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Understanding Different Tax Slips: T4A, T4E, T5018, and Others

As the tax season approaches, it is crucial to understand the various tax slips that you may receive and their implications. Tax slips such as T4, T4A, T4E, T5018, T4A(P), T4A(OAS), T4RSP, T4RIF, T5007, T2202, T3, T5, T5013, RC62, RC210, T1163, T1164, and T101 all serve different purposes and are issued by different entities.

Quick Description and the use of the following tax slips

T4, T4A, T4E, T5018

The T4 slip is issued by employers to employees to report their income and tax deductions. These amounts should deduct tax from any payment received, however, the income slip will only show you cumulative income tax withheld and other deductions for the calendar year. Income that doesn’t have deductions will still be included in Box 14.

The T4A slip is used to report various types of income. You may not receive a T4A but must report all business and self-employment income. The difference between T4 and T4A slips is the difference between employment income and self-employment income.

T4A(P), a statement of pension, reports pension, annuity, or superannuation earnings, this also includes the Canada Pension Plan (CPP). T4A(OAS) reports Old Age Security benefits that need to be reported on your tax return. A T4A slip is often used for Other Payments, this can include payments such as honorariums, and independent contractors. 

If you receive a T4A slip from your employer’s payroll department this issue should be straightened out before filing your taxes, speak to your accountant or employment lawyer if the payroll department cannot explain why they have issued a T4A instead of a T4. T4As will not have an amount of income tax, CPP or EI deducted.

The T4E is related to Employment Insurance benefits received in the calendar year.

T5018, a statement of contract payments, is used to report subcontractors for construction services, similar to a T4A Other Income, this is specifically for the construction industry. This can be issued on a calendar tax year or a fiscal year for the company.

T4RSP, T4RIF, T5007, T2202

These slips are specific to different sources of income. T4RSP (RRSP) and T4RIF (Retirement Income Fund) are for retirement income, and T5007 is for workers’ compensation benefits.

The T2202 is for tuition and education amounts and is issued by the educational institution you are attending. These amounts can also be transferred and claimed by the parent of the student if they are paying the tuition.

T3, T5, T5013

T3 is for trust income, such as a family trust.

T5 is for investment income, such as dividends from shares, interests from savings accounts, royalties, bonds, and other investments. T5s are for those investments you have earned $50+ in the year.

T5013 is for partnership income.

RC62, RC210, T1163, T1164

RC62 is for Universal Child Care benefits received, RC210 is for Advanced Canada Workers Benefit (ACWB), T1163 and T1164 are for various agricultural income.

Contractor vs Employee

If you are self-employed or work as a contractor, you may receive specific tax slips, such as the T4A or T5018, which report self-employment income. Employees, on the other hand, typically receive T4 slips from their employers. Issuing a T4A slip for an employee can be an indicator of fraud within a company, as they would report to the government they did not deduct anything from their payments to you. It is strongly recommended that you reconcile the final paystub of the year from your payroll department with your T4. Year-to-date (YTD) numbers should match what is issued on your T4.

Personal Taxes Write-offs

When filing your income tax and benefit return, it’s essential to be aware of eligible write-offs. Business expenses, self-employment income, and deductions related to various sources of income reported on the tax slips can significantly impact your taxable income. Additionally, certain income reported on the T4A may be eligible for deductions under specific tax provisions, such as old age security clawbacks and pension income splitting. Understanding the write-offs available for personal taxes is critical to optimizing tax savings and ensuring compliance with Canadian tax laws.

RRSP Slips

A common slip for personal taxes, these slips are issued by banks and other companies that hold Registered Retirement Savings Plans for their clients. This slip indicates how much has been squirrelled away into your RRSPs with various institutions. It is important not to over-contribute to your RRSPs as this can result in penalties. The limit of your RRSP contributions for the current year is 18% of your total earned income (total income with some adjustments) from the previous year or the maximum, which for 2023 is $30,780. These amounts are cumulative, so if you have never contributed to your RRSP, you may have $100,000+ that you can defer taxes on.

These slips are due for March 1-December 31 by the last day of February. RRSPs allow the contributions made in January and February to be claimed on the prior year’s tax returns (ie. $5000 contributed on February 15, 2024, can be deducted from 2023’s taxable income). These slips may not be issued until May (60 days), it is important to keep track of contributions in these first 2 months to ensure timely filing of your personal tax return.

Medical Deductions

The next most common deduction on personal tax returns is medical expenses. This is one of the largest categories of deductions and can range from service animal expenses to travel for medical procedures. If you are reimbursed for these medical expenses, you cannot claim them as an expense. Deductibles, Co-pays, and the amount in box 85 of your T4 (health plan deductions) are deductible under medical deductions. The general rule of thumb with everything else is if it is a required medical procedure or device it is deductible. There is a searchable list of common deductions on this CRA webpage.

There is another catch though. You must spend at least 3% of your total income or $2,635, whichever is less before you are allowed to start receiving a benefit for these deductions.

Squirrel Thoughts

In conclusion, understanding the purpose and differences of various tax slips is crucial for accurately reporting your income and deductions to the Canada Revenue Agency. The CRA already has most, if not all, of this information within their systems as they are reported by employers and other third parties on your behalf, if you find a discrepancy between what has been filed by your employer (what the CRA has on file) and what you have been given by your employer (paper or electronic copies), it is important to inquire and have the issue resolved before filing your taxes.

The tax system can become overly complex as your finances become more complex, this could include things such as getting married, retiring, purchasing a rental property or many other things. It is always advisable to speak with your accountant about any major life events before your tax return is filed with the CRA, this will help minimize taxes owing by maximizing the tax credits available and will 

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