Plan ahead for a smooth year-end payroll process. In this article, I discuss key changes that will affect all employers preparing T4 and T4A slips for 2023, and some changes to be aware of for 2024.
New dental benefits reporting on T4 and T4A tax slips
The federal government has indicated that making dental care available to Canadians without access to a dental plan is a priority. In November 2022, the Dental Benefit Act, the first part of the Canadian Dental Care Plan (CDCP), was passed to provide assistance for dental benefits for children under the age of 12. These benefits are to be provided to uninsured Canadians with annual family income of less than $90,000, with the full amount of the payment available to those with family incomes under $70,000.
In the 2023 federal budget, the government announced its plan to expand the CDCP to more Canadians. As a result of these new benefits, the Dental Care Measures Act was passed in June 2023 requiring employers to provide information on their reporting to employees or former employees about employer-provided dental benefits. Consequently, beginning for payroll slips for 2023, it is mandatory that employers report on the T4 and/or T4A whether an employee or any of their family members were eligible, on December 31, to access any dental care insurance, or coverage of dental services of any kind offered by the employer. This new information will need to be reported in Box 45 – Employer-offered dental benefits on the T4, or Box 015 – Payer-offered dental benefits on the T4A. Completion of Box 015 will be mandatory if an amount is reported in Box 016, Pension or Superannuation.
For purposes of this reporting, a family member of an employee or where applicable, former employee, includes:
- the employee’s spouse or common-law partner,
- a child of the employee, or a child of the employee's spouse or common-law partner, who is under the age of 18 years, and
- a child of the employee, or a child of the employee's spouse or common-law partner, who is 18 years of age or older and dependent for support on the employee or their spouse or common-law partner due to mental or physical infirmity.
The following codes are to be used to complete the new reporting:
- Not eligible to access any dental care insurance, or coverage of dental services of any kind
- Payee only
- Payee, spouse, and dependent children
- Payee and their spouse
- Payee and their dependent children
It is important to note that the codes above are based on access and not whether an employee has chosen dental coverage. Consider the following examples:
- If an employee was eligible on December 31 for dental coverage but chose to opt out of the plan, it is not appropriate to use code 1.
- If a Healthcare Spending Account is offered to the employee that can be used for dental coverage, then using code 1 would also not be appropriate, regardless of how the account was actually used.
- If the individual is no longer an employee on December 31 (even if they were an employee who had access to dectal coverage on December 30), the box should be left blank.
Employers should work closely with their payroll service provider to ensure the new T4/T4A reporting requirements can be met for all employees by the February 29, 2024, filing due date.
New CPP2 and QPP2 boxes on the T4 slip
As part of the CPP enhancement that began in 2019, the second phase of structural changes to the CPP will take effect in 2024.
Specifically, a new second earnings ceiling to the CPP will be implemented. Currently, the Yearly Maximum Pensionable Earnings (YMPE) sets the maximum amount on which CPP contributions are calculated. Beginning in 2024, a separate additional contribution of 4% will apply on the difference between the YMPE (first earnings ceiling of $68,500) and the additional maximum annual pensionable earnings amount (new second earnings ceiling of $73,200). As such, additional information will need to be reported on T4 slips beginning in 2024.
Note that the 2023 version of the T4 slip already includes new boxes 16A - CPP2 and 17A - QPP2. However, reporting obligations in these boxes don’t begin until T4 slips are issued for the 2024 tax year. This means that boxes 16A and 17A should be left blank for T4 slips issued for the 2023 tax year.
