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The Canada Revenue Agency (CRA) recently announced several changes affecting payroll reporting. We highlight three below.
Retiring allowance reporting
Starting in January 2011 (for the 2010 tax year), retiring allowances will be required to be reported on T4 slips rather than T4A slips. This will reduce the burden of filing both slips for the same taxpayer.
Redesign of T4A slip
The T4A slip is being redesigned with a view to simplifying reporting and increasing data quality. The fixed-field design is being converted to a generic style, similar to the T4 slip. The 2010 version of the T4A slip is expected to reflect the redesigned look and to accommodate T4A reporting requirements for all tax years. The new T4A slip is currently in draft format only. Employers should start using the new form in early 2011 to report T4A information for the 2010 tax year. Until then, the current T4A slip should be used for all tax years.
Employee gifts and awards
The CRA has introduced a new tool to assist employers in determining the taxability of employee gifts or awards. The tool is in a question-and-answer format. It leads the user through the CRA’s policy and reviews relevant topics, including:
- Cash or near-cash gifts and awards
- Performance-related awards
- Disguised remuneration
- Reimbursements
- Employer-provided social/special events
- Loyalty points, such as frequent flyer points
- Gifts or awards provided by a social committee including prize draws
The questionnaire also takes into account the comments included in Income Tax Technical News No. 40 which discusses changes announced by the CRA to its administrative policies with respect to taxable employment benefits.