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Top 5 Tips to Prep for Year-End

Well, it’s that time of year – end of the calendar year.  Whether or not your organization year-end is December 31st, there are some deadlines a person in payroll should be aware of.  Here is a Top Five List to prepare for year-end:  

1. Review your employee data – In order to ensure your T4s show up-to-date information, you may want to send an email to all employees advising them to let you know if they have had an address or name change over the past year.  Often these details are overlooked. If your organization send T4s in the mail, some may not reach the recipient due to an outdated address.  Avoid getting calls from anxious, frustrated employees in the spring telling you they never received their T4.   Prepare now!  Remember, employees who worked for your organization in 2015 but are no longer currently employed with you still need a T4. 

2. Review your source deductions account – The CRA source deductions operate on a calendar year.  As you make payments each pay period to the CRA for the payroll withholding amounts, your CRA account gets credited.  As a result, by the last payment for 2015 (which for many will be the first remittance in January), there is a large amount showing in your account.  It is only when the T4 returns are filed that an adjustment to the Source Deductions account is made, based upon the information found on the T4s.  If there is any difference (money owing), you will need to pay.  If there is extra money left, call the CRA and make arrangements to either reduce a remittance in the future or ask for the funds to be refunded to your organization. 

3. Reconcile your deductions accounts – For organizations that pay benefits or pensions, a quick look at the balance in the GL should be performed to ensure that what non statutory deductions that have been deducted from your employees match what is being paid or owed to the other third parties.  If there is a discrepancy, you may want to make an adjustment on the employees’ last pay.  Just ensure that any adjustment is communicated to your staff. 

4. Filling out 2016 TD1 forms – The Blue Canvas team recommends you let your employees know to fill out a new 2016 TD1 form that will allow your organization to ensure the proper taxes are being withheld.  With the 2015 mid-year change to the Child Tax Benefit program (now known as the enhanced UCCB), recipients now receive funds outright rather than receive funds once filing their taxes.  You should note that these funds are a taxable benefit, so you might consider increasing your tax withheld at source.  You should no longer be ‘claiming’ your non-infirm child on your TD1 form. Continuing to do so will cause too little tax withholding and the possibility of tax owing come tax time. 

5. Holiday bonus distribution – Many organizations like to pay out Christmas / Holiday Bonuses.  Two things to consider: 

  • Christmas / holiday bonuses are exempt from stat pay calculations.  Therefore, when calculating the stat pay calculations for hourly employees, do NOT include the bonus amount in the calculation in order to be compliant with Manitoba Labor Standards.  Only for performance-related bonuses would you need to include the amount in your stat pay calculation.  
  • Some smaller businesses like to pay their staff bonuses in the form of cash or gift cards.  Note that cash and gifts cards are still considered income and subject to ALL the taxes and statutory deductions.  Bonuses should always be paid out through payroll for CRA compliance purposes.  To do otherwise is a bit risky resulting in not all ‘income’ being declared on a T4.  Don’t take the chance of being found in non-compliance with the CRA.

 With a little planning, communication and prep work, your year-end should really be straight forward resulting in a stress-free T4 season!   On behalf of the entire Blue Canvas team, happy holidays and here’s to a healthy, prosperous 2016!  

Author:
Wendie Karlowsky
Contact Blue Canvas.  We're here to help!
Email:
info@bluecanvasgroup.com
Phone: (204) 488-5698  |  
Toll Free: 1-855-690-6161

146 Commerce Drive
Winnipeg, Manitoba, CANADA
R3P 0Z6