The Ultimate Guide to Canadian Payroll Year-End

Editor's note: This blog post was updated in December 2025 for accuracy and comprehensiveness.

Payroll year-end can be a heavy lift, but it doesn’t have to be. It’s all about how you prepare for it. Having the right processes in place and the correct information on hand can ensure it’s compliant and stress-free. To help you get through your Canadian payroll year-end with flying colours, we’ve rounded up all the essential year-end resources and checklists you need to successfully finish 2025 and easily process your first pay of 2026.

Who can use the Canadian payroll year-end guide?

If you run a payroll or get paid in Canada, this guide is for you. We built this guide primarily for Canadian payroll and accounting professionals responsible for processing their payroll year-end. To help your employees and managers easily file their 2024 income taxes, Avanti’s Year-End Toolkit also includes many informative guides to share with your team.

2025 Canadian payroll year-end best practices

Make it your best year-end ever with our best practice checklists:

Make sure you know what’s new for your first pay of 2026

1. Check rates and limits for CPP/QPP contributions and EI and QPIP premiums
2. Compare the TD1 forms from last year to this year for federal and provincial changes
3. Note Pension Adjustment and RRSP limits
4. Check if there are any Federal income tax changes
5. Look for changes in WCB rates and maximum earning amounts and add WCB reporting dates to your calendar
6. Add any legislated provincial minimum wage changes to your calendar to make sure they are updated on time
7. If you pay weekly or bi-weekly check the calendar to see if this is a year where you will have 52 or 26 pay periods and adjust your pay calendar accordingly

As a best practice, create a one-page brief for your employees summarizing all of the new year information. This way, they can plan for changes to their pay based on any new values. It also provides a great opportunity to remind them to complete their new TD1s and to encourage them to start their savings plan for the new year.

Get a head start on tax slips (T4, T4A, RL-1)

1. Run quarterly reconciliation reports
2. Review your tax slip boxes mid-year
3. Create a list of who to get what additional payroll year-end information from
   (e.g., stock option information from HR by MM/DD/YYYY date)
4. Note banking and stat holidays for planning purposes
5. Check for employees who have moved between business numbers or provinces
6. Create templates for all of your employee and contractor communications
   (e.g. when tax slips will be available, how to read tax slips, who to contact with questions)
7. Send your employees this tax slip guide

Vacation or other entitlement carry-over policies

If you have a maximum carry-over policy in place, plan to provide reports in September to your managers of all vacation or other entitlement balances. This will help them start conversations with any employees who have excess vacation or entitlements and need to use them, or prepare to request an exception on the amount they can carry over the following year.

Canadian payroll year-end checklists

Use our Year-End Prep Checklist to get everything organized before it’s time to start balancing year-end, issuing tax slips, and more. Get the 2025 Year-End Prep Checklist. Once you’ve completed the Prep checklist, you’re ready for the Process checklist. The order of these events is critical, so please complete the steps in order. Get the 2025 Year-End Processing Checklist.

2026 Canadian payroll source deductions

Get all the 2026 Canadian payroll source deduction tables, rates, and changes you need from our quick reference guide. Use the links below to jump to a section.

• CPP/QPP
• eCPP/eQPP
• EI/QP
• Worker’s Compensation Rates
• Pensionable Adjustment Limits
• Federal TD1 Changes
• Provincial TD1 Changes
• Minimum Wage Info

Canada Pension Plan (CPP) & Québec Pension Plan (QPP)

^*Base contribution rate of 5.30% and first additional contribution rate of 1%.

Enhanced Canada Pension Plan (eCPP) & Québec Pension Plan (eQPP)

For more information, see our post on everything you need to know about the CPP enhancement.

Employment Insurance (EI) & Québec Parental Insurance Plan (QPIP)

EI premium reduction rates

An employer providing a Short-Term Disability (STD) plan may now qualify for a lower EI premium rate than the general rate of 1.4 times the employee’s premium rate. For more information on rate setting, see the Canadian Revenue Agency’s EI premium reduction guide for employers.

