Making Sense of the T4

Shawnee Love   •  
January 23, 2015

January rolls around and it suddenly becomes the season for T4s.

The T4 is a document created for and by Revenue Canada for what seems to be the sole purpose of establishing how much (more) money workers owe to the government.  However, many employers treat the T4 like a Total Rewards Statement and misguidedly assume that the T4 will update their employees on how much they made last year and what the company offered in benefits and perks.

The reality is very different:

  1. Many employees don’t even review their T4’s.
  2. For those who do review their T4’s:
    1. Some don’t understand them at all (but don’t want to ask)
    2. Others understand some of the T4 and figure the rest isn’t important,
    3. A few completely understand but don’t realize the T4 is only part of the story, and
    4. The rest understand some, are confused by some and would love some more information.

Since confusion breeds unhappiness, it is a great time for employers to get in front of the T4 with some communication about:

  • What exactly the T4 is saying (and why it is important), and
  • What the T4 doesn’t say well, i.e., what is the entire package that the employee receives for working with the company.

This year, when putting together T4’s, we suggest an accompanying letter which explains the information in the T4 and what to do with that information.  Then, in the next page, summarize all the tangible and intangible “rewards” offered by your company to that employee .

Not only is an explanation of the T4 really helpful to less experienced workers but a summary of the entire package will reinforce the often unheralded aspects of a workplace that people really value.  Since small and medium sized organizations often can’t compete with larger companies on hard rewards like wages or benefits, a reminder of what your company does offer to employees can really pay off.

Does your company provide annual reward statements?

Come back next week and we will go through the contents you might find in a reward statement.