Payroll year-end: a checklist for Canadian employers

Payroll year-end is a reconciliation exercise dressed up as a filing deadline. The slips are easy to produce; the work is confirming that what you remitted through the year equals what the slips say you withheld. Do that first and the rest is administration.

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

Confirm each employee’s social insurance number and legal name against your records, verify the province of employment, and make sure Box 28 exemption indicators are set correctly for anyone genuinely exempt from CPP or EI. Employees who turned 18 or 70 during the year need their pensionable status checked, because their CPP treatment changes mid-year.

Step 4 — File by the deadline

The filing due date for T4, T4A, T4A-NR and T4PS returns is the last day of February after the preceding calendar year. Where the due date falls on a Saturday, Sunday or public holiday recognised by the CRA, a return received or postmarked on the next business day is on time.

Two special situations shift the date. If the business stops operating, the return is due 30 days from that date. If a partner or sole proprietor dies, it is 90 days from that date. T5018 contract payment returns follow a different rule entirely — six months after the end of the reporting period — which is covered in T5018 subcontractor reporting.

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

For returns filed on or after 1 January 2024, you must file electronically if you have more than five information returns of the same type for a calendar year. The threshold used to be 50. Filing on paper when you were required to file electronically carries its own penalty, assessed per type of return.

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

Every year the CRA runs a pensionable and insurable earnings review comparing the CPP and EI amounts required, calculated from each employee’s pensionable and insurable earnings, against the amounts your T4 slips reported. Where the two do not match, the discrepancy is printed on a PIER listing showing the affected employees, a summary of 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 the whole picture. BC employers also have the employer health tax to consider, with its own return and thresholds — see the BC employer health tax guide. Employers with workers in BC have a WorkSafeBC payroll report as well.

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 for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique — please speak with a CPA before acting on anything here.