By March 2, 2015
If you paid salary, employment commissions or employee benefits from January 1 to December 31, 2014, you must complete and file:
- T4 Summary and Supplementary reporting forms provided to you by the federal government.
- Retiring allowances, including termination and severance pay, must be reported on T4s. Note that amounts eligible for transfer to an RRSP are reported separately on this form from those that are ineligible for such transfers.
By March 16, 2015
Employers must complete and file the Ontario Employers' Health Tax Annual Return. You should receive this return from the government in January 2015.
Employers are exempt from Ontario Employers' Health Tax on the first $450,000 of Ontario payroll. This exemption must be shared among associated employers. This exemption is eliminated for private sector employers with annual Ontario payrolls over $5 million.
Employers are required to complete and file Ontario Workers' Compensation Returns on the dates indicated on their particular forms.
In preparing the T4s for your employees, you must calculate and report the value of all employee benefits in addition to reporting actual salary or wages.
See the latest version of the "Employers' Guide - Taxable Benefits and Allowances", available on the CRA website for a detailed listing of benefits.
Ensure that all employee benefits that are taxable supplies (other than special-rated employer-paid automobile operating expenses, exempt supplies or zero-rated supplies) are grossed up for the effect of the Harmonized Sales Tax (HST).
See Appendix I to help you calculate complex GST/HST-included automobile benefits and employee loan interest benefits.
On each employee's T4, you must report contributions to Registered Pension Plans in 2014 and his/her pension adjustment (PA) figure for the year. Your plan administrator can assist you in determining your employees' PA figures, the calculation of which is quite complex for defined benefit plans.
T4 forms are available at our office and we can assist you in their preparation.
By March 2, 2015
You must complete and file a T5 Summary and Supplementary reporting form if you:
- paid or owed accrued interest (generally, from inception to each anniversary day);
- paid dividends (including eligible and non-eligible dividends, and certain deemed dividends); or
- paid royalties.
Please note that exceptions to this rule include:
- interest paid by one individual to another, such as interest paid on private mortgages;
- interest paid on loans from banks or other financial institutions;
- interest paid or credited to nonresidents of Canada (which must be reported on separate NR forms);
- capital dividends paid to Canadian residents by corporations; and
- total amounts paid for the year if they are $50 or less per recipient.
If you file more than fifty T4 slips or fifty T5 slips for a calendar year, you must file the information returns over the internet.
T5 forms are available at our office, and we can assist you in their preparation.
Be sure to use current versions of T4 and T5 Summaries and Supplementaries to accommodate government scanning requirements.
By March 31, 2015
If you are the trustee of an inter-vivos trust or a testamentary trust with a December 31, 2014 year-end, you must complete and file the following:
- T3 Trust return and supplementary forms by March 31, 2015. Please note the requirement to separately disclose eligible and non-eligible taxable dividends; and
- T4 and T4A reporting forms for executor or trustee fees paid (as noted above, these are due by March 2, 2015).
If you have paid or credited an amount to a non-resident of Canada such as:
- investment income (interest, dividends);
- estate or trust income;
- pension or annuity income;
- rents; or
you must complete and file an NR4 Summary and Supplementary reporting form by March 31, 2015.
Forms are available at our office, and we can assist you in their preparation.
CALCULATION OF CERTAIN EMPLOYEE BENEFITS
The amount of any payment (or benefit) received by an employee, relating to automobile operating expenses attributable to personal use of the automobile, must be included as a taxable benefit in the employee's income. The value of this benefit would normally be computed as follows:
|[All operating costs
paid by the employer] x
[personal use kilometres]
If an automobile is provided to an employee, a shareholder, or a related person for personal use, a taxable benefit must be reported on his/her T4 slip. This benefit is calculated in two parts, as follows:
- standby charge; plus
- personal portion of operating costs.
Two per cent (1.5% for automobile salespeople) of the original cost of the automobile for each thirty-day period during which the automobile was made available to the employee or shareholder (or related person). For this purpose, cost includes HST. Please refer to the example in this appendix.
Two-thirds of the cost of leasing the automobile for the time the automobile was available to the employee, shareholder, or related person. The cost of leasing the automobile for this purpose includes HST, but excludes insurance included in the lease cost.
The standby charge may be reduced where all of the following apply:
- the employee's personal use of the automobile is less than 20,004 km per year;
- the employee is required by the employer to use the automobile in the course of his/her employment; and
- the automobile is used at least 50 per cent of the time for business purposes.
This reduced amount is calculated by multiplying the standby charge by the following fraction:
|Number of non-business
automobile was driven in the year
|1,667 x number of
30-day periods the
automobile was made available to the
employee in the year
To qualify for this reduced standby charge, the employer or the employee must keep detailed records to substantiate business use (i.e., a log of kilometres driven for the year).
Any amounts paid by the employee or shareholder to the employer for the use of the car should be deducted from the standby charge.
Personal portion of operating costs
Operating costs generally include such items as: licensing, gas, insurance, ordinary repairs and maintenance, but not parking for business purposes.
Where an employer provides an employee with an automobile and pays the related operating costs, the employee has the option of having the operating cost benefit calculated as 50 per cent of the gross standby charge (prior to any reimbursement by the employee). This method may only be used where:
the employee uses the automobile primarily for business purposes (more than 50%); and
the employee notifies the employer in writing, before the end of 2014, to have this method apply.
For employees not eligible to use option one, or those who choose not to do so, a second option applies for calculating the operating cost benefit. This method is designed to reduce the record-keeping burden for employers. Under this method, the operating cost benefit is calculated based on a fixed rate of 27 cents/km of personal use (24 cents/km for automobile salespeople).
Under either option, the benefit is reduced by amounts reimbursed (relating to the operation of the car) by the employee within 45 days after the end of the year (i.e., February 14, 2015).
Please refer to the example calculations on the following page.
Most employers, who report HST taxable benefits on T4s, must normally add and remit notional HST with their February 2015 HST liability otherwise calculated on business sales.
In the following example, the HST on the standby charge is $436 (10.71% x $4,067). This amount, along with the imputed HST on the operating benefit of either $183 or $243 [9% of either $2,034 (option 1) or 9% of $2,700 (option 2)], must be remitted.
If regular HST plus this notional HST exceeds credits claimed, the difference must be paid to Canada Revenue Agency (CRA). This HST payable is considered to represent the recovery of a portion of the input tax credit otherwise claimed for an automobile, relating to its personal use by employees.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.