The end of the calendar year is not the end of your payroll obligations — it is the start of the most error-prone reporting exercise BC employers face all year. Your T4 slips for 2021, and any T5 slips for investment income or dividends you have paid, must be filed with the CRA and delivered to recipients by February 28, 2022. That feels far away in December, but the work that makes February painless — reconciling what you remitted against what you should have remitted — is best done now, while the year is fresh and your bookkeeper still remembers that unusual March adjustment.
This post is a close-out guide. The goal is accurate slips filed on time, no surprise discrepancies with the CRA, and no panicked re-issuing of slips in March because a taxable benefit was missed.
Why payroll reconciliation matters more than the slips themselves
A T4 is only as good as the data behind it. The slip simply summarizes what you paid an employee and what you withheld and remitted. If your monthly source-deduction remittances to the CRA do not tie out to the totals on your T4 Summary, you have a problem — and it surfaces at exactly the wrong time, when everyone is busy and the deadline is fixed.
Reconciliation means proving that, for the full year, the sum of CPP, EI, and income tax you withheld from employees plus the employer portions you owe equals what you actually sent the CRA across all your remittance periods. Do this in December and any gap is a calm investigation. Discover it in late February and it is a fire drill.
What belongs on the T4 that owners routinely miss
The wages are the easy part. The errors cluster in the items that are not obvious:
- Taxable benefits — employer-paid portions of group life insurance, personal use of a company vehicle (the standby charge and operating benefit), gifts and awards above the CRA thresholds, and certain allowances. These are taxable and must appear on the T4.
- Bonuses paid late in the year — make sure a December bonus run is captured in 2021 totals.
- Owner-manager remuneration — confirm that salary and any year-end bonus accruals are recorded consistently with how they were remitted.
- Special situations — terminations, parental leaves, and corrected pay runs during the year that may have changed withholdings.
Each of these can throw a T4 off, and a wrong T4 means an amended slip and an irritated employee whose personal tax return is now incorrect.
When does a T5 come into play?
If your corporation paid dividends to shareholders during 2021, you generally need to issue T5 slips reporting that investment income, also due by February 28, 2022. Owner-managers who took part of their compensation as dividends — a common and often sensible choice — must remember the T5 step. The dividend is recorded in the corporation's resolutions and the T5 reports it to the shareholder and the CRA so it lands correctly on the personal return.
A worked example: the cost of a late, sloppy filing
Penalties for late or incorrect information returns are mechanical, and they add up faster than owners expect. The CRA penalty for filing T4 slips late is a flat amount based solely on the number of slips filed late — it does not accrue by the day — with a minimum of $100 and rising into the thousands for larger employers.
Consider a fictional BC firm, Cascade Logistics Ltd., with 45 employees. Its bookkeeper is overwhelmed and the T4s are filed three weeks after the February 28 deadline.
- For an employer with 45 slips, the CRA's late-filing penalty is a flat $250 — the penalty for 6 to 50 slips. The full schedule is: $100 (1–5 slips), $250 (6–50), $500 (51–500), $1,500 (501–2,500), $2,500 (2,501–10,000), $7,500 (over 10,000). The amount does not vary by how many days late — it is assessed the moment the deadline passes.
- At a flat $250 for this employer, the penalty is a pure, avoidable cost — regardless of whether the return is one day late or three weeks late.
But the harder cost is downstream. Two of the 45 T4s omitted a taxable vehicle benefit. Those employees file their personal returns based on the wrong slips, the CRA later reassesses them, and the employer has to issue amended T4s and field upset calls. The direct penalty was a few hundred dollars; the reputational and relationship cost with staff was larger. Clean reconciliation in December would have caught the missing benefit before a single slip was issued.
Reconciling to the T4 Summary: the step that catches errors
The mechanical heart of the close-out is the T4 Summary reconciliation. The summary totals every T4 you issue — total employment income, total CPP, total EI, total income tax — and those totals must agree with two independent sources: your payroll records and your CRA remittance history for the year. When all three tie out, you can file with confidence. When they do not, the difference is a clue you must chase before filing, not after.
Three discrepancies show up again and again for BC employers:
- Remittance timing mismatches. A December pay run remitted in early January can land in the wrong year if the remittance was coded to 2022 but the pay relates to 2021. The T4 follows the pay date; make sure the remittance and the slip agree.
- CPP and EI over- or under-deductions. Employees who changed mid-year, turned 18, reached the maximum pensionable or insurable earnings, or had multiple records can produce small deduction errors that the summary surfaces. The CRA's pensionable and insurable earnings review (a PIER report) will flag these after filing, so catching them now avoids a follow-up assessment.
- Missed taxable benefits. A benefit added to income for tax but not run through a cash pay line is the classic source of a summary that does not balance.
If the reconciliation is off by a few dollars, it is usually rounding and easily explained. If it is off by hundreds or thousands, something structural is wrong, and that is exactly what you want to discover in December rather than from a CRA notice in the spring.
Owner-managers: coordinate the corporate and personal sides
For owner-managed BC corporations, T4/T5 season is also the moment the corporate and personal tax pictures connect. The salary on your T4 and the dividends on your T5 are the two halves of how you paid yourself, and they need to reflect the salary-versus-dividend decision you made at the corporate year-end. If you accrued a bonus before year-end intending to pay it within 180 days, make sure the slip and the timing match the resolution. A mismatch between what the corporation deducted and what your personal return reports is the kind of inconsistency that invites questions. Closing payroll cleanly is partly about your employees and partly about keeping your own two tax returns — corporate and personal — telling the same story.
A December-to-February close-out checklist
- Reconcile source deductions for the full year — withheld CPP, EI, and income tax plus employer portions against total remittances.
- Capture all taxable benefits — vehicle standby charges, insurance, gifts over threshold, allowances.
- Confirm year-end bonus runs are recorded in 2021 totals and any accruals are consistent.
- Identify all T5 obligations — every dividend paid to a shareholder during the year.
- Verify employee details — SINs, addresses, and legal names, because errors here delay filing.
- File electronically and on time — T4 and T5 slips and summaries to the CRA, and copies to recipients, by February 28, 2022.
Key takeaways
- T4 and T5 slips for 2021 are due to the CRA and to recipients by February 28, 2022 — plan the work in December, not February.
- Reconcile a full year of source deductions against your remittances; a gap found early is routine, found late is a crisis.
- The errors that cause amended slips are taxable benefits, late bonuses, and owner remuneration — check these specifically.
- If your corporation paid dividends, do not forget the T5 step for each shareholder.
- Late and incorrect information returns carry mechanical CRA penalties plus the larger cost of fixing employees' reassessed returns.
A clean payroll close-out is quiet by design — the goal is a February where nothing surprises you, because you did the reconciling in December.
If your year-end payroll reconciliation needs a steady hand, RN Canada supports BC employers through T4/T5 season and the source-deduction tie-out that prevents amended slips. We would be glad to help you close 2021 cleanly.