T4s have to be submitted by the end of February, making February stressful for busy families employing domestic employees.
You may be familiar with obtaining T4s from your employer, yet there are intricate CRA treatments to recognize when filing T4s for an at-home worker.
It sounds terrifying, but In Time Caregiver and Tax Services is here to teach you how to file T4s as a company!
File Your T4 Summary
In addition to a T4 Slip, you need to send the T4 Summary to the CRA-- a reality that many at-home employers are unaware of.
The T4 Summary is a crucial document for any employer to keep track of their employees' remittances. It breaks down how much money was sent in taxes, CPP and EI contributions from each paycheque throughout the year, and what deductions were taken against those payments.
The Summary also contains your share of CPP and EI. It is all too common that domestic employers only learn to file their portion or even miss a deadline for remittances once the CRA has doled out an expensive penalty.
Don't Submit Pass Due.
You have until the last day of February to submit T4s to the CRA. If an employer of fewer than 50 employees submits their T4 slip or T4 Summary late, they will be penalized a maximum of $1,000.
Bed And Board Taxable Benefit
The CRA identifies free room and board for live-in domestic staff members as a taxable benefit. You should include the market value for the room as part of your staff member's taxable benefit.
If your employee earns $30,000 per year in salary and their room is valued at 500/month ($ 6000/year), it will be reflected as a 36k yearly income on the T4.
The CRA states that you should report the taxable amount in Box 14, "Employment Income," and under Code 30 at the bottom of a T4 slip.
Claiming Public Transit Passes
You can provide your nanny or caregiver with either type of public transit passes. Both kinds of payment must be filed differently with the CRA:
1- You buy a bus pass and hand it to your employee:
The value of the bus pass will be included in taxable and CPP income only. Include the value of the bus pass on the employee's T4 slip in Box 14, "Employment revenue," in Box 26, "CPP," as well as in the "Other details" under Code 40 at the bottom of the T4 slip.
2- You give money to your employee for the bus pass:
The amount is now included in the EI income, in addition to taxable and CPP income. The amount is included in your EI premium as well. Record the taxable benefit on the employee's T4 slip in Box 14, "Employment earnings," in Box 26, "CPP," in box 24, "EI," and in the "Other info" under Code 40 at the bottom of the T4 slip.
Reasonable Per Kilometre Allowance
Nannies who drive for their employers are given a reasonable per-kilometre allowance. As long as the amount is within limits set by CRA, it will not have tax implications and can therefore be considered a non-taxable benefit!
In 2021, the reasonable per-kilometre allowance was 59c/km, up to 5,000 kilometres, and 53c/km after 5,000 km. By 2022, it has increased to 61c/km, approximately 5000km, and 55c/km after 5000km.
If the allowance you give to your employee surpasses the affordable per kilometre allocation, the difference will need to be included as a component of their taxable income.
Employing a caregiver or nanny means you're most likely over-extended, and having to navigate tricky T4 slips may take up hours of your valuable time.
Luckily, In Time Caregiver Tax and Payroll got your back! We're more than comfortable handling all your tax and payroll needs, down to the last decimal point.