From T4 and T5 to T5018, we make sure there are no slip ups .
When your corporation makes profits, it pays tax on those profits, but those profits do not belong to the owners. You, the owner or shareholder of your corporation, must be paid by your corporation. We help you decide how you should pay yourself, then file the proper T slips.
Dividends vs wages
You have to decide each year if you would like dividends, wages, or some of each - and we help you decide which makes the most sense for you. Dividends are simple and often mean you keep a bit more money in your pocket when compared to wages. A wage is a deduction to the corporation, whereby the corporation does not pay any tax on your wages, and you are taxed on the full amount, personally. At the personal level, dividends are taxed at a lower rate than wages, but dividends are also taxed at the corporate level, where wages are not. When you receive a wage, you must also pay into your CPP (Canada Pension Plan), with the corporation paying half the CPP and you personally paying the other half.
T Slip deadlines
T4 and T5 slips must be filed by February 28 of the following year. CPP for the tax year must be paid by January 15 of the year following the tax year, assuming you pay yourself a wage annually, once in December. If you pay yourself more regularly, you need to follow the monthly payroll schedule and make your remittance by the 15th of the month following the paycheque.
Your subcontractors should give you an invoice with a GST number, name, address, date, etc. If you hire ‘casual’ workers as subcontractors who do not have a business number, then you must get the following information from them: full name, address, Social Insurance Number and phone number. Be careful though – it’s common for unknown casual workers to provide fake Social Insurance Numbers. If you pay a worker less than $500 in a year, they could be considered 'casual labour' and T5018 slips are not necessary.
Payroll and CPP
If you pay regular wages or salaries to yourself or any employee of your business, you’re required to make regular (monthly) payroll remittances to the CRA. Payroll remittances include a portion for CPP (Canada Pension Plan), a portion for EI (Employment Insurance) and a portion of income taxes. The specific requirements vary largely based on your situation, so it’s best to talk to us about the payment details.