T4 reporting changes for 2023

As we near the end of the year, now is a good time to plan ahead for a smooth year-end payroll process. In this article, we discuss key changes that will affect all employers preparing T4 and T4A slips for 2023 and how becoming familiar with the new requirements early on can prevent costly mistakes.

New dental benefits reporting on T4 and T4A tax slips

The federal government has indicated that making dental care available to Canadians without access to a dental plan is a priority. In November 2022, the Dental Benefit Act, the first part of the Canadian Dental Care Plan (CDCP), was passed to provide assistance for dental benefits for children under the age of 12. These benefits are to be provided to uninsured Canadians with annual family income of less than $90,000, with the full amount of the payment available to those with family incomes under $70,000.

In the 2023 federal budget, the government announced its plan to expand the CDCP to more Canadians. As a result of these new benefits, the Dental Care Measures Act was passed in June 2023 requiring employers to provide information on their reporting to employees or former employees about employer-provided dental benefits. Consequently, beginning for payroll slips for 2023, it is mandatory that employers report on the T4 and/or T4A whether an employee or any of their family members were eligible, on December 31, to access any dental care insurance, or coverage of dental services of any kind offered by the employer. This new information will need to be reported in Box 45 – Employer-offered dental benefits on the T4, or Box 015 – Payer-offered dental benefits on the T4A. Completion of Box 015 will be mandatory if an amount is reported in Box 016, Pension or Superannuation.

For purposes of this reporting, a family member of an employee or where applicable, former employee, includes:

• the employee's spouse or common-law partner,
• a child of the employee, or a child of the employee's spouse or common-law partner, who is under the age of 18 years, and
• a child of the employee, or a child of the employee's spouse or common-law partner, who is 18 years of age or older and dependent for support on the employee or their spouse or common-law partner due to mental or physical infirmity.

It is important to note that the codes above are based on access and not whether an employee has chosen dental coverage. Consider the following examples:

• If an employee was eligible on December 31 for dental coverage but chose to opt out of the plan, it is not appropriate to use code 1.
• If a Healthcare Spending Account is offered to the employee that can be used for dental coverage, then using code 1 would also not be appropriate, regardless of how the account was actually used.
• If the individual is no longer an employee on December 31 (even if they were an employee who had access to dental coverage on December 30), the box should be left blank.

Note that Health Canada (the CDCP administrator) has provided some administrative relief as follows:

• For the 2023 calendar year only, employers will not have to complete box 45 on the T4 or box 015 on the T4A when, and only when, code 1 is applicable, provided that reasonable efforts have been made to comply with the reporting requirements.
• If a T4/T4A slip is filed before January 2024, employers will not have to file amended slips.

Employers should work closely with their payroll service provider to ensure the new T4/T4A reporting requirements can be met for all employees by the February 29, 2024, filing due date.