Global Employer Services News

Canada - Canada Introduces T4 reporting changes for 2023 Tax Year

The Canadian government has made key changes that will affect all employers preparing T4 (Statement of Remuneration Paid) and T4A (Statement of Pension, Retirement, Annuity, and Other Income) slips for 2023. Becoming familiar with the new requirements early on can prevent costly mistakes.

New dental benefits reporting

Canada’s federal government has indicated that making dental care available to Canadians without access to a dental plan is a priority. Following the enactment of the Dental Benefit Act in November 2022 and the expansion of the Canadian Dental Care Plan (CDCP) in the 2023 federal budget, the Dental Care Measures Act was passed in June 2023 to require employers to provide information on their reporting to employees or former employees about employer-provided dental benefits.

Consequently, beginning for 2023 payroll slips, it is mandatory for employers to report on the T4 and/or T4A whether an employee -- or when applicable, a former employee -- or any of their family members were eligible, on 31 December, to access any dental care insurance or coverage of dental services of any kind offered by the employer. This new information will need to be reported in Box 45 – Employer-offered dental benefits on the T4, or Box 015 – Payer-offered dental benefits on the T4A.

The following codes are to be used to complete the new reporting:

1 – Not eligible to access any dental care insurance, or coverage of dental services of any kind
2 – Payee only
3 – Payee, spouse, and dependent children
4 – Payee and their spouse
5 – Payee and their dependent children

These codes are based on access to dental coverage, and not on whether an employee has chosen the dental coverage.

Health Canada (the CDCP administrator) has provided some administrative relief:

  • For the 2023 calendar year only, employers will not have to complete box 45 on the T4 or box 015 on the T4A when, and only when, code 1 is applicable, provided that reasonable efforts have been made to comply with the reporting requirements.
  • If a T4/T4A slip is filed before January 2024, employers will not have to file amended slips.

Employers should work closely with their payroll service provider to ensure the new T4/T4A reporting requirements can be met for all employees by the 29 February 29 2024 filing due date.

Quebec Pension Plan changes

Effective 1 January 2024, changes to the Quebec Pension Plan (QPP) will allow workers aged 65 and over who already receive a retirement pension to stop contributing to the QPP. Similar rules already exist under the Canada Pension Plan (CPP).

When an employee chooses to stop contributing to the QPP, they will be required to complete the form Election to Stop Contributing to the QPP or Revocation of an Election, and provide a copy to their employer and Revenu Québec.

For employers, the election is effective on the first day of the month after the date they receive this form. Employer contributions will also cease. Workers who turned 72 in the previous year can no longer contribute to the QPP.

New CPP2 and QPP2 boxes on the T4

As part of the CPP enhancement that began in 2019, the second phase of structural changes to the CPP will take effect in 2024. Specifically, a new second earnings ceiling to the CPP will be implemented. Currently, the yearly maximum pensionable earnings (YMPE) sets the maximum amount on which CPP contributions are calculated.

Beginning in 2024, a separate additional contribution of 4% will apply on the difference between the YMPE (first earnings ceiling of CAD 68,500) and the additional maximum annual pensionable earnings amount (new second earnings ceiling of CAD 73,200).

As such, additional information will need to be reported on T4 slips beginning in 2024. The 2023 version of the T4 slip already includes new boxes 16A - CPP2 and 17A - QPP2. However, reporting obligations in these boxes don’t begin until T4 slips are issued for the 2024 tax year. This means that boxes 16A and 17A should be left blank for T4 slips issued for the 2023 tax year.

BDO commentary

The changes discussed above may add complexity to the T4 preparation process. It is important to understand the changes and work with a payroll service provider on a timely basis to ensure that compliance obligations can be met.

Contact your BDO advisor for more information or if you have any questions on the changes.

Debra Moses
Christopher Ng
BDO in Canada