Reduced EI premium rates for 2026

Please note that these rates are only for employers who have qualifying short-term disability plans. Reductions are in place for the 2025 tax year.

Reduced EI premium rates for 2026 (QPIP)

Please note that these rates are only for employers who have qualifying short-term disability plans for employees in Québec. Reductions are in place for the 2024 tax year.

Worker’s Compensation rates (WCB, WSIB & CSST) for 2026

Pension adjustment limits for 2026

Federal TD1 changes for 2026

Provincial TD1 changes for 2026

Minimum wage by province

‍^*Alberta introduced Bill 201 – Employment Standards (Protecting Workers’ Pay) Amendment Act, proposing incremental increases to the province’s minimum wage of $1 per year for three years.

• December 15, 2025: $16.00
• October 1, 2026: $17.00
• October 1, 2027: $18.00

^**The minimum wage in Nova Scotia will increase to $16.75 per hour on April 1, 2026, and $17.00 per hour on October 2, 2026.

^***The minimum wage in Prince Edward Island will increase from $16.50 to $17.00 per hour on April 1, 2026.

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Common payroll audit adjustments from CRA

The Canada Revenue Agency provides a list of commonly requested adjustments to an employer’s payroll due to wages and benefits not being correctly reported by the employer. Thanks to our friends at the National Payroll Institute (become an NPI member here) for making this list available.

1. Unreported payments for independent contractors

Failure to report fees for services paid to independent contractors on the prescribed T4A tax slip.

2. Security/stock options

A common method of compensating officers and employees providing them with a financial benefit as well as a sense of ownership with the employer. Taxable benefits are not being reported when stock options are exercised.

3. Automobile standby and operating expense

Employees are not maintaining proper logbooks to separate personal and business driving, so employers are not calculating the benefit correctly. Incorrect perception that if a vehicle doesn’t meet the definition of an 'automobile,' there is no benefit to be reported.

4. Housing, low/free rent, board & lodging

Except for special or remote worksites, most employees who receive free or subsidized housing from their employer would be deemed to receive a taxable benefit based on fair market value (FMV). In some instances, the value of the benefit may be reduced.

5. Unreported payments

Includes unreported salary and wages, such as bonuses, commissions, and cash payments to employees that must be included on a T4 tax slip.

6. Travel expenses and allowances

To be treated as non-taxable, travel expenses and allowances must be reasonable and clearly validated as business expenses that primarily benefit the organization.

7. Reclassification of employee status

Individuals operating as self-employed contractors when they should be treated as employees or vice versa.

8. Personal and living expenses (employees or shareholders)

Many corporate owners look at this type of expense as personal drawings and are therefore not reporting it as taxable income. These include appropriations of corporate assets for personal use. Some employees, as part of their compensation agreement, may have personal living expenses paid for by the employer. Unless these fall under a specific exemption, this would be considered taxable income.

9. Vehicle allowances

Employers are providing non-accountable vehicle allowances to their employees and not reporting the benefits as income; this can include cash allowances, gas cards, or reimbursements.

10. Parking

Employers are not reporting the value of this benefit, and when they do, they report a minimum amount and not the true fair market value (FMV).
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2026 Canadian payroll calendar

Stay organized throughout the year with our 2026 payroll calendar. Featuring all federal, provincial, and Canadian holidays, you can plan your pay periods with ease.

Get the 2026 Canadian Payroll Stat Holiday Calendar here.
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2025 Tax slip guides for Canadian payroll year-end

Our interactive tax slip guides are the most accessed resources we provide for payroll year-end. You’ll find a bilingual guide to T4 tax slips, a T4A tax slip guide, and the RL-1 tax slip guide for employees in Quebec.

