Canadian Payroll Updates: May Roundup

Summer is just around the corner and we’re here with several important payroll updates to ensure your payroll runs smoothly. We’ve summarized last month’s updates below so you have everything you need to ensure your employees are paid correctly and on time, and you can get out and enjoy the sunshine!

This month’s roundup includes:

• New codes (94 & 95) on the T4 slip for 2024 tax year
• Manitoba WCB distributes surplus funds to employers
• Ontario Employment Standards 2024-25 compliance initiatives
• B.C. EHT rates changes 2024
• Prescribed interest rates for Q3 2024

Read on for more details on this month’s Canadian payroll updates.

New codes (94 & 95) on the T4 slip for 2024 tax year

FEDERAL

The Canada Revenue Agency has introduced new codes for the T4 slip for the 2024 tax year as follows:

Code 94 - Indian (exempt employment income) – RPP contributions  

For T4 slips submitted for the 2024 tax year and beyond, only report contributions to a registered pension plan (RPP) related to tax-exempt employment income paid to registered employees or eligible for registration under the Indian Act, using Code 94.  

Code 95 – Indian (exempt employment income) - Unions Dues

For T4 slips submitted for the 2024 tax year and beyond, only report union dues associated with tax-exempt employment income paid to registered employees or eligible for registration under the Indian Act, using Code 95.

WCB distributes surplus funds to employers

MANITOBA

The Manitoba Workers Compensation Board (WCB) announced a surplus distribution to employers contributing to the workers' compensation system. This refund amounts to 50% of the employer 2023 premiums.

To receive the credit, employers must have:

• Completed their 2023 payroll reporting
• Paid WCB premiums in 2023

Those yet to report can still submit their data to qualify for this distribution.

Employment Standards 2024-25 compliance initiatives

ONTARIO  

The Ontario Ministry of Labour conducts inspections to ensure employers across the province meet the minimum employment standards. Inspections may be announced via letter or conducted randomly, covering areas such as minimum wage, work hours, meal breaks, overtime, public holidays, vacation benefits, ESA poster requirements, wage statements, and record-keeping. Inspectors may also conduct private employee interviews to verify information.

If non-compliance is found, employers are usually allowed to rectify issues. Failure to comply can lead to fines ranging from $250 to $1,000 or even part III prosecutions with potential corporate fines up to $100,000 and/or a 12-month jail sentence for a first offense.

Employers must:

• Regularly conduct self-audits, ideally several times a year, to ensure compliance before inspections
• Educate employees about their rights
• Promote compliance gained through professional development seminars offered by the Institute on Employment Standards

B.C. EHT rates changes 2024

BRITISH COLUMBIA  

British Columbia’s Bill 3: Budget Measures Implementation Act was passed on April 25, 2024. Changes to the Employer Health Tax (EHT) apply to remuneration paid on or after January 1, 2024 and effective the first EHT installment on June 15, 2024.

Starting from the employer health tax return for 2024, employers with B.C. remuneration:

• Of $1,000,000 or less: do not pay employer health tax
• Between $1,000,000.01 and $1,500,000: pay 5.85% x (B.C. remuneration - $1,000,000)
• Greater than $1,500,000: pay 1.95% x total B.C. remuneration

These changes have not been officially announced, but are referenced on B.C.'s Employer health tax overview.

Prescribed interest rates for Q3 2024

FEDERAL  

The Canadian Revenue Agency announced that the prescribed income tax interest rates for taxable benefits, overpaid taxes, and underpaid taxes will decrease by 1% in the third quarter of 2024 (July 1, 2024 - September 30, 2024).

• The interest rate on overdue income taxes and penalties will decrease from 10% to 9%
• The prescribed rate for refunds of overpaid tax will decrease from 8% to 7% for non-corporate taxpayers and from 6% to 5% for corporate taxpayers
• The prescribed rate that applies to taxable benefits for employees and shareholders from interest-free and low-interest loans, as well as the prescribed rate of family income-splitting loans, will decrease from 6% to 5%

Employers who offer certain taxable benefits, such as low or no-interest employee loans, must calculate the associated taxable benefit amounts. This calculation must be based on the current government-prescribed interest rate to determine the value of the employee's benefit from the loan. Employers must stay updated with changes in the prescribed interest rate to maintain accurate and compliant benefit calculations.

Additional Reading Links

1. How to be a more strategic payroll leader
2. 5 ways to advance your payroll career
3. How to do payroll reconciliation: the 6-step process