[Canada] Payroll year-end checklist

Take the steps provided in this guide as early as possible to ensure your 2020 filings are accurate.

At a glance


Verify your employees' wages, benefits and personal information

Are all employees paid within 2020 reported (even from before Wave)?
Are all wages reported accurately?
Do employee wages match their Employment Insurance (EI) premiums and Canada Pension Plan (CPP) contributions?
Are all benefits reported accurately?

 

Audit your employee wages to ensure there is no discrepancy between their insurable/pensionable earnings and their EI/CPP amounts on the T4. 

Unless your employee was exempt for the whole year, or part of the year, you should have been deducting EI premiums and CPP contributions from every pay cheque. As an employer, your portion of EI would be 1.4 times your employees' premiums, and your portion of CPP would match the employees' contributions.
For 2020, the EI rate was 1.58%. You should be able to multiply Box 24 on the T4 by 1.58% and see it match what is reported in Box 18. (Note that due to rounding, you may see it as a few cents off to a couple dollar. This is expected by the CRA.)
For 2020, the CPP rate was 5.25%, with the annual exemption remaining at $3,500. Checking CPP earnings in Box 26 against contribution in Box 16 is more complicated than it is for EI. The CRA has provided a step-by-step guide to checking CPP contributions to assist with this process.
For information on what to do if they don't match, please see the CRA's instructions here.

Make sure benefits enjoyed this year are included on 2020 payroll

If you are missing a benefit and have yet to run your final 2020 payroll, you can add it to payroll before the end of the year. To do this, go to the employee profile > click Benefits & Deductions. Find more information about adding deductions, bonuses and benefits here. 

If you're missing a benefit and cannot add it to a future payroll in Wave, please contact our Support Team as soon as possible. Please include the employee name and the benefit or deduction name, amount and quarter it was enjoyed in.


Preview your T4 slips

Take advantage of previewing your T4 slips now to make sure you’ve entered correct wages, benefits and employee information for 2020. To preview your T4 slips, go to PayrollTax Forms.


Reflect on business structure changes this year

If you made changes to your business structure in 2020 that resulted in a new Canada Revenue Agency (CRA) Payroll Account Number (e.g. incorporating from a sole-proprietorship), you would have already submitted T4 slips with your old CRA Payroll Account number when the change occurred. Ensure wages reflected on year-end forms only include wages paid towards your new CRA Payroll Account Number. You’ll need to create a second business in Wave for your restructured business


Important direct deposit dates

As 2020 comes to a close, it's important to keep direct deposit timelines in mind. Payrolls and direct deposits do not process on Federal bank holidays. This means if a bank holiday falls on the day you normally approve payroll, pay employees, or anytime in between, you must approve payroll at least one business day earlier. The following dates are bank holidays to keep in mind:

Federal Bank Holiday Date
Christmas Day Friday December 25, 2020
Boxing Day Monday December 28, 2020
New Year's Day Friday January 1, 2021

December 28, 2020: The last day to approve a direct deposit payroll with a 2020 pay day. Make sure that your payroll is approved no later than 3:00PM ET on December 28, 2020 for the payroll to be reported in the 2020 tax year.


Audit your T4A contractor information

In order for contractor payments to show up on the T4A slip at year-end, the contractor must have been listed as a T4A contractor in your Vendors list. If you need to update this, here's how:

  1. Under Purchases > Click Vendors
  2. Select the Vendor Name
  3. Click the arrow under Actions > Click Edit
  4. Under the vendor name > Locate Type
  5. Update the vendor type to T4A contractor Click Save

Make sure to review and confirm all contractor information is accurate. If your contractor is an Individual, ensure that their Social Insurance Number (SIN) is correct. If your contractor is a Business, ensure their CRA Account Number and Business Legal Name is correct.


Review contractor bills and bill payments

In order for contractor payments to appear on 2020 T4A slips, ensure the related bill payments in Wave are recorded as paid in 2020. Payments made to a T4A contractor totalling $500 or more in the year require a T4A slip.

If you are a construction company paying subcontractors for construction services, you will file Form T5018 Statement of Contract Payments instead of the T4A slip. For more information on this type of return, see Information for payers of the T5018.


Update employee tax profiles for 2021

January 1, 2021: If employee federal or provincial claim amounts have changed, they must submit new forms to their employer to ensure accurate payroll calculations. Otherwise, make sure tax details are up to date with the 2021 basic exemption amounts. Here's how:

  1. Under Payroll > Click Employees 
  2. Select Employee Name 
  3. Click Tax Details

Confirm your deposit frequency for 2021

December 2020: Review notices received before the end of 2020 from the Canada Revenue Agency (CRA) with updates to your business' remittance deposit frequency. You can update this in Settings > Tax Profile. Please update this as soon as possible - you can make the effective date January 1, 2021.


Key dates: get your forms to the CRA and to your workers

January 2021: Internet filing for T4/T4A Summaries and T4/T4A Slips becomes available.

February 28, 2021: This is the last day to get your T4 and T4A slips to employees and contractors. This falls on a Sunday, so if you don’t see your employees on the weekends, you should give them their forms beforehand.

March 1, 2021: This is the last day to submit T4/T4A summaries and T4/T4A slips to the CRA. Since February 28th falls on a Sunday, your slips are due the next business day.


Bring everything together with reconciliation

If you pay your employees by cheque, perform a payroll bank reconciliation through December 31, 2020. Look for outstanding cheques and make sure you've accounted for employee expense reimbursements. Compare payroll tax withdrawals from your bank account to the amounts on your tax liability records. To review payroll taxes in Wave, go to Payroll > Taxes. For more steps and insight into year-end accounting, check out: Accounting year-end checklist.

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