What Are The Filing Deadlines For T4 And T5 Slips | Virtual Accountant
Entrepreneurs need to understand what all of the various filing deadlines are says virtual accountant not just for their fiscal year and taxes, but also for their source deductions. Entrepreneurs need to ensure that not only are they filing their T4 and T5 slips on time, but all source deductions need to be paid up prior to their filing deadline to avoid triggering a payroll audit in their business. Payroll audits can often lead to an entrepreneur being assessed significant amounts of additional tax, that can be financially devastating to their business. An entrepreneur should keep a few things in mind in order to ensure that they do not trigger a payroll audit themselves.
What is being recorded with the T4 and T5 slip according to virtual accountant are all of the amounts of money that are coming out of the business to pay an entrepreneur and their staff. A T5 slip is for the entrepreneur to claim all of the dividends that they have taken out of the business. Since this is how entrepreneurs disperse profits of their corporation, only shareholders and business owners can get paid and dividends.
A T4 is how an entrepreneur records all of the employment income both their own salary, as well as their employee’s wages. It is important that all employment income has source deductions being withheld from them, and being submitted to Canada revenue agency in a timely fashion. Many entrepreneurs are unaware that there is a monthly deadline for all people remittances to be submitted to the Canada revenue agency in full. The fifteenth day of every month is the deadline, and all paychecks that were submitted in the be is month must have appropriate source deductions paid by the fifteenth day of the next month.
As long as an entrepreneur is making a payment on or before that date, they are likely not going to hear from Canada revenue agency, even if they are under paying says, virtual accountant. It is important that entrepreneurs take note of this because if they are expecting Canada revenue agency to let them know that there underpaying, it is not going to happen. However, if they file their T4 and T5 slips without having the correct amount paid up in full, they could trigger a payroll audit. Therefore it is very important for entrepreneurs to ensure that they are holding the correct amount of payroll taxes including the employer and the employee portion of CPP, EI and income tax and submitting it to Canada revenue agency.
A payroll audits can be very devastating for an entrepreneur, especially if they’re already facing a cash-flow shortage. Therefore, entrepreneurs can ensure that they are holding the correct amount of source deductions, submitting it in full to Canada revenue agency and doing so on or before the fifteenth of the month deadline. When entrepreneurs do this, they can avoid triggering a payroll audit in their business.
Virtual Accountant | What Are The Filing Deadlines For T4 And T5 Slips
Many entrepreneurs understand how important it is for ensuring that they are filing their taxes on time says virtual accountant, but they may not understand that they also need to ensure that they are filing their T4 and T5 slips on time every year as well. In fact, if entrepreneurs miss this deadline, they could potentially cause Canada revenue agency to do a payroll audit of their business.
Since the T4 and T5 slips have to do with all of the money that an entrepreneur has taken out of their business and pay their employees it is important that the entrepreneurs file the slips with Canada revenue agency by their filing due date of the last day of February. Once an entrepreneur has submitted that the was slips, Canada revenue agency will be able to see if an entrepreneur has paid enough source deductions. If an entrepreneur has not been paying the correct amount, but either missing a payment or underpaying, the best-case scenario will before CRA to send a letter requesting the amount of money that is due immediately, the however worst-case scenario is that this will trigger a payroll audit.
If an entrepreneur is facing and audits, virtual accountant says that but they can do to be proactive is go through their own personal benefits that they have taken out of their business to ensure they have claimed it on a T4 or it T5 slip. If they have not, they should be attributed to their shareholder loan before the auditor sees their financial statements. The reason why is so that this can help an entrepreneur show the auditor that they are being reasonable as well as transparent on what transactions have not previously been claimed. It raises the credibility of the entrepreneur and can help an auditor give the entrepreneur the benefit of the doubt when looking at any grey area transactions.
The auditor will be looking at the bank statements, credit card statements and general ledger of the business says the virtual accountant. They are looking to see if an entrepreneur has paid individuals that should have been paid as employees have the appropriate source deductions withheld and submitted to CRA. If an entrepreneur has hired an unincorporated contractor in their business, and auditor may consider these contractors as staff, forcing an entrepreneur to pay source deductions on all the amounts they have paid that contractor. This could end up being a significant amount of money depending on how many times an entrepreneur is use that contractor, and how many contractors have been identified as staff.
The next thing that an auditor is going to be looking for them to virtual accountant is all of the money that an entrepreneur has taken out of their business, as well as non-cash benefits such as the company paying for things like their mortgage. They are looking to compare them to the T4 and T5 to ensure that all of the personal expenses have been accounted for. Any additional amounts will be assessed tax and interest.
In order for an entrepreneur to simply avoid the stress of going through payroll audits, all an entrepreneur has to do is file their T4 and T5 slips by the end of February, and ensure that they are current with all payroll remittances at all times.