On a Canadian T4 slip, Box 24 specifically indicates your Employment Insurance (EI) insurable earnings for the tax year. This amount represents the portion of your income that is subject to Employment Insurance premiums.
Understanding EI Insurable Earnings
Employment Insurance (EI) insurable earnings are the total gross earnings an employee receives from insurable employment up to the annual maximum insurable earnings for the year. Both employees and employers contribute to the EI program through deductions from these earnings.
- Purpose: The EI program provides temporary financial assistance to eligible Canadians who are out of work through no fault of their own, such as due to job loss, illness, or caring for a new child.
- Contribution Calculation: The amount in Box 24 is used by the employer to calculate the EI premiums that are deducted from your pay and remitted to the Canada Revenue Agency (CRA).
- Benefit Eligibility: For employees, the insurable earnings reported in Box 24 are crucial because they determine eligibility for Employment Insurance benefits and influence the amount of benefits you might receive if you need to apply for them in the future.
Box 24 in the Context of a T4 Slip
The T4 slip, also known as the Statement of Remuneration Paid, is an essential tax document issued by employers to employees each year. It summarizes the employment income earned and deductions made during a calendar year. Box 24 is one of several critical boxes on this slip.
Here's a quick overview of Box 24 alongside other significant boxes you might find on your T4:
| T4 Box | Meaning | Importance |
|---|---|---|
| 24 | Employment Insurance (EI) Insurable Earnings | This figure is vital for calculating EI premiums and for determining your eligibility and benefit amount for future EI claims. |
| 20 | Registered Pension Plan (RPP) Contributions | Shows amounts contributed by the employee to a Registered Pension Plan, which may be deductible on your tax return. |
| 22 | Income Tax Deducted | Represents the total federal, provincial, or territorial income tax that your employer withheld from your pay. |
| 26 | CPP/QPP Pensionable Earnings | The portion of your earnings used to calculate your contributions to the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP). |
Practical Insights
- Not Always Equal to Total Earnings: It's important to note that the amount in Box 24 might not be the same as your total employment income (reported in Box 14). This is because there's an annual maximum for insurable earnings. For instance, if you earn above the yearly maximum insurable earnings, your Box 24 will reflect that maximum, not your entire gross income.
- Accuracy is Key: Employers are responsible for accurately reporting your insurable earnings in Box 24. This ensures correct premium remittances and helps employees access the benefits they are entitled to when needed. If you believe there's an error on your T4 slip, contact your employer for clarification and correction.
