Indians – Partly tax-exempt employment income

How to fill out the T4 slip

Prepare the T4 slip in the following way when you pay a partly tax-exempt salary or wages to your Indian employee.

Employer’s name

Enter your operating or trade name.

Employee’s name and address

Enter the employee’s name and address, including the province or territory and postal code.

Box 10 – Province of employment

Enter the provincial or territorial abbreviation.

Box 12 – Social insurance number

Enter the SIN, as provided by the employee.

Box 14 Employment income

Enter the taxable salary or wages paid to the Indian employee in box 14. In the "Other Information" area, enter code 71 and the amount of the tax-exempt salary or wages paid in the year.

Boxes 16 and 17 Employee's CPP/QPP contributions

If you did not elect to provide CPP/QPP coverage to all your Indian employees on their tax-exempt employment income, enter the CPP/QPP contributions you deducted from the employee's taxable earnings.

If you did elect to provide CPP/QPP coverage, enter the CPP/QPP contributions you deducted from the employee's earnings.

Box 18 Employee's EI premiums

Taxable and tax-exempt salary or wages paid to your Indian employee are insurable earnings and you must deduct EI premiums. Enter the EI premiums you deducted.

Box 20 RPP contributions

Registered pension plan (RPP) contributions that have been made for tax-exempt income are not deductible. Do not enter those contributions in box 20. If the employment income that relates to an RPP contribution consists of both taxable and tax-exempt income, you have to prorate the RPP contribution.

You do not have to prorate the amount of pension adjustment (PA). Report the total amount in Box 52 – Pension adjustment of the T4 slip.

Box 24 EI insurable earnings

Enter the amount of insurable earnings on which you calculated the EI premiums, up to a maximum of $54,200 for 2020. Enter "0" if there are no insurable earnings.

Box 26 CPP/QPP pensionable earnings

Enter the amount of pensionable earnings on which you calculated the CPP/QPP contributions, up to a maximum of $58,700 for 2020. Enter "0" if there are no pensionable earnings.

Box 44 Union dues

Annual union, professional, or like dues related to tax-exempt income are not deductible. Do not enter these dues in box 44. If the employment income that relates to union dues consists of both taxable and tax-exempt income, you have to prorate the union dues.

Box 52 Pension adjustment

Taxable and tax-exempt salary is included when determining the pension adjustment amount. See Box 52 – Pension adjustment for details.

Box 55 Employee's PPIP premiums

Taxable and tax-exempt salary or wages paid to an Indian in Quebec are insurable earnings and you must deduct PPIP premiums. Enter the PPIP premiums you deducted from employees working in Quebec.

Box 56 PPIP insurable earnings

For employees working in Quebec, enter the total amount used to calculate the employee's PPIP premiums, up to a maximum of $78,500 for 2020.

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