Editor's note: This blog post was updated in December 2024 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 2024 and easily process your first pay of 2025.
Who can use the payroll Year-End Toolkit?
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.
2024 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 2025
- Check rates and limits for CPP/QPP contributions and EI and QPIP premiums
- Compare the TD1 forms from last year to this year for federal and provincial changes
- Note Pension Adjustment and RRSP limits
- Check if there are any Federal income tax changes
- Look for changes in WCB rates and maximum earning amounts and add WCB reporting dates to your calendar
- Add any legislated provincial minimum wage changes to your calendar to make sure they are updated on time
- 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)
- Run quarterly reconciliation reports
- Review your tax slip boxes mid-year
- Create a list of who to get what additional payroll year-end information from
(e.g. stock option information from HR by xx/xx/xxxx date) - Note banking and stat holidays for planning purposes
- Check for employees who have moved between business numbers or provinces
- 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) - 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 on providing reports in September to your managers of all vacation or other entitlement balances. This will help them start the conversation with any employees who have excess vacation or entitlements on how they can use it, or prepare to request to an exception on the amount they can carry over to the next year.
Canadian Payroll Year-End Checklists
2024 Canadian payroll source deductions
Get all the 2024 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)
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 2025
Please note that these rates are only for employers who have qualifying short-term disability plans. Reductions are in place for the 2024 tax year.
Reduced EI premium rates for 2025 (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 2025
Pension adjustment limits for 2025
Federal TD1 Changes for 2025
*The amount is indexed after 2024. For individuals whose net income is greater than the amount at which the 29% tax bracket begins ($150,473 for 2020), the increase in the basic personal amount gradually phases out so that the basic personal amount for individuals whose income is greater than the next tax bracket threshold ($214,368 for 2020), remains unchanged ($12,298 for 2020) and continues to be indexed.
Similar increases were announced for the maximum spouse or common-law partner amount and the maximum amount for an eligible dependant. The phase-out of the increase is based on the individual’s income rather than the income of the dependant.
Provincial TD1 Changes for 2025
Minimum Wage Info
*"The federal jurisdiction includes labour market sectors coming under federal authority by virtue of the Constitution, such as international and interprovincial transportation, telecommunication and banking." - CRA
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).
2024 Canadian payroll calendar
Stay organized throughout the year with our 2024 payroll calendar. Featuring all federal, provincial, and Canadian holidays, you can plan your pay periods with ease.
Get the 2024 Canadian Payroll Stat Holiday Calendar here.
2024 Tax slip guides for Canadian payroll year-end
Our interactive and downloadable tax slip guides are the most accessed resources we provide for Canadian 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 Québec.
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 Taxable Benefits you’ve received in the year as well as earnings and allowances. The company pays Taxable Benefits on your behalf and 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 includes your gross income and taxable benefits in box 40. The amount shown in box 40 should be added to your gross year-to-date income from your final pay statement in December. The total should equal the amount shown in box 14. If this is not the case, please contact your payroll team or manager.
2024 may have included an extra pay period if you are paid bi-weekly or weekly, so the amount in box 14 may be slightly higher than you expected.
4. Why does my income in box 14 on my T4 seem low?
You may have received two or more T4s. The amount shown in box 14 in each T4 should be totalled and equal to your final December pay statement's year-to-date earnings, plus the total of taxable benefits recorded in box 40 of each T4. If this is not the case, please contact your payroll team or manager.
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 retiring allowances
- A T4A is a tax slip for income such as a pension, lump-sum payments, and other income as defined by the CRA
6. What’s the difference between an RL-1 and RL-2?
Revenu Québec 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
7. How can I get a reprint of my tax slip if I lose it?
You can print as many copies of your tax slips from the Avanti Self-Service Portal, if available. You can also access them from your personal CRA or RQ account; they’ll be available once they’ve had a chance to process the slips.
Otherwise, please contact your payroll team or manager and request another copy.
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 can always have access to the slips through your Avanti Self-Service Portal should you need them now or in the future.
9. Will the Canada Revenue Agency (CRA) and Revenu Québec (RQ) accept a self-printed/online tax slip?
The CRA gladly accepts self-printed tax slips from our employee self-service portal. The form generated matches all CRA specifications. If you’re filing electronically, there’s no need to print your tax slips since you aren’t required to mail copies to the CRA or RQ.
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 2024, 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 $65,700 and box 26 for CPP pensionable earnings has a maximum of $71,300, while QPP pensionable earnings has a maximum of $71,300. 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 or manager. To facilitate a response to your query, please have your tax slips, as well as your final December 2024 pay stub available.
14. Who can I reach out to if I need help filing my tax return?
The Canada Revenue Agency, a professional tax filing service, or an accountant 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.
Frequently asked questions from employees 2024 first pay period
1. Why is my paycheque less in January than it was in December?
Check your December 2024 pay statement to see if you maxed out on your CPP and EI contributions in 2024. 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 2025 are:
- CPP: $4,034.10
- eCPP: $396
- QPP: $4,339.20
- eQPP: $188
- EI: $1,077.48
- Québec EI: $860.67
- QPIP: $484.12
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 2025?
The maximum RRSP annual contribution limit for 2024 is $32,490.
3. How much am I allowed to put into my TFSA during 2025?
The TFSA limit for 2024 is $7,000.
4. Will the minimum wage be changing in 2025, and if so, when and by how much?
Check out our guide to minimum wages across Canada.
5. How do I prevent the additional tax from coming off my cheque this year?
When you complete your new Federal TD1, leave the Additional Tax to be deducted box blank, and Payroll will not deduct additional tax from your pay.
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 2024 Legislative Compliance Rate Sheet
- Revenu Québec: Guide for Employers
- Revenu Québec: Guide de l’employeur
- T4 (CRA)
- T4A (CRA)
- RL-1 (Revenu Québec)
- T2200 Form and Work-From-Home Expenses
Additional Reading Links
Everything you need for 2024 year-end
You’ve got a lot on your plate and staying organized is key. Don’t stress, we’re here to help you every step of the way. Use our updated year-end resources and checklists to successfully finish 2024 and easily process your first pay of 2025.
Everything you need for 2024 year-end
You’ve got a lot on your plate and staying organized is key. Don’t stress, we’re here to help you every step of the way. Use our updated year-end resources and checklists to successfully finish 2024 and easily process your first pay of 2025.
.png)