• Interactive T4 Tax Slip Guide
• Interactive T4A Tax Slip Guide
• Interactive RL-1 Tax Slip Guide
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Employee communications for Canadian payroll year-end and first pay period

Happy New Year! Now you’re in full swing of getting those T4s issued before the end of February, but your inbox and voicemail are starting to pile up with questions from employees. Questions like, “What does Box 40 mean on my T4?” or “When do I get my T4?” No worries – use the communications templates below to help educate employees on what they can expect regarding payroll year-end.

Employee tax slip FAQ for payroll year-end

1. Why do I have two T4 Slips?

If you’ve received more than one T4 from us, there are a few possible reasons:

• You worked at different locations or company divisions, requiring us to produce a T4 for each business number you worked in.
• You worked or earned income in different ways. For example, you were on contract and then gained full-time employment with us.
• You worked for the company in two or more provinces during the year.

If any of these apply, and you received two or more slips together, you must include them all in your tax return.

2. What is box 40 on my T4?

Box 40 includes your taxable allowances and benefits besides your wages or salary. Not everyone will have a Box 40 amount on their T4 slip. However, if you do have an amount for Box 40, that same amount is also included in Box 14 – Total Employment Income. The company pays taxable benefits on your behalf. These may include life insurance, wellness spending accounts, flat-rate car/cell phone allowances, etc.

Taxable benefits are identified as such on your pay statements. When you add up the items identified as taxable benefits on your pay statements, you should arrive at the total in box 40. If your total is not the same as box 40, please contact your payroll team or manager.‍

For more information on how taxable benefits and allowances appear on your T4, go to the CRA’s Benefits and Allowances Chart.

3. Why does my income in box 14 on my T4 seem high?

Box 14 is your gross employment income for the calendar year, including taxable benfits (the amounts shown in Box 40). If Box 14 looks higher than your final year-end pay statement, it may be because taxable benefits, retroactive pay, or other adjustments were included in the T4 but not obvious on a single pay stub. If you can’t reconcile the difference, please contact your payroll team.

4. Why does my income in box 14 on my T4 seem low?

If Box 14 looks low, first check whether you received more than one T4. You must add Box 14 amounts from all T4s. Other reasons include pay timing (some pay may be for a different calendar year) or employer reporting choices (some amounts on pay stubs may not be employment income). If totals still don’t match, please contact your payroll team.

For more information on how taxable benefits and allowances appear on your T4, see the Benefits and Allowances Chart.

5. What is the difference between a T4 and a T4A?

The Canada Revenue Agency requires that different tax slips be used to report specific types of income.

• A T4 is a tax slip issued to report employment income, taxable benefits, and retirement allowances.
• A T4A is a tax slip for income, such as pension, lump sum payments, and other income as defined by the CRA.

If you received both a T4 and a T4A for amounts from the same payer, include both slips on your tax return and check the box descriptions for where to report each amount.

6. What’s the difference between an RL-1 and RL-2?

Revenu Quebec has different tax slips to report specific types of income.

• RL-1s are issued to report employment income, commissions, gratuities, scholarships, and fees
• RL-2s are issued to report retirement and annuity income, such as retirement benefits, retirement annuities, RRSPs, RRIFs, and other income as defined by RQ.

If you received both an RL-1 and an RL-2 for amounts from the same payer, include both slips on your tax return and check the box descriptions for where to report each amount.

7. How can I get a reprint of my tax slip if I lose it?

You can print copies from the Avanti Self-Service Portal (ASSP) if provided. You may also be able to view slips in CRA My Account after your employer files them with the CRA. If you can’t access them there, request a copy from payroll. If the issuer filed a slip with an incorrect SIN or name, it may not appear in My Account. Please contact your payroll team so they can reissue or correct it.

8. Do I need to print my online tax slips?

If you are filing your taxes electronically, printing the slip is entirely optional since you aren’t required to mail copies to the CRA or RQ. You always have access to your tax slips through your Avanti Self-Service Portal (ASSP), should you need them now or in the future.

Tip: Keep digital or printed copies of your tax slips. The CRA may request supporting documents up to six years after you file.

