What Is a T4A Slip and How It Affects Your Taxes

Every tax season, millions of Canadians receive a T4A tax slip — one of many tax slips used to report income to the Canada Revenue Agency (CRA).

The T4A slip is a critical tax document issued by Canadian payers to report income unrelated to regular employment, such as pensions, scholarships, self-employment earnings, and registered savings plan payments.

This guide will explain everything individuals and businesses need to know about T4A slips to remain compliant with CRA requirements.

What is a T4A Slip?

A T4A slip, officially called a Statement of Pension, Retirement, Annuity and Other Income, reports non-employment income not declared on a T4 slip. The main types of income reported on a T4A include:

• Pension and retirement payments
• Old Age Security (OAS)
• Canada Pension Plan (CPP)
• Annuities
• Self-employment commissions
• Scholarships, bursaries, and fellowships
• Registered Education Savings Plan (RESP)
• Registered Disability Savings Plan (RDSP)

The payer prepares the slip outlining the amounts and any tax deducted, then issues it to the recipient prior to the end of February following the tax year.

Who Must File T4A Slips?

The payer, like an employer or administrator, must file T4A slips properly to avoid CRA penalties. Key requirements:

• Payers issue recipients their T4A slip by the end of February following the tax year.
• T4A slips must also be filed directly with CRA, electronically or on paper, if less than 50 slips.
• Late filing or mistakes on T4As can lead to CRA penalties. Fines depend on the severity of errors.

When Should a Payer Issue a T4A Slip?

A payer must issue a T4A slip in two situations:

• If non-employment income paid out exceeds $500 for the year. This applies to self-employment earnings, scholarship payments, pension income, registered savings plan withdrawals, and more.
• If any tax was deducted from a payment, regardless of the amount, a T4A is required. For example, an RESP withdrawal with tax deducted requires a T4A.

Here are nine common situations where a T4A slip must be issued:

• Self-employment income over $500
• Pension or superannuation
• OAS benefits
• CPP benefits
• Scholarships, fellowships over $500
• RESP payments
• RDSP payments
• Annuity payments
• Artists’ project grants over $500

If you got any of these types of payments, the person or organization who paid you will likely send you a T4A so you can report it on your taxes.

What Information is Included on a T4A Slip?

A T4A slip must contain important information, including:

• Recipient name, address, Social Insurance Number (SIN)
• Payer name and address
• Tax year
• Income amounts are shown in specific numbered boxes, depending on the type of payment
• Tax deducted at source (Box 022)
• Income codes specifying the type of income

Here are some of the most common boxes found on a T4A slip and what they mean:

How Recipients Report T4A Income and Claim Deductions

When recipients receive their T4A slip, they must accurately report the income on their tax return. Most T4A income is taxable, but deductions or exemptions can sometimes be claimed:

• Enter amounts from each box on the T4A slip into the corresponding sections of the tax return. Tax software or e-filing simplifies this.
• Scholarship or bursary amounts may be non-taxable for students. Recipients should verify with CRA.
• Self-employed recipients can deduct valid business expenses by filing Form T2125. Accountants can ensure proper deductions are claimed.

Do Independent Contractors in Canada Receive a T4A?

Contractors represent one of the largest groups receiving T4A slips in Canada, with unique considerations that differ significantly from other T4A recipients, like pensioners or scholarship recipients.

The Purpose of the T4A Slip for Contractors

For contractors, a T4A slip serves as the primary income reporting document from clients, replacing the traditional T4 employment slip. When businesses pay independent contractors more than $500 in a calendar year or deduct any taxes from payments, they must issue a T4A slip reporting these amounts in Box 48 – Fees for Service. (Source)

Unlike pension recipients or students who receive T4A slips for different types of income, contractors receive T4A slips specifically for self-employment earnings only.

When Contractors Should Expect T4A Slips

Contractors should receive T4A slips by February 28 following the tax year from any client who:

• Paid more than $500 for services during the calendar year
• Deducted any amount of tax from payments (rare for contractors)
• Classified the contractor as a consultant or service provider in their system

However, contractors may not receive T4A slips from:

• Clients paying less than $500 annually
• International clients without Canadian operations
• Private individuals hiring for personal services
• Clients who fail to comply with CRA requirements

Important reminder: Not receiving a T4A slip doesn’t eliminate the obligation to report income. Contractors must track all earnings independently and report them on Form T2125, regardless of T4A receipt.

How T4A Differs from Other Tax Slips

There are three main tax slips used to report income in Canada – the T4, T5, and T4A. While they share some similarities, these slips differ in key areas like the type of income they report, who issues them, and the information boxes used.

The table below outlines the core differences between T4, T5, and T4A slips:

Common Mistakes to Avoid When Preparing T4As

To avoid issues and penalties when filing T4As, payers should be aware of some common compliance mistakes:

• Reporting an incorrect Social Insurance Number (SIN) for the recipient – Always double-check that SINs match the recipient’s official records before filing T4As.
• Categorizing types of income or amounts in the wrong information boxes on the T4A slip – Carefully review CRA guidelines on which income types belong in which boxes.
• Forgetting to include mandatory information such as details on pension adjustments, taxable RESP payments, or foreign income – Use CRA’s T4A checklist to ensure no required information is missed.
• Filing T4A slips late after the February deadline – Set calendar reminders and allow ample lead time to prepare and file T4As well before the deadline to avoid penalties.
• Not filing electronically when required – Double check current CRA thresholds to confirm whether paper filing is still permitted based on your total number of T4A slips.

Recent Changes and Updates to T4A Requirements

It is important that payers stay up-to-date on recent changes to T4A reporting requirements, such as:

• As of 2023, payers must indicate whether recipients were eligible for dental benefits when reporting pension income in Box 16. This supports the administration of the new Canada Dental Benefits Program.
• Electronic filing thresholds for T4A slips were reduced – now only 5 or more T4A slips can be paper filed, down from 50 previously. All other returns must be e-filed.
• New information boxes and income codes have been introduced on T4A slips in recent years to report items like COVID-19 benefits. Payers must ensure they are using current forms.

The bottom line

Filing your T4A slips accurately doesn’t have to be scary or confusing. With the information provided in this guide, you can now approach your T4A with confidence, knowing exactly how to report non-employment income correctly.

Just remember – always double-check the amounts, fill in all required boxes, retain copies for your records, and file by the deadline.

Payers and recipients should understand Canada’s T4A rules thoroughly to remain compliant. Consulting accounting professionals can also help address any questions or uncertainties.

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