely how PIER letters get generated.

Step 3 — Produce and check the slips

Check each employee’s social insurance number, legal name and province of employment, and set Box 28 for anyone exempt from CPP or EI. Anyone who turned 18 or 70 in the year needs their CPP status checked.

Step 4 — File by the deadline

T4, T4A, T4A-NR and T4PS returns are due the last day of February. If that is a weekend or CRA-recognized public holiday, the next business day is on time.

Two situations shift the date: if the business stops operating, the return is due within 30 days; if a partner or sole proprietor dies, within 90 days. T5018 returns are due six months after the reporting period ends; see T5018 subcontractor reporting.

Step 5 — File electronically if you have more than five slips

From 1 January 2024, more than five information returns of one type for a year must be filed electronically; the threshold used to be 50. Paper filing when electronic was required has its own penalty per return type.

What late filing costs

Each slip is a separate information return, and the penalty is based on how many were filed late. It is $100 or the amount from the CRA’s chart, whichever is more. A relieving administrative policy reduces the amount for small employers filing T4, T4A, T5 or T5018 slips:

The PIER review

Each year the CRA runs a pensionable and insurable earnings review, comparing the CPP and EI required on each employee’s earnings with what your T4 slips reported. Discrepancies appear on a PIER listing with the affected employees, any balance due and a remittance voucher.

The CRA names four common causes:

• Box 28 of the T4 slip not completed correctly.
• An employee’s change of age altering pensionable status — turning 18 or 70 — without the deductions being adjusted.
• A social insurance number or name entered incorrectly on the T4.
• An extra payment made during the year where the CPP pay-period exemption was applied more than once.

The timeline is fixed: an initial PIER package on day 1 requesting a reply within 30 calendar days; a notice of assessment on day 45 if you neither reply nor pay in full; and amended T4s issued to you on day 65. You do not need to respond if you agree with the calculation and will remit the exact amount shown by the deadline. You do need to respond if you disagree, returning the PIER with corrected information and an explanation.

The PIER is sent electronically if you are registered for My Business Account or Represent a Client, where it stays available for the last five years — another reason to have CRA online mail and notifications configured before February.

Step 6 — Provincial payroll obligations

Federal slips are not everything. BC employers may owe employer health tax (see the BC employer health tax guide), and employers with BC workers file a WorkSafeBC payroll report.

Check leavers too. Their T4 must reconcile to the ROE, and any retiring allowance goes in codes 66 and 67, not box 14. See final pay and the ROE on termination.

The bottom line

Reconcile first, fix benefits second, file by the end of February, and read the PIER when it arrives. Almost every payroll penalty a small employer pays traces back to skipping the first step.

This article is general information, current as of July 2026. It is not tax, legal or accounting advice and creates no client relationship. Rules change and situations differ, so speak with a CPA before acting on it.