Year-end legislation changes roundup: what employers need to know

To help you stay compliant and well-prepared as we head into the 2025 year-end payroll processing season, we’re highlighting some key legislative and payroll changes to keep on your radar and your year-end to-do list (psst: don’t forget about our trusted 10-Step Year-End Checklist!).

2025 Key changes at a glance:

1. Mandatory reporting requirements for the Canadian Dental Care Plan (CDCP)
2. T4 and RL-1 capital gains codes revert to standard format
3. New Employment Insurance (EI) premium rates for 2026
4. Provincial updates to maximum assessable earnings and Québec Parental Insurance Plan (QPIP) contributions
5. New CRA & Service Canada Tools

Ready to dive into the details? Read on!

Mandatory reporting requirements for the CDCP

While many Canadian employers have been familiar with the Canadian Dental Care Plan (CDCP) since its introduction for the 2023 tax year, the Canada Revenue Agency (CRA) will no longer provide administrative relief for CDCP reporting starting in the 2025 tax year. This means that all Canadian employers must now complete the dental benefit fields on T4 and T4A slips – even if no dental coverage was offered. If the field is left blank, the CRA may reject your submission.

So what needs to be reported? Employers must indicate whether an employee, former employee, or any of their family members had access to any form of dental insurance or dental coverage through the employer’s benefits as of December 31 of the reporting year. The CRA doesn’t require that employers report whether or not an individual made use of the dental coverage; they just need to report whether or not it was available.

Report this information here:

• T4 Box 45 – Employer-offered dental benefits.
• T4A Box 015 – Payer-offered dental benefits.

To refresh your memory on the original CDCP reporting requirements, how the T4/T4A boxes work, and how Payworks’ Payroll solution can help, check out our previous blog article: https://blog.payworks.ca/new-t4/t4a-boxes-added-explore-how-the-cdcp-changes-your-year-end.

Updates to T4 and RL-1: Capital gains codes

We’ve got important news for employers and payroll professionals: the CRA and Revenu Québec (RQ) have reverted back to the standard format for capital gains reporting on T4 and RL-1 form. This means there’s no longer a need to split reporting between two different time periods, as the previously introduced codes for the 2024 tax year have been retired.

T4 reporting

• Code 38 – Security options benefits.
• Code 39 – Security options deduction 110(1)(d).
• Code 41 – Security options deduction 110(1)(d.1).

RL-1 reporting

• Box L – Other Benefits
• L-9 – Security option deduction under section 725.2 of the Taxation Act (line 297).
• L-10 – Security option deduction under section 725.3 of the Taxation Act (line 297). 

2026 Employment Insurance (EI) premium rate

The Canadian Employment Insurance Commission has announced updated EI premium rates and maximum insurable earnings for 2026. These changes take effect January 1, 2026 and bring a mix of lower rates and higher thresholds.

Maximum insurable earnings:

• Increasing from $65,700 to $68,900.

EI premium rate reductions

Outside Québec:

• Employee rate is decreasing from 1.64% to 1.63%.
• Employer rate is decreasing from 2.30% to 2.28%.

Within Québec:

• Employee rate is decreasing from 1.31% to 1.30%.
• Employer rate is decreasing from 1.83% to 1.82%.

Provincial updates

2026 maximum assessable earnings

The following provinces have announced increases to their maximum assessable earnings for workers’ compensation in 2026:

• British Columbia: Increasing to $127,500 (up from $121,500 in 2025).
• New Brunswick: Increasing to $85,800 (up from $84,200 in 2025).
• Yukon: Increasing to $107,599 (up from $104,975 in 2025).

2026 (QPIP) rate reductions

Effective January 1, 2026, QPIP contribution rates are decreasing by 8%. The new premium rates will be:

• Employee contribution: 4.55%.
• Employer contribution: 6.36%.
• Self-employed individuals: 8.08%.

Bonus: tools, systems and timelines

New: Employment Insurance Premium Reduction Web Portal (EIPR)

Good news! Service Canada has launched a brand new bilingual web portal to make submitting EI premium reduction applications and supporting documents faster and easier for employers. Say goodbye to paperwork headaches and slow approvals. This new web portal simplifies the process, speeds up approvals and cuts down administrative hassle.

New: EI Benefits Estimator Tool

Planning for leave just got easier!

Service Canada’s new EI Benefit Estimator Tool provides employees a simple way to get a quick estimate of their weekly EI benefits, based on inputs like insurable hours and recent earnings.

Whether an employee is preparing for maternity leave, sick leave, or another type of EI-eligible absence, this tool can help them plan with more clarity and gives you a head start on estimating any top-up payments your organization may provide.

Heads up: CRA system downtime

Mark your calendars! The CRA’s internet filing applications will be temporarily unavailable for scheduled maintenance from:

• December 22, 2025 – January 12, 2026

But there’s no need to stress – with Payworks’ Payroll, we’ll take care of your year-end filings for you. That means year-end compliance is one less thing on your to-do list.

Compliance is critical… and complicated!

Navigating year-end payroll processing can feel overwhelming, especially with the ever-changing landscape of Canadian payroll legislation. Fear not – we’re here to help guide you every step of the way, whether it’s through our one-to-one client support, user-friendly solutions, intuitive Year-End Checklist, or comprehensive library of resources. Best of all, our fan-favourite Payroll Guide is available to you 24/7 and free of charge, whether you’re a Payworks client or not! Download it today: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.