Step 3 - Balance and Reconcile

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Have you finished step two?

Before jumping into this article, if you haven't read Step 2 – Taxable Benefits, we strongly recommend reading it first.


This step will walk you through the balancing and reconciling of your records. 

Balancing and reconciling your records can be difficult because changes to one record can impact another and cause it to be incorrect.

For example, if a non-cash taxable benefit is added during the review, the CPP and EI due to CRA may increase. As a result, it's critical to follow a process in which you review your records, make adjustments (if necessary), and then review your records again.

However, we strongly advise you to complete this step so that you can identify and reconcile any potential discrepancies before generating your T4s. This will save you a lot of time (and headaches) in the long run.


Download the Flowchart

Download File

This flowchart shows the actions you need to complete for this step. 

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Be sure to keep your records.

All employers are legally responsible for keeping payroll and employment records for each employee for at least 36 months.

It's also a best practice to back up all payroll records regardless of whether or not third-party payroll providers produce the records for you.


Part 1 - Add Dental Benefits

If your employer provides Dental Benefits, you can easily enter these codes using our handy Year-End Adjustment tool. We built this tool to make the process as simple and efficient as possible, so you can be sure your benefits are accurately recorded.

Curious to learn more? Skip to Part 5 for more details about the Year-End Adjustment tool.


Part 2 - Run the PIER Analysis Report

Run the PIER Analysis Report to audit CPP and EI statutory deductions

In Reporting, select the Payroll tab and click on the PIER Analysis report. The PIER Analysis Report will help you quickly identify any potential discrepancies in:

  • Employee CPP
  • Employer CPP
  • Employee EI
  • Employer EI

We recommend doing this review before generating your employee T4s to ensure your business won't receive a Pensionable and Insurable Earnings Review (PIER) from the CRA.


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You can easily see a discrepancy if there's an amount other than zero in any of the variance fields.

A positive discrepancy means there's an overage (i.e. over-remitted amount), and a negative discrepancy means there's a deficiency (i.e. under-remitted amount).

For overages, you don't need to do anything because the CRA will return the over-remitted amounts to the employee as tax refunds.

Please note that it's normal to have minor deficiencies if there are still outstanding payrolls for the current tax year.

If the last payroll(s) for the year hasn't yet been processed, you should verify whether the discrepancies will be covered by the final payroll(s) or not.


Things to review in this report:

CPP Variance and ER CPP Variance EI Variance and ER EI Variance

CPP Variance and ER CPP Variance

These amounts represent discrepancies in the Employee CPP and Employer CPP amounts calculated throughout the year versus the statutorily required amounts.

Variance Type Calculation
CPP Amount Humi takes the Pensionable Earnings, subtracts the Basic Exemption (based on the Periods Paid and the pay period Basic Exemption Amount), multiplies this amount against the CPP contribution rate, and then subtracts this value from the CPP Deducted.

Common causes of CPP/EI discrepancies

  • Rounding errors. It's possible for per-period CPP/EI deductions to be correct but have minor discrepancies when per-period amounts are added together to get the annual amount due to rounding. These are unlikely to trigger a PIER review from the CRA.
  • The employee earned less Pensionable income in a pay period than the pay period basic exemption amount.
  • Incorrect configuration of CPP/EI exemption statuses. For example, when an employee turns 18 and becomes non-exempt or turns 70 and becomes exempt.
  • Incorrect or missing YTD amounts uploaded to Humi Payroll during implementation.
  • payroll frequency change mid-year.
  • Records were adjusted retroactively and no longer reflected the remittances made.
  • Clerical or calculation errors.


If you see a variance that you believe is not a rounding error, we have included four columns in the report to help determine the root cause:

  • Employee birthday
  • CPP exemption
  • EI exemption
  • Is there a YTD?

Important Note

The report aims to help reveal basic errors in implementation or usage in Humi Payroll. It's not designed to replace the employer's review of payroll records. As a result, Humi does not guarantee all discrepancies are captured in the PIER Analysis Report.


Part 3 - Run the T4 Preview Report

Run the T4 Preview Report to verify that earnings and deductions are reporting in the correct boxes

Humi’s T4 Preview Report is designed to help you quickly review where earning codes are mapped and check for overall accuracy. Doing this review before generating your T4s will help you avoid mistakes and time-consuming T4 Amendments. It allows you to generate a box-by-box preview of your T4s, broken down by each employee.

To access the report, under Reporting, select the Payroll tab and click on the T4 Preview report.


You can verify this information within the Employee Profile under the Personal and Job & Pay tabs.

Important Note

It's vital to ensure all employees paid within 2023 are set up in Humi Payroll, even if they've been terminated.


Confirm all Income Types are set up correctly

Certain Income Types have specific reporting requirements on the T4.

These resources may help you understand the requirements for pay types you have offered employees in the tax year:

With this information, you can use the T4 Preview report to ensure that T4s meet the reporting requirements.


Get to know your pay types

If you need to investigate the specifics of certain pay types within your account, use the links below to dig into the details:


Helpful CRA Resources

While Humi automates many of these processes, it's a best practice that employers also periodically perform a self-directed review of all payroll records.