9. Will the Canada Revenue Agency (CRA) and Revenu Québec (RQ) accept a self-printed/online tax slip?

Employers submit official T4, T4A, and NR4 returns to the CRA. In the case of a personal audit, a printout from the employer’s secure portal or from CRA My Account is generally acceptable as your copy and can be used if CRA requests documentation. If you need an “official” replacement (for example, a corrected slip), please ask your payroll team to reissue it.

10. What if there is a mistake on my tax slip?

If there’s an error on your tax slip, please contact your payroll team or manager.

11. How do I change my tax claim amounts or have additional taxes deducted from my 2024 pay?

You will need to complete a new Provincial and Federal TD1 for 2026, indicating the additional amount you’d like deducted. You can access the new TD1s through the CRA website. Once completed, please submit your TD1 forms to your payroll team.

12. Why is my income in box 14 greater than the CPP pensionable and EI insurable earnings? (i.e. amount in box more than box 24 and 26)

Box 24 for EI insurable earnings has a maximum of $68,900, and box 26 for CPP pensionable earnings has a maximum of $74,600, while QPP pensionable earnings has a maximum of $74,600. If your income is higher than those amounts, box 14 will be larger than boxes 24 and 26.

Additionally, while most earnings and taxable benefits are EI Insurable, the ones that aren’t will not be added to box 24.

13. Who should I contact if I have a question?

If you have additional questions or concerns, please contact your payroll team. To facilitate a response to your query, please have your T4 and/or T4A as well as your final December 2025 pay stub on hand.

14. Who can I reach out to if I need help filing my tax return?

The Canada Revenue Agency can help you if you're having a tough time filing your income tax return.

If you are a student, senior, person with a disability, a newcomer to Canada, or a low-income earner with a simple tax-filing situation, contact Community Volunteer Income Tax Program (CVITP) at 1-800-959-8281 to ask for help. CVITP volunteers work with members of local community organizations who can help you complete and file your return.

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Frequently asked questions from employees 2026 first pay period

1. Why is my paycheque less in January than it was in December?

Check your December 2025 pay statement to see if you maxed out on your CPP and EI contributions in 2025. Remember that CPP and EI restart every January.

Additionally, CPP, QPP, EI, and QPIP have increased, which means more will be taken off each paycheque. The new employee annual maximum contributions for 2026 are:

• CPP: $4,230.45
• eCPP: $416
• QPP: $4,479.30
• eQPP: $416
• EI: $1,123.07
• Quebec EI: $895.70
• QPIP: $442.90

2. I want to contribute to my RRSP in the first 60 days of the new year; what is the RRSP annual contribution limit for 2026?

The maximum RRSP annual contribution limit for 2026 is $33,810.

3. How much am I allowed to put into my TFSA during 2026?

The TFSA limit for 2026 is $7,000.

4. Will the minimum wage be changing in 2026, and if so, when and by how much?

Check out this guide to minimum wages and planned increases across Canada.

5. How do I prevent the additional tax from coming off my cheque this year?

A new TD1 ensures that you inform us of any changes in your life that could impact your income tax calculations. This could include having a new dependent, becoming a caregiver, or recently enrolling in school. If changes are needed, sending new TD1s to your payroll team ensures your taxes will be calculated accurately at the source, your pay.

6. How do I prevent the additional tax from coming off my cheque this year?

If you were previously having additional tax deducted but want to change the amount, or no longer want additional tax deducted, then complete a new federal TD1 form and send it to your payroll team.

Additional payroll legislative updates and links

Here you’ll find provincial and federal information on payroll deductions, payroll year-end employer kits, and more.

• NPI’s 2026 Legislative Compliance Rate Sheet
• Revenu Quebec: Guide for Employers
• Revenu Quebec: Guide de l’employeur
• T4 (CRA)
• T4A (CRA)
• RL-1 (Revenu Quebec)
• T2200 Form and Work-From-Home Expenses

Additional Reading Links

1. What you need to know about the CPP enhancement
2. What you need to know about the new Canadian Dental Care Plan
3. T2200 Forms: What you need to know