Failing to report all taxable earnings from work is a common issue the CRA aims to curb. This makes properly understanding Line 10400 for “other employment income” critical for the 29 million T1 personal tax filers in Canada.
Line 10400 provides a way to fully disclose all taxable earnings from work to the Canada Revenue Agency (CRA), even if employers did not document them on a T4.
Proper use of Line 10400 is important for maintaining tax compliance in Canada. Our article here will explain what types of income belong on Line 10400, documentation to track, calculation steps, potential deductions, and common reporting mistakes to avoid.
What is Line 10400?
Line 10400 is where you report additional employment income that was not included on your T4 slips. This line item is found on the T1 General Income Tax and Benefit Return form that all Canadian residents must file annually.
Line 10400 allows you to provide the Canada Revenue Agency (CRA) with a complete and accurate record of all your employment earnings, even those not reported through typical channels.
Income reported on Line 10400 is still considered employment income. However, it differs from the income reported on Line 10100, which is for earnings documented on T4 slips provided by your employer.
Think of Line 10400 as the line for “other” employment income that does not belong on other T1 lines like Line 10100. Properly reporting earnings on Line 10400 ensures you meet your tax obligations to the CRA.
What Types of Income are Reported on Line 10400?
Four common types of employment earnings should be reported on Line 10400.
| Income Type | Description | Examples |
|---|---|---|
| Tips and Gratuities | Unreported cash tips from service jobs | Restaurant server tips, taxi driver tips, tour guide gratuities |
| Casual Labor Earnings | Irregular or short-term employment income | Income from side jobs, freelance work, short contracts |
| Taxable Allowances/Benefits | Non-cash taxable employer perks | Clergy residence allowance, discounted personal use of company assets |
| Foreign Employment Income | Offshore income from a non-Canadian employer | Salary from job abroad, overseas consulting income |
| Director Fees | Compensation for serving on a board | Directors fees from being on an employer’s board |
| Retiring Allowances | Early retirement incentive or severance pay | Retirement pay package, severance for job loss |
What Documentation is Required for Line 10400?
Since Line 10400 other employment income is used to report income that may not have been documented through T4 slips, you need to track details on any cash or ad hoc earnings. This includes:
- Detailed records of any tips or casual job earnings in cash
- Any T4A, T4PS slips you received for taxable benefits/allowances
- Documentation of foreign income and conversion calculations to CAD
- List of any expenses related to research grants
It is a good idea to maintain detailed records and estimates of any cash income you receive throughout the year so you can accurately report it on Line 10400 later on.
Failing to fully report employment income could expose you to penalties and back taxes.
How to Calculate the Line 10400 Amount
The seven main steps to calculate the total amount reported under Line 10400 are:
- Add up any cash tips, gratuities not included on T4 slips
- Include any cash or unrecorded tips from service jobs, contract work, customer gifts, etc.
- Keep detailed logs throughout the year, listing dates and estimated tip amounts.
- Tally earnings from casual, irregular employment
- Calculate total payments received for short-term gigs, side jobs, and freelance work
- Keep invoices, job records, 1099s, and payment documents for support
- Add taxable allowances from T4 Box 30
- If your T4 shows taxable clergy residence allowance, car benefits, gifts, etc., in Box 30, include this total
- Calculate net research grant income
- Total grant amount received
- Subtract eligible expenditures (lab fees, travel, salaries, etc.)
- Provide expense details in case CRA requests them
- Add foreign employment income converted to CAD
- Use the Bank of Canada annual average exchange rate for the year funds were received
- Keep detailed income records from foreign employer(s)
- Include amounts from T4A slips for SUBPs
- Report SUBP amounts shown in Box 152 of your T4A slips
- Add other taxable income like employment-related royalties
- Ensure royalties are directly tied to employment duties
The ultimate goal is to account for and accurately report all taxable employment-related income that was not included in your T4 slips on Line 10100.
Deductions and Credits Related to Line 10400
In certain cases, you may be able to claim tax deductions or credits related to some types of Line 10400 income:
Clergy residence deduction
If you are a member of the clergy, you may be able to deduct a portion of the clergy residence amount reported in Line 10400. This deduction is claimed on Line 23110.
To be eligible, you must meet specific criteria related to the dwelling, employment duties, and residency requirements. Consult the CRA’s Clergy Residence Deduction form for details.
Foreign tax credits
You may be able to claim a foreign tax credit for any foreign taxes paid on Line 10400 foreign employment income, preventing double taxation. Foreign tax credits are claimed on Line 40500. Proper documentation of foreign taxes paid is required.
No CPP enhancement or EI eligibility
Unlike regular employment income reported on Line 10100, amounts reported on Line 10400 do not qualify for the enhanced Canada Pension Plan benefit.
Line 10400 income is also not eligible for Employment Insurance since no EI premiums were withheld at source.
No RRSP room
Line 10400 amounts do not count towards RRSP contribution room since they fall outside of T4-reported pensionable earnings.
No Canada Employment Credit
The Canada Employment Credit is only available for income reported on Line 10100, not Line 10400.
Employment expenses
Unreimbursed employment expenses, such as vehicle, travel, or supplies costs, are deductible against net Line 10400 income on Line 22900.
In summary, limited deductions or benefits are associated directly with Line 10400, beyond the basic employment amount claim in some cases.
Understand how Line 10400 income differs from regular T4 employment earnings for deduction eligibility and CPP/EI purposes.
What Are Common Mistakes to Avoid When Reporting Line 10400?
Some common errors individuals make when reporting Line 10400 income include:
- Forgetting to add cash tips, gratuities not on T4s
- Not keeping detailed records of casual earnings and foreign income
- Failing to report taxable allowances or benefits described on T4s
- Incorrectly calculating net research grant income
- Omitting foreign exchange conversions for foreign amounts
- Including non-employment income incorrectly on Line 10400
- Missing eligibility criteria for clergy residence deduction
- Claiming RRSP room or Canada Employment Credit improperly
CRA auditors pay close attention to Line 10400 since it falls outside the typical T4 reporting channels. Underreporting Line 10400 income is a high-risk area that, if discovered, can trigger reassessments and penalties.
Maintaining meticulous records is key. If you are unsure about the categorization of a particular earning, consult a tax professional or the CRA to avoid mistakes.
The Bottom Line
Reporting other employment income fully and accurately on Line 10400 is critical for maintaining tax compliance and good standing with the CRA.
By understanding the most common forms of Line 10400 income, keeping detailed support, maximizing eligible deductions, and seeking expert help when unsure, you can avoid issues and feel confident that your T1 employment income reporting is complete.
FAQs related to reporting income on Line 10400
How do I report tips on Line 10400?
You must report any cash tips you received through employment that were not included on your T4 slip. Keep detailed records and report the total amount on Line 10400.
Where do I find my clergy residence allowance amount for Line 10400
If you are a member of the clergy, the taxable allowance amount will be shown in Box 30 of your T4 slip provided by your employer.
Why report foreign income on Line 10400?
Any offshore employment income where no Canadian taxes were withheld must be reported on Line 10400. This ensures you properly pay taxes in Canada.
Do I have to report severance pay on Line 10400?
Yes, retiring allowances like severance for job loss and early retirement incentives must be included in your Line 10400 income.
Can I deduct expenses before reporting grant income?
Yes, you can deduct eligible expenses incurred to conduct research funded by a taxable grant, and just report the net amount on Line 10400.
Should I estimate amounts when reporting other income?
It's best to track exact amounts, but reasonable estimates are acceptable if needed when documenting Line 10400 income.
