Every January, the same question shows up: does this person get a T4 or a T4A? It looks like an administrative detail, but when you're dealing with someone who performed services for your business, the answer often starts with a more important question: were they an employee, or were they carrying on their own business? Getting that classification wrong can create a much bigger problem than issuing the wrong slip.

What's Happening

A T4 (Statement of Remuneration Paid) goes to anyone you ran payroll for during the year — employees, in other words. It reports salary, wages, bonuses, and taxable benefits, along with the CPP, EI, and income tax you withheld and remitted on their behalf.

A T4A (Statement of Pension, Retirement, Annuity, and Other Income) reports several kinds of income outside regular employment. For a small business, one important use is Box 048, Fees for services — amounts paid for services to Canadian-resident service providers when the reporting rules apply. Other T4A boxes cover things like pension income, lump-sum payments, and self-employed commissions, but Box 048 is the one most relevant to contractor payments.

For most Canadian-resident recipients of fees for services reported in Box 048, the payer doesn't withhold CPP, EI, or income tax — the recipient handles their own tax obligations.

One thing that surprises a lot of business owners: the requirement to report fees for services on a T4A is legislated and has existed for years, but CRA introduced an administrative moratorium on assessing penalties for missing Box 048 back in 2011 — meaning the filing requirement was real, but CRA generally wasn't enforcing it with penalties. That moratorium remains in place for most industries. Starting with the 2025 tax year, CRA lifted it specifically for the trucking industry. The requirement itself hasn't changed for anyone else — but CRA has now started lifting that relief in at least one industry, so this isn't a reporting requirement I'd assume will stay unenforced indefinitely.

How to Manage This Ongoing

Issuing a T4A doesn't protect you if the classification is wrong. If CRA later determines the relationship was actually employment, the slip you issued doesn't matter — you can still be held responsible for the CPP, EI, and income tax that should have gone through payroll, plus interest and penalties. The slip reflects the classification; it doesn't create it.

Don't include sales tax in Box 048. If a contractor billed you $5,000 plus GST/HST, Box 048 shows $5,000 — the fee for services, before tax. Don't report the full invoice amount including GST/HST.

Track cumulative payments across the year, not per-invoice. The reporting requirement generally applies once total payments for services to a recipient are more than $500 during the calendar year — not per payment. Someone you paid $150 four separate times has crossed it, at $600 total.

Both slips are generally due by the same date: the last day of February following the year the payments relate to. If that date falls on a weekend or recognized public holiday, the deadline shifts to the next business day.

Watch the electronic filing threshold. If you're filing more than five information returns of the same type, CRA generally requires you to file them electronically. Filing six T4As, for example, puts that return over the threshold.

If You've Issued the Wrong Slip

If you realize you've issued a T4A to someone who should have received a T4 — or the reverse — don't assume the problem is limited to the slip. If the mistake came from classifying the worker incorrectly in the first place, the payroll treatment may need correcting too, and the two issues need to be looked at together.

To understand the test behind the classification, read employee or independent contractor? How CRA decides. For what a wrong classification can cost, see what happens if CRA reclassifies your contractor as an employee.

FAQ

Do I need to issue a T4A for every service provider I paid, no matter how small the amount?
Generally, only once total payments for services to that recipient are more than $500 during the calendar year. Below that, a T4A generally isn't required — but track payments through the year so you're not caught off guard when someone crosses the threshold partway through.

Can issuing a T4A instead of a T4 protect me if CRA later says the worker was really an employee?
No. The slip reflects how you classified the worker — it doesn't determine the classification itself. If CRA disagrees with how you classified someone, the slip you issued doesn't shield you from the back CPP, EI, and tax that should have been withheld.

What if I genuinely don't know whether someone should get a T4 or T4A?
That usually means the underlying employee-vs-contractor question hasn't been settled yet — and that's a bigger decision than a slip.

Follow the system. File with confidence.