The CRA has published a series of helpful resources to facilitate this review process:

Important Note

The report aims to help reveal basic errors in implementation or usage in Humi Payroll. It's not designed to replace the employer's review of payroll records. As a result, Humi does not guarantee all discrepancies are captured.


Part 4 - Use the T4 Preview

Use the T4 Preview to make sure that all employees have an accurate social insurance number and email address

The CRA uses the social insurance number reported on the T4 to identify the taxpayer. If this number is incorrect, your employee will have problems when they file their personal taxes.

You will also want to make sure that your employees all have an accurate email address, and that they will have access to this email address. This is important because Humi will send employees their T4s via a password-protected email. Therefore, all employees (Active and Terminated) must be able to receive this email from Humi.

Confirm that your employee's personal information is correct:

  • Employee First Name (Legal)
  • Employee Last Name (Legal)
  • Employee Address
  • Employee valid Email (for terminated employees, this will be their personal email)
  • Social Insurance Number (for security reasons, the T4 Preview Report will show a partially redacted SIN)

Admins can update employees' legal names, addresses, emails, or SINs directly from their Employee Profiles under the Personal or Job & Pay tabs.


Part 5 - Use the Year-End Adjustment Tool

With Humi, it’s easy to make any adjustments needed—simply use our Year-End Adjustment tool! This is a powerful tool and admins should only use it after a thorough review of payroll data and the T4 requirements.

For a step-by-step guide on using the Year-End Adjustment Tool, click here.

Available January 1st!

This tool becomes available on January 1st, for the previous year. For example, for the 2023 reporting year, the Year-End Adjustment tool will be available in Humi on January 1, 2024.


Correct any issues you’ve identified in the PIER Analysis Report, and/or T4 Preview Report

The Adjustment Table has a row for every employee who was on at least one payroll in the year. The table also has a column for every type of Pay, Additional Income, Benefit and/or Deduction that was on at least one payroll in the year.

To make an adjustment, double-click on the field, and enter the change.

  • To increase the value of an earning or benefit, enter a positive dollar value.
  • To increase the value of a tax or deduction, enter a positive dollar value.

Humi automatically saves the changes and reflects them on the T4.

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New for 2023! Add Dental Care Insurance Information

For the 2023 calendar year and onwards, it is mandatory to indicate in Box 45 of the T4 whether the employee or any of their family members were eligible, on December 31 of that year, to access any dental care insurance or coverage of dental services of any kind that you offered, as follows:

Code Description
Code 1 No access to any dental care insurance, or coverage of dental services of any kind.
Code 2 Access to any dental care insurance, or coverage of dental services of any kind for only the payee.

Code 3

Access to any dental care insurance, or coverage of dental services of any kind for payee, spouse and dependents.
Code 4 Access to any dental care insurance, or coverage of dental services of any kind for only the payee and their spouse.
Code 5 Access to any dental care insurance, or coverage of dental services of any kind for only the payee and dependants.

To enter this in Humi, simply select the code that matches the dental coverage eligible for that employee on Dec 31 in the Year End Adjustment tool, in the column titled Employer Offered Dental Benefits


Add Pension Plan Information (if required)

If you've used any of the Defined Benefit Pension Plan, Defined Contribution Pension Plan, or Profit Sharing Plan benefit types, then you will need to fill in Box 50 with the pension plan registration number, and Box 52 with the Pension Adjustment amount on the T4s after they're generated.

If Money is Owed

The Adjustment feature does not move money to your employee(s) or the CRA. If the adjustment results in more money owed to the employee or the CRA, you will need to pay (or collect) this outside of Humi.

About Remittances

If you need to make an adjustment that requires increasing tax amounts, whether it's for the employee or the employer, please be aware that you, the employer, must remit these amounts to the CRA outside of Humi.


Part 6 - Remit outstanding CPP, EI, and Income Tax statutory deductions

It’s a good idea to reconcile the amounts paid to the CRA with the total statutory deductions for the year, and, if necessary, make any additional payments. You can review all payments received by the CRA in your MyBusiness account, and compare these to the total statutory deductions. You'll need to remit any owed income tax, CPP, or EI statutory deductions before or as part of the final remittance for the tax year through the CRA's My Business Account.

You will incur no penalties or interests as long as the owed amounts are remitted and received by the CRA within the remittance period's due date.

As a leniency policy, the CRA offers a last resort solution known as Payment on Filing, allowing eligible employers to remit a reconciliation payment by the last day of February without being subject to a penalty or interest.

Employers are eligible if they meet all three of the following requirements:

  1. If the reconciliation payment is less than 1% of your total annual remittances
  2. You have perfect payroll compliance:
    • No late or outstanding remittances
    • No assessments in the year they are filing
    • All T4 information filed on or before the due date
  3. You must have one or more of the following circumstances:
    • Employees who are paid stock-based salaries or wages
    • Third-party information they rely on for insurance, health benefits, broker information, taxable benefits and/or automobile fleet mileage
    • Employees who live in other tax jurisdictions

However, we generally recommend remitting any owed amounts as soon as possible, so Payments on Filing can only be used for true emergencies, such as reconciling discrepancies that are discovered after the final remittance due date.


Downloadable Resources:

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