Guides
T4 and T5 Filing for Bookkeeping Firms: Deadlines and Common Mistakes
T4 and T5 filing for bookkeeping firms: CRA deadlines, the electronic filing rule, and common mistakes US preparers see on Canadian client slips.
What to take away
- T4 slips and the T4 Summary are due the last day of February after the calendar year.
- The T5 information return, which is the T5 slips plus the T5 Summary, is due the last day of February as well.
- Under the CRA's information return penalties, filing more than 5 slips for a calendar year on paper rather than by Internet file transfer or Web Forms draws a penalty by type, $125 for 6 to 50 slips, so 6 T5 slips and 6 T4 slips on paper mean two $125 penalties. A late T5 information return costs at least $100 and at most $7,500.
- The costliest mistake is a T4 for salary with no matching payroll remittances.
- Some T5 errors stay invisible until a client receives a notice of reassessment many months later.
- Treat the final week of February as a hard cutoff, not an internal target.
T4 and T5 filing for bookkeeping firms is cross-border work for a growing number of US tax preparers: a client with a Canadian payroll, a subsidiary, or an investment account north of the border puts CRA slips on the same desk as the IRS returns. The T4 reports employment income and deductions; the T5 reports investment income such as dividends and interest. Both carry separate CRA filing obligations, both land on the same winter deadline, and both create their own failure patterns. A bookkeeping firm compliance calendar turns those dates into a visible checklist.
The costly one
A bookkeeper includes a T4 for a shareholder-manager who took draws all year. The corporation never opened a payroll account. The bookkeeper records the draws as salary at year-end and issues a T4 so the owner can claim RRSP room. CRA matches the T4 against remittances and finds none. The corporation is assessed for unremitted CPP, EI, and income tax, plus penalties and interest.
T4 vs T5 Decision
Payroll account and remittances exist?
Issue T4 for salary
Treat draws as dividends, issue T5
A T4 that does not match remittance totals is the fastest way to turn a client's March reconciliation into a CRA payroll examination.
The prevention is to confirm that a payroll account exists and that source deductions were remitted before issuing any T4 for salary. The CRA payroll hub sets out the remittance due dates, and CRA guide RC4120 (Employers' Guide: Filing the T4 Slip and Summary) covers the slip and the summary themselves. If remittances are absent, treat the draws as dividends and issue T5 slips instead, where the corporation has sufficient retained earnings.
The ones that look fine at first
A T4 with the wrong province of employment code looks complete at first pass. The numbers balance, the SIN matches, and the summary totals agree. CRA's pensionable and insurable earnings review later catches the mismatch and issues a PIER report. The client then owes the difference in CPP and EI contributions, often months after the file was closed.
Pre-Filing T4/T5 Checks
- Compare slip province to work location
- Run payroll register by employee
- File T4 Summary
- File T5 Summary separately
- Verify summary totals match slips
The cause is manual entry from a payroll register that did not flag province changes. Employees who moved or worked across provincial lines are easy to miss. The prevention is to run a payroll register by employee and compare each slip's province of employment to the employee's actual work location before filing. A daily checklist for reconciliation tasks can make this check routine.
Another mistake that looks fine is filing T5 slips without a summary. The client's investment income slips are produced, but the T5 Summary is missed. CRA treats the individual slips as not filed, and the company receives a penalty for a missing information return. The prevention is to treat the T4 Summary and the T5 Summary as separate documents that must be filed even when the number of slips is small.
The ones that only show up later
A corporation pays interest on a shareholder loan but the bookkeeper does not issue a T5. The client's personal return does not report that interest because no slip arrived. CRA's matching program links the corporation's interest expense to the shareholder's unreported income after the filing season ends. The client gets a notice of reassessment, sometimes 12 to 18 months later, with interest and late-filing penalties.
When Delayed Mistakes Surface
- FebruaryT4/T5 filing deadline
- 12 to 18 months laterReassessment for unreported shareholder loan interest
- LaterEmployer compliance audit catches omitted taxable benefits
This is the invisible mistake. It survives the February deadline because neither the client nor the bookkeeper sees an error in the current year. The prevention is to review every loan to and from shareholders during the year and issue a T5 for interest paid or deemed dividends. Before you trust an export from bookkeeping software, check the 4 things to check audit trail so that loan accounts are not hiding in an equity or suspense account.
Another delayed failure is a taxable benefit that never made it onto a T4. A client provides a car to an employee, but the bookkeeper omits the standby charge. The error looks fine until an employer compliance audit or a worker's personal income tax review brings it forward. The prevention is to ask clients each December for a list of taxable benefits and to add them to the T4 before the summary is filed.
What they have in common
All of these mistakes share three features: deadline compression, manual extraction, and a missing reconciliation step. Bookkeepers often pull payroll and investment data in the last week of February, so verification gets skipped. The prevention is to start the data pull in mid-January and reconcile each slip total to source records.
Common Mistakes and Fixes
Mistake
- T4 salary without remittances
- Unremitted CPP, EI, tax
- Wrong province code
- PIER report, CPP/EI arrears
- Missing T5 for loan interest
- Reassessment 12-18 months later
Consequence
- T4 salary without remittances
- Confirm payroll account and remittances
- Wrong province code
- Compare T4 to work location
- Missing T5 for loan interest
- Review shareholder loans, issue T5
Prevention
- T4 salary without remittances
- Wrong province code
- Missing T5 for loan interest
| Mistake | Consequence | Prevention |
|---|---|---|
| T4 salary without payroll remittances | CRA assesses unremitted CPP, EI, and income tax | Confirm payroll account and remittances before filing T4 |
| Wrong province of employment code | PIER report and CPP/EI arrears months later | Compare each T4 to employee work location |
| Missing T5 for shareholder loan interest | Notice of reassessment 12 to 18 months later | Review shareholder loans and issue T5 slips |
The same reconciliation habit applies before the slips go out: match each T4 slip total against the client's payroll remittance summary and confirm the payroll account is open and current.
US W-2 deadlines arrive earlier and use different forms; the IRS instructions for W-2 and W-3 govern those. In Canada, the last day of February is the single cutoff for most T4 and T5 slips, so a US practice that serves a Canadian client runs two filing calendars side by side. Bookkeeping firms that treat the summary as an afterthought are the ones that get the March call from a panicked client.
