Filing T4 slips might feel like just another step in wrapping up your year-end business taxes, but common T4 mistakes are one of the easiest ways to draw unwanted attention in the form of a CRA review.
And here’s the thing: it’s not usually fraud or shady accounting that leads to penalties. It’s often a few small mistakes.
At Swain CPA, we see it every year. Little slips can lead to a CRA T4 audit, employee frustration, and costly reassessments. We can help after the fact, but it’s better for you if we can help prevent it in the first place.
Let’s walk through five common T4 errors that can trigger a CRA review, and more importantly, how to avoid them before you hit “submit.”
1. Incorrect Pension Adjustment (Box 52)
If there’s one box that causes confusion year after year, it’s Box 52: pension adjustment.
Here’s the issue: this isn’t a number you calculate yourself. It should come from your pension plan administrator. But we’ve seen Box 52 left blank, entered manually, or pulled from the wrong year-end file.
Always double-check Box 52 pension adjustment against your provider’s official year-end reports.
Don’t guess. Confirm it.
CRA will follow up if this number’s off. That usually means explaining things to both the CRA and your employee.
Not fun at tax time!
2. Missed Taxable Benefits (Box 40)
A classic trigger for CRA reviews is leaving off taxable benefits.
If your employee received:
- A car allowance
- An employer-paid cell phone
- Life insurance premiums
…those need to be reported in Box 40, and included in Box 14 (total employment income).
To avoid issues, cross-check your benefits summary with deductions. If the employee received something of value, it probably needs to go on the T4.
3. T4 Income Mismatch
A T4 income mismatch occurs when the total income reported on the T4 doesn’t align with your year-to-date payroll records.
The CRA compares your T4 slips, T4 Summary, and remittance history automatically, and if something’s off, they’ll notice.
This is especially common when year-end bonuses are missed, retroactive pay isn’t recorded correctly, or when multiple payroll runs happen in December.
Before filing, generate a year-end payroll reconciliation report and compare it to your T4s and summary. The numbers have to match.
4. Duplicate Slips for Terminated Employees
Sometimes, employees leave and come back. Other times, they’re accidentally paid through two different batches or systems.
This can lead to duplicate slips with overlapping periods or identical earnings. Naturally, these are red flags for the CRA.
Be sure to check your list of active and terminated employees carefully. If an employee left and returned, issue one T4 slip for the full year unless they had multiple business numbers or changed SINs.
5. Unreported Allowances or Reimbursements
This is a sneaky one.
If you reimbursed employees for:
- Cell phones
- Home internet
- Meals
- Personal vehicle use
…and those weren’t strictly business expenses, the CRA may see them as disguised compensation.
These often slip through because they’re handled outside the payroll system through accounts payable or expense reimbursements.
Don’t forget to review all non-salary payments made to employees during the year! If it’s not a documented business expense, it may need to be reported on the T4.
“Does the CRA Really Care About Small Mistakes?”
Short answer? Yes.
Even small errors can trigger a CRA T4 audit or review.
And while CRA reviews often start with automated systems (not a knock at your door), they can still lead to:
- Penalty assessments
- Employer liabilities
- Employee tax return issues
Come tax season, it’s worth slowing down and getting it right. Take a look at our T4 filing service!
How to Prevent Filing Errors
The best fix? Don’t let mistakes happen in the first place. Here’s a quick checklist:
- Verify Employee Info (e.g. SIN, address, etc.)
- Reconcile Payroll Totals – Check T4s against internal records
- Review Key T4 Boxes – Especially Boxes 14, 22, 40, and 52
- Cross-check Taxable Benefits – Don’t rely solely on payroll software
- Get a Second Set of Eyes – Preferably an accountant before filing
At Swain CPA, we do a lot of these reviews each February. Trust me, it’s way easier to fix now than after you file.
FAQ: Common T4 Mistakes and CRA Review Triggers
1. What are the most common T4 mistakes that lead to a CRA review?
Incorrect Box 52 pension adjustment, missed benefits in Box 40, T4 income mismatch, duplicate slips, and unreported reimbursements.
2. How does the CRA audit T4 slips?
A CRA T4 audit often starts with automated checks. They compare your T4s, T4 Summary, and remittances. If something doesn’t match, it gets flagged.
3. What is a T4 income mismatch?
When the income in Box 14 doesn’t match your payroll totals or summary. It’s a common CRA red flag.
4. How do I fix a T4 Summary error after filing?
You’ll need to file amended T4 slips and a corrected T4 Summary. Correcting T4 summary errors should be done as soon as you discover the mistake.
5. What are the top mistakes to avoid when filing T4 slips?
Box 52 errors, missing taxable benefits, duplicate slips, and not reconciling your totals.
Final Thoughts: Mistakes to Avoid When Filing T4 Slips
The mistakes to avoid when filing T4 slips are usually small oversights.
Taking time to review your data, understand what each box is for, and get professional support where needed can save you from penalties, reassessments, and headaches down the road.
So take the time now. Slow down. Run a proper review. Ask your CPA for a second look.
If you’re unsure whether your T4s are accurate or want a second look at your T4 Summary, we’re here to help.
Swain CPA offers T4 reviews and year-end support so you can file with confidence.
Reach out today to get your T4s done right.
