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T4A Requirements for Contractors and Self-Employed Workers

Last updated: Jul. 26, 2023 

An important part of the Canadian tax system, a T4A slip, is also considered a statement of pension, retirement, annuity, or other income. This type of slip is issued to anyone who receives income that’s not considered employment-related, such as money earned from pensions, annuities, self-employment, and more. 

What are the T4A requirements for contractors?

T4A Requirements for Contractors: What’s a T4A slip? 

A T4A slip is a financial document that offers an itemized breakdown of any nontraditional income received, including the monetary amounts and applied tax deductions. Individuals who receive T4A slips must carefully review the information provided on their slips to ensure that it aligns with their records. This helps them follow and comply with Canada’s tax regulations. 

A business typically issues a T4A slip to summarize all compensation paid to a nonemployee worker or contractor during a given calendar year. Independent contractors then use these forms to file their income taxes in place of a T4 slip. When it comes to reporting income from a T4A slip for contractors, business expenses or operating costs can be claimed against it to lower the amount of taxes owed.

What are the differences between a T4 and T4A slip?

While T4A and T4 slips share a number of similarities, the T4 slip lays out a more detailed account of various payroll contributions received by an employee from their employer. In addition to summarizing how much an individual has earned during the past year, a T4 slip itemizes all necessary deductions. This can include income tax, union fees, or any employment insurance premiums paid by an employer. Noncontracted individuals who work multiple jobs should expect to receive T4 slips from each employer they work for. 

However, certain self-employed individuals may not receive a T4A slip from every business or client they work with because this document is typically only sent by companies that classify you as a consultant. Depending on the information you receive in a T4A slip, you must report all business and self-employment income on Canada Revenue Agency (CRA) Form T2125.

When is a T4A slip required?

If a contractor was paid more than $500 during a calendar year by a business or deducted tax from any payment, they may be issued a T4A slip that’s also filed with the CRA. Employers, payers, issuers, or administrators prepare both T4A and T4 slips.

Who will receive a T4A form?

Any individual who receives income from sources outside of standard employment may receive a T4A form. This may include self-employed workers, pensioners, and those who receive investment income, such as dividends or interest.

Are you an employee or self-employed? 

Unsure if you’re an employee or a self-employed contractor

To determine if a person performing a job is considered a self-employed individual or an employee working for an employer, the CRA must know if the self-employed contractor and the payer entered a working relationship and whether they intended to enter into a contract of service or a contract for services.

The CRA has set forth specific standards that will help identify whether you’re an employee, independent contractor, or employer that has hired a contractor or an employee. The following questions can help:

  • How much control does the worker have?
  • Does the worker have the ability to subcontract work or hire additional help?
  • Who pays for and provides the tools used to carry out the job?
  • How much profit, loss, and risk are involved?

The nature of contract work differs from employment, and contractors may set their own hours, deciding when and how to get the work done. They work for themselves and must remit their own taxes. They also may directly profit from business activities and any work that’s performed. 

Contractors can negotiate terms and receive payment for their work. They may also have the ability to bring on and pay for subcontractors, and the payer has no control over who the contractor hires. Finally, contractors typically must supply any tools and equipment needed to perform a job, such as computer equipment, machinery, and more.

When will I receive my T4A slip? 

T4A slips are typically sent out in February. You can also log into your CRA account to view your slip. However, you may not receive receipts for registered retirement savings plan and pooled registered pension plan contributions made during the first 60 days of the tax year until May. You can access the CRA’s T4A slip here

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