The facts about tax: Tips for addressing five common tax questions from staff at year end

Question #1: When will my T4 slip be ready?

As soon as the calendar year ends, there are usually some keen staff members who inquire about the status of their T4 slips. Although it’s admirable that these staff want to get started on their taxes as soon as possible, you should clarify that the deadline for sending these out is actually the last day of February.

At the same time, if you want to remind all staff, you can let them know that you will send a formal communication when T4 slips are ready. When you prepare this communication, include instructions for how staff can retrieve their T4 slips. If you are using payroll software, remind staff how to log into their account since many will only access their payroll information once a year. They should also be made aware that they have the option of accessing T4s through their CRA account.

Question #2: Why am I being charged more CPP this year?

Staff may not know about the introduction of a second CPP contribution, known as CPP2, on January 1, 2024. CPP2 represents an additional contribution for staff who earn higher wages above the maximum pensionable earnings. They are made in addition to their regular CPP contribution.

Who does this change affect?

For 2024, employees earning annual wages over $68,500, also known as the first earnings ceiling, will make CPP2 contributions up to $73,200, also known as the second earnings ceiling. The deduction for 2024 maxes out at $188. Just be aware that the first and second earnings ceilings aren’t static and will change on an annual basis based on direction from CRA.

Question #3: Is my year-end bonus taxable?

Many organizations award year-end cash bonuses paid in December, and staff often have questions about how this will impact their tax situation. As a starting point, it’s important for staff to be aware that, in Canada, bonuses are considered supplemental income and are subject to the same federal and provincial taxes as their regular salary.

Question #4: Can I claim home office expenses as a tax deduction?

This question is important because many staff became accustomed to claiming at-home office deductions on their taxes from 2020 to 2022 – a time when many individuals were required to work from home due to the COVID-19 pandemic. At that time, they were told to file a Form T2200S.

Since 2023, however, to claim this benefit, employees must meet a series of criteria set forth by the CRA on Form T2200 including whether they were required to use part of their home for work and if their related expenses were reimbursed. From a financial perspective, December, or even earlier, is a key time to ensure that your department has a solid understanding of the work arrangements of staff across the organization as Form T2200 is filled out by the employer, not the employee. By taking the time to better understand who is eligible, you can manage any questions you receive from staff regarding eligibility, and inform managers, who may be the first point of contact for their staff.

Question #5: What are my taxable benefits?

The answer to this question will depend on what is offered by your organization, but it’s important to have a simple explanation ready. From a staff perspective, they need to know that taxable benefits are paid for by the organization on their behalf and can include allowances, reimbursements and specific job perks. You can then provide specific context to an individual if they ask a specific question about a benefit they receive - be it a parking space, company vehicle, cell phone or all of the above.

How can HCM professionals get ahead of these questions?

Send a pre-emptive staff communication: Before questions start rolling in, consider sending an all-staff communication that outlines key information related to tax season. Even if you can’t address everything upfront, a quick email that reminds staff of where and when T4 slips will be available could save you time and energy in the future.

Document commonly asked questions and answers: As you receive questions, document your responses and share these with others when appropriate. If you have an intranet or shared drive, you can keep a running list of questions and answers that staff can access at any time before coming directly to you for a response. This documentation can also be updated and repurposed for future years.

Don’t forget staff who are on leave: It’s sometimes easy to focus on staff who you interact with on a regular basis, but don’t forget to connect with those who are on leave. These individuals may not be top of mind, but they should receive all communications, as they may have tax questions or need other support depending on their specific situation.

Don’t provide financial advice: In some organizations, staff may inadvertently overstep and start asking non-work-related tax questions. If you find yourself in a situation where staff are asking for your advice on a personal issue, such as how much they should contribute to their RRSP, always refer them to a financial advisor for support. Though well-intended, you never want to put yourself in a situation where you become a resource for this type of information, even if you are trying to be helpful.

When in doubt, refer staff to CRA: If you are unsure of how to answer a specific question or want to be careful in your messaging, it is always prudent to include a link to the relevant information on the CRA website. Ultimately, you want to make sure staff are accessing the most up-to-date, accurate information available, and CRA is your best source to make sure nothing is overlooked.

While December is a busy time for HCM professionals supporting payroll administration, preparing answers to some of these commonly asked questions now will, hopefully, make your holiday season a little brighter… and help your staff feel a little more supported once tax season comes around.

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