Payroll year-end in Canada is one of the most administratively intense periods for business owners — especially those managing teams, contractors, or seasonal staff. The good news? With the right preparation, you can avoid penalties, corrections, and unnecessary stress.
Here’s a step-by-step guide to getting payroll year-end right.
1. Review Employee Information
Data accuracy is critical. Confirm:
- Legal names
- SIN numbers
- Addresses
- Provincial tax status
- Employment start/end dates
Small mismatches create CRA filing rejections.
2. Record All Taxable Benefits
This includes:
- Health/dental benefits
- Personal-use vehicles
- Bonuses/commissions
- Gift cards
- Employer-paid training
- Group insurance premiums
These must be added before T4s are produced.
3. Process Year-End Bonuses Properly
Many businesses issue bonuses in December or January.
Make sure:
- Source deductions are calculated correctly
- Bonuses are aligned to the correct reporting year
- Payments and journal entries match your payroll platform
4. Reconcile Payroll Accounts
Validate that all remittances and pay runs match your GL:
- CPP
- EI
- Federal/provincial tax
- Employer contributions
- WSIB/WCB (if applicable)
A mismatch here can trigger CRA penalty letters by summer.
5. Prepare T4/T4A Slips early
T4s are due by the end of February — but the prep must begin in December and early January.
Typical issues we see:
- Missing contractor payments for T4A
- Incorrect taxable benefit coding
- Misallocated bonuses
- Unrecorded ROEs
- Duplicate employee profiles
Start early to avoid February panic.
6. Align Payroll with Your Monthly Close
Payroll interacts with your month-end process through:
- Accrued wages
- Vacation accruals
- Employer contributions
- Payroll clearing accounts
A clean payroll setup accelerates the Day-15 Close— keeping leadership informed and reducing year-end adjustments.
7. Use Checklists & Automation
Tools like Wagepoint, QuickBooks Payroll, or Payworks streamline T4/T4A production, but they still depend on correct inputs.
Build a year-end checklist that includes:
- Reviewing annual earnings reports
- Validating taxable benefits
- Filing ROEs
- Confirming remittances
- Scheduling T4 distribution
Final Thoughts
A strong payroll year-end process reduces risk, eliminates costly corrections, and keeps employees confident that their records are accurate. We help Canadian businesses prepare, reconcile, and file payroll year-end smoothly — freeing you to focus on what matters most.
