What’s the difference between a T4 and a T4A?
A T4 reports employment income with source deductions; a T4A reports other income — most commonly contractor fees paid to unincorporated workers.
The T4 is the employee slip: salary and wages, with the income tax, CPP, and EI you withheld. The T4A covers “other income” — for small businesses, most often fees paid to self-employed contractors, plus things like certain benefits.
T4, T4A, or T5018 — at a glance
| Slip | Who gets it | What it reports | Source deductions | Due to CRA |
|---|---|---|---|---|
| T4 | Employees | Salary, wages, and taxable benefits | Yes — income tax, CPP, and EI withheld | Last day of February |
| T4A | Unincorporated self-employed contractors and certain other payees | Fees for services and other income | Generally none | Last day of February |
| T5018 | Construction subcontractors | Payments for construction services | None | Six months after the reporting period you choose |
T4 vs T4A: the details
The short version: a T4 carries withholdings and payroll obligations; a T4A is a record of what you paid, with the recipient responsible for their own tax and CPP.
| Feature | T4 | T4A |
|---|---|---|
| Issued by | The employer | The business paying the contractor or other amount |
| Key box | Box 14 — employment income | Box 048 — fees for services (excluding GST/HST) |
| CPP and EI | Withheld from pay and matched by the employer | None withheld — the contractor pays both halves of CPP on their personal return; no EI unless they opt into the self-employed program |
| Minimum amount | No minimum — all employment income is reported | Generally not required when total payments to that person are under $500 for the year (unless tax was withheld) |
| Filing deadline | Last day of February | Last day of February |
| Late-filing penalty | Minimum $100 per return type, scaling with slip count and days late under CRA’s published schedule | |
Why the line matters more than the slip
The slip follows the relationship. If CRA decides your “contractor” was really an employee — based on control, tools, financial risk, and integration — you can owe the source deductions you never withheld, plus penalties. The slip choice is the paperwork; the classification is the risk.
When to issue a T4A instead of a T4: CRA’s test
CRA’s guide RC4110, Employee or Self-Employed?, weighs four main factors. No single factor decides it — CRA looks at the whole relationship:
- Control. Who decides how, when, and where the work is done? Employees are directed; contractors decide their own method.
- Tools and equipment. Contractors typically supply and maintain their own significant tools; employees use yours.
- Financial risk. Contractors can profit or lose money on the engagement — fixed-price quotes, their own expenses, other clients. Employees are paid regardless.
- Integration. A worker whose services are the core of your operation, full-time, for years, with one client, looks like an employee no matter what the contract says.
The written contract matters, but CRA weighs what actually happens over what the paper says.
Common mistakes
- Misclassifying an employee as a contractor. The most expensive one — a full-time worker with set hours, your tools, and no other clients is an employee even if both of you preferred the contractor label.
- Issuing a T4A to an incorporated business. Not required — T4As for fees target unincorporated individuals. (Construction is different: the T5018 applies to subcontractors whether or not they are incorporated.)
- Forgetting the $500 threshold. Slips are generally required once total payments to an unincorporated person reach $500 in the year — it is per payee, per year, not per invoice.
- Skipping the slip because the amount was paid in cash. The reporting requirement follows the payment, not the payment method — and the contractor still owes tax on it either way.
Penalties for getting it wrong
Two different exposures, and the second is much bigger than the first:
- Late or missing slips. Minimum $100 per return type, scaling with the number of slips and days late under CRA’s published schedule (for example, a return of 11–50 slips accrues $10 per day to a maximum of $1,000).
- Failure to deduct or remit. If a “contractor” is reassessed as an employee, CRA can charge 10% of the CPP, EI, and tax that should have been withheld — 20% for repeat failures in the same year made knowingly or through gross negligence — and the employer can be assessed both halves of the unpaid CPP and EI, plus interest, going back years.
T4A or T5018: which one for contractors?
Two slips cover contractor payments, and the split is by what your business does, not what the contractor does. If construction is your primary activity, payments to subcontractors for construction services go on the T5018 — incorporated or not, which is the opposite of the T4A’s rule. Every other kind of business reports fees to unincorporated contractors on the T4A. A renovation GC paying a drywaller: T5018. A marketing agency paying a freelance designer: T4A. A business that does both construction and something else should settle the question once with an accountant rather than guessing slip by slip — the two forms have different deadlines and different rules about incorporated payees, so the wrong pile is not a harmless mistake.
What about incorporated contractors?
You do not issue a T4A for fees paid to a corporation — the requirement targets unincorporated individuals (sole proprietors and partnerships). Two caveats: construction businesses report subcontractor payments on the T5018 regardless of incorporation, and incorporation only protects the classification if the person genuinely operates as an independent business — a “personal services business” (an incorporated employee) creates its own tax problems for the contractor. If you are the owner deciding how to pay yourself — salary on a T4 or dividends on a T5 — that is a different decision: see salary vs dividends in Canada.
Deadlines
Both are due to CRA and to the worker by the last day of February for the previous calendar year. Construction businesses reporting subcontractor payments use the T5018 instead, on its own schedule.
What good books do here
Track worker payments correctly all year — payroll for employees, contractor ledger for T4A recipients — and slip season is an export, not an investigation. That is how taxifi works: payments are booked correctly as they happen, and slip prep is part of one flat monthly price. If you run a construction business, start with our trades & contractors page.
This is general information, not tax advice for your situation. Get started and a Canadian accountant will give you the answer for your business.
Common questions
Do I need to issue a T4A to an incorporated contractor?
Generally no — T4As for fees target unincorporated self-employed individuals, and payments to corporations are typically outside the requirement. Construction subcontractor payments use the T5018 regardless. Confirm your specific cases with your accountant.
What if I paid someone partly as an employee and partly as a contractor?
It happens — a real employment period plus a genuine contracting arrangement can each be reported on the matching slip. But if it is one continuous relationship dressed two ways, that is a classification problem, not a paperwork choice.
Is there a minimum amount before I need to issue a T4A?
Generally, a T4A is not required when total payments to a person are under $500 for the calendar year, unless you withheld tax from any of it. The threshold applies per payee per year, not per invoice — ten $60 payments to the same contractor cross it. When in doubt, issue the slip; there is no penalty for reporting a payment you did not have to.
Do I deduct CPP or EI from payments to a T4A contractor?
No. A genuine contractor pays both halves of CPP through their own personal return, and pays no EI premiums unless they have opted into CRA’s program for self-employed special benefits. If you find yourself wanting to withhold from a “contractor” because the relationship feels like employment, that instinct is the classification test talking.
What box does contractor income go in on a T4A?
Box 048, “fees for services,” and the amount excludes any GST/HST you paid on top of the fee. Other T4A boxes cover different kinds of income — pensions, scholarships, certain benefits — so a contractor slip with the fee in the wrong box causes matching problems on the recipient’s return.
What is the penalty for filing T4 or T4A slips late?
The minimum is $100 per type of return, and it scales with the number of slips and the number of days late under CRA’s published schedule — a return of 11 to 50 slips, for example, accrues $10 per day to a maximum of $1,000. T4 and T4A returns are penalized separately, so filing both late doubles the pain. The deadline for both is the last day of February for the previous calendar year.
What happens if CRA decides my contractor was really an employee?
CRA can reassess you for the income tax, CPP, and EI you should have withheld — including the employer’s share of CPP and EI — plus a penalty of 10% of the unwithheld amounts (20% for knowing or grossly negligent repeat failures in the same year) and interest, going back years. The worker’s past invoices do not protect you; CRA looks at how the relationship actually operated. This is the single most expensive payroll mistake a small business can make.