If you are a business or non-profit organisation in Canadathen the answer is YES. You are requiredto issues a T4A slip to ANYONE who you pay any of the following types ofrevenue to:
- pension or superannuation
- lump-sum payments
- self-employed commissions
- patronage allocations
- registered education savings plan (RESP)accumulated income payments
- RESP educational assistance payments
- fees or other amounts for services
- income replacement payments made under theVeterans Well-being Act
- other income such as research grants, paymentsfrom a registered disability savings plan (RDSP); wage-loss replacement planpayments if you were not required to withhold Canada Pension Plan (CPP)contributions and employment insurance (EI) premiums, death benefits, orcertain benefits paid to partnerships or shareholders
The two most common reasons a small business will issue T4Asis to report self-employed commissions (box 20) and fees for services (box 48). For the sake of this article I am going to focuson fees for service (as commission is fairly straight forward and the other casesare far less common for small businesses).
Please note that the CRA is currently stating “The CRA isnot assessing penalties for failures relating to the completion of box 048.” Ontheir T4Apage, but this can change at any time. CRA auditors have been known to review T4A filings and catch people ofissues with this field.
Who should I issue T4A slips to?
There are a lot of misconceptions here. It is easier to start with the list of whoyou do NOT have to send these slips to. These include:
- Suppliers of goods and products
- Payments to a Crown agency, department or corporation(use form T1204 instead)
- Payments to subcontractors in the building industry(use T5018)
- Passive income paid to non-residents of Canada(use NR4)
- Suppliers who were paid $500 or less during theyear
Note what is not listed here. It does not exempt payments to corporations,people with a GST number, offshore contractors, your accountant, lawyer or yourbank! Technically you be sending T4As toall these entities (yes, even to me).
So for most businesses you will have a dozen or more T4Aslips to issue, even if you don’t have any independent contractors. You’ll have to decide how pedantic you want tobe here – do you issue a T4A slip to Google for Adwords and Aps, or to everySoftware as a Service product you spend more than $500 on? You should, according to the letter of thelaw – but given CRA’s temporary declaration of not
What information do I need to include?
The form is pretty straight forward, but here are someuseful comments:
- Name – you should use their legal name, not theirtrading name
- Number – for companies use their 15 digit BNnumber (their GST registration number would be fine); for sole proprietors usetheir SIN (which is not the same as the GST number). If they don’t (or won’t) give it to you use000000000RP0000 for BN or 000000000 for SIN.
- Amount – enter the amount you paid them duringthe year into the appropriate box (48 for services). This is on a payments basis and shouldexclude any sales taxes you paid them.
Getting this data from Xero
Unfortunately, Xero doesn’t have a report that can reallyhelp here. Start with the Expenses byContact report (purchases section on the report page). Use this to determine which contacts you wantto send slips to. Then go to the ContactTransactions – Summary report (Accounting section) and select each contact oneby one. The report will show you thetotal “Spend Money Transactions” (includes spend money and bill payments) whichis probably the amount (less GST/HST) that you want to include on the T4A. You can click on this line for a moredetailed listing.
When are the slips due?
Regardless of your financial year end, T4As are based on aJan to Dec calendar year. They mist befiled with CRA by 28 Feb of each year (same time as T4 and T5 slips). There are penalties for late filing or not filingT4A slips and the penalty is PER SLIP, not one penalty for all slips.
How do I file the slips?
While you can submit them online through your MyCRA account. You will need a payroll account, even if youdon’t pay employees. You can use the WebForms wizard to create up to 100 forms (but the wizard is pretty prone to crashingand requiring you to start again, so keep it to a few!). Third party and software and XML uploadoptions are also available.