Payroll Software Costs, Pricing Models and 2026 Rules
T4 slips and year-end payroll in Canada: deadlines, electronic filing and what software should do
T4 and T4 Summary deadlines, mandatory electronic filing above five slips, T4A and RL-1 pointers, year-end fees and a payroll year-end sequence.
For each calendar year, an employer must give every employee a T4 slip and file the slips with a T4 Summary with the CRA by the last day of February of the following year. If you file more than five slips of one type (for example six T4s) for a calendar year, the CRA requires you to file them electronically; paper filing above that threshold can attract a penalty. Payroll software should produce the T4 data from the year's pay runs, reconcile it to what you remitted, file it electronically (usually as an XML file or through the vendor's transmission) and let you issue amended slips. If you have Quebec employees, you also file RL-1 slips with Revenu Québec, generally by the same date.
This guide is part of the payroll and HR software comparison overview.
Key dates for the 2026 tax year
| What | Deadline | Notes |
|---|---|---|
| T4 slips to employees | Last day of February 2027 | Email delivery needs the employee's written consent; a secure employer portal is allowed; paper on request |
| T4 Summary and slips to the CRA | Last day of February 2027 | 28 February 2027 is a Sunday; when the due date falls on a weekend or CRA-recognised holiday, the return is due the next business day (1 March 2027) |
| T4A slips (pensions, fees for services and other amounts) | Same date | Separate return type with its own count for the electronic filing threshold |
| RL-1 slips (Quebec) | Generally the last day of February | Filed with Revenu Québec, with the RLZ-1.S summary |
| Business closing or payroll stopping | Within 30 days of ceasing to operate | 90 days after death for a deceased sole proprietor or partner (CRA T4 guide) |
The electronic filing threshold
For information returns filed after 31 December 2023, the CRA lowered the mandatory electronic filing threshold from 50 to 5 slips. In practice:
- 1 to 5 slips of a type: paper or electronic.
- 6 or more slips of a type: electronic filing is mandatory.
- The threshold is counted per return type, so six T4s require electronic filing even if you have only two T4As.
Electronic options are Web Forms (the CRA's free online application, which suits small employers) and Internet file transfer of an XML file produced by payroll software. Most payroll tools either generate the XML for you to upload or transmit it on your behalf.
The CRA's penalty for filing on paper above the threshold is graduated by the number of slips; for example, the CRA's published table starts at $125 for 6 to 50 slips. Late filing has its own penalties. See payroll penalties.
What goes on a T4
The boxes are produced from the year's pay data, which is why payroll set-up matters all year:
| T4 box (common) | Comes from | Typical set-up error |
|---|---|---|
| 14 Employment income | All taxable pay and taxable benefits | Taxable benefit coded as non-taxable |
| 16 / 16A CPP and CPP2 contributions | Deductions taken | Wrong exemption for a mid-year hire or an employee turning 18 or 70 |
| 17 / 17A QPP and QPP2 (Quebec employees) | Deductions taken | Province of employment set incorrectly |
| 18 EI premiums | Deductions taken | EI-exempt employee not flagged |
| 22 Income tax deducted | Deductions taken | Manual cheques recorded outside the system |
| 24 EI insurable earnings, 26 CPP/QPP pensionable earnings | Earnings flags | Earning types with wrong insurable/pensionable flags |
| 44 Union dues, 46 charitable donations, 52 pension adjustment | Deductions and plan data | Pension adjustment not calculated |
| Other information (codes) | Benefits, commissions, specific income types | Codes missing for non-cash benefits |
A T4 Summary that does not match the deductions you remitted triggers a CRA review (a PIER, the Pensionable and Insurable Earnings Review) that can lead to assessments for under-deducted CPP or EI. Good software runs a reconciliation report before filing: total remitted per the CRA statement of account versus total deducted per the T4s.
Year-end in the software: a practical sequence
- November: confirm employee addresses, SINs and province of employment; record any taxable benefits not yet processed (for example a car allowance, gift cards over the CRA's limits, or group life premiums paid by the employer).
- Last pay run of December: run any bonuses, retroactive pay and final benefit amounts so they fall in the right year (the pay date decides the year).
- January: load the new year's tables; do not start 2027 runs before the vendor's January update.
- January–February: run the year-end reconciliation, fix differences, preview slips and file electronically.
- After filing: keep the confirmation number; issue amendments promptly if you find an error.
Illustrative example of a year-end fee comparison for 22 employees and 3 contractors receiving T4As:
| Pricing approach | Calculation | Year-end cost |
|---|---|---|
| Slips included in the monthly price | — | $0 |
| Per slip | 25 slips × $4 | $100 |
| Flat year-end fee + per slip | $75 + 25 × $2 | $125 |
| Accountant prepares slips from your spreadsheets | Illustrative flat fee | $600 |
Year-end fees are small next to the monthly price, but amendments can add up. Ask about amended slips when comparing pricing models.
Switching software and T4s
If you change systems during the year, each system holds part of the year's pay. Either the new system imports the year-to-date amounts so it issues one T4 per employee, or each system issues its own T4 for its part of the year. The first is cleaner for employees and easier to reconcile. See switching payroll providers mid-year and Records of Employment for related year-end interactions.
FAQ
Can I email T4 slips to employees?
Yes, with the employee's written consent given before you send them. Without email, you can post slips on a secure employer portal. If an employee asks for a paper slip, you must provide one. The CRA's T4 guide (RC4120) sets out the conditions.
What if I find an error after filing?
File an amended T4 for the affected employee (electronically if you filed electronically) and give the employee a copy. Do not file a new original slip for the same employee and year. Most payroll software has an amendment workflow; check whether it is extra-cost.
Do I need to file T4s if I had only one employee?
Yes. The obligation applies from the first employee. With five slips or fewer you may file on paper, but electronic filing through Web Forms is free and avoids mailing time.
Are contractor payments reported on a T4?
Payments to self-employed individuals are not employment income. Some are reported on a T4A (for example certain fees for services), and the T4A has its own rules and threshold count. Misclassifying an employee as a contractor is a separate risk; the CRA can rule on employment status.
Sources
- Canada Revenue Agency — T4 guide (RC4120), filing information returns electronically, Web Forms, penalties
- Justice Laws Website — Income Tax Regulations on information returns
- Revenu Québec — RL-1 slips and the RLZ-1.S summary
- National Payroll Institute — year-end training and checklists for payroll practitioners
