T4A Slips for Contractors: When Do You Actually Need to Issue One?

 

Paying a freelancer or subcontractor $500 or more in a year can mean the CRA expects a T4A slip from you by the last day of February. It's an easy step to miss, and late-filing penalties run from $100 to $7,500.

This guide covers when a T4A is required for contractors in Ontario, the exceptions, and the deadline. If you'd rather not track it yourself, payroll services can handle your T4 and T4A filing, and bookkeeping services for small businesses keep contractor payments organized all year.

What a T4A Actually Reports

A T4A is the slip used to report fees paid to contractors, commissions, and certain professional service payments — distinct from a T4, which reports employment income with CPP, EI, and income tax already withheld. The CRA uses T4A information to cross-check what a business claims as a deductible expense against what the contractor reports as taxable income on their own return. If the two don't match up, that mismatch is exactly the kind of thing that draws attention.

The $500 Threshold That Decides Most Cases

The core rule is straightforward: if a business pays a resident contractor, sole proprietor, or partnership $500 or more in a calendar year for services, a T4A generally has to be issued. Below that threshold, a slip isn't required, though many businesses issue one anyway for their own record-keeping. This applies to professional and management fees, commissions, service fees to self-employed individuals, and casual service payments like freelance marketing or IT support — a wide net that catches more routine small business spending than people often expect.

Corporations Are Usually the Exception — But Not Always

Paying an incorporated contractor generally doesn't require a T4A, with one significant exception: certain professional fees, such as legal fees, still require one even when paid to a corporation or professional corporation. This distinction catches a lot of businesses off guard, particularly those working with incorporated professionals who assume incorporation automatically removes the filing requirement. For a realtor's brokerage paying referral fees or commission splits, understanding which of those payments fall under this exception is exactly the kind of detail worth confirming with a real estate agent tax accountant who knows PREC structures, since real estate commission structures often involve exactly this kind of mixed payment. Owner-managed companies that hire incorporated trades and suppliers can sort out the same questions with accountants for incorporated small businesses.

What Doesn't Need a T4A at All

A few categories sit outside the T4A requirement entirely: payments to employees, which belong on a T4 instead; payments strictly for goods or products rather than services; and payments to non-residents, which may instead require a T4A-NR or NR4 slip. Getting this classification wrong in either direction — issuing a slip that wasn't needed, or missing one that was — creates its own cleanup work, which is why a self-employed tax filing review before year-end tends to catch these edge cases before they become a filing problem.

Deadlines and What Happens If You Miss One

T4A slips need to be issued to contractors and filed with the CRA by the last day of February following the calendar year of payment. Miss that deadline, and the CRA can assess penalties ranging from $100 to $7,500 depending on how late the filing is and how many slips are involved — a cost that scales quickly for a business working with several contractors across the year. Businesses managing both employee payroll and contractor payments often find it easier to handle both filing streams together rather than tracking separate payroll remittances and T4 deadlines alongside T4A dates.

Employee or Contractor? The Classification That Comes First

None of the T4A rules matter if the worker is actually misclassified as a contractor when the CRA would consider them an employee. The CRA looks at control over the work, who provides the tools, and who carries the financial risk and opportunity for profit — a genuine contractor typically sets their own hours, supplies their own equipment, and can subcontract the work. Getting this wrong doesn't just mean the wrong slip — it can trigger retroactive CPP and EI assessments, which is a far more expensive problem than a late T4A. This is a core part of what a corporate tax accountant reviews for any business that regularly works with contractors, especially if you've already received a CRA review letter.

Building the Habit Before It's a Problem

The businesses that handle T4A filing smoothly are the ones that collect contractor information — legal name, SIN or business number, mailing address — before the first payment goes out, and track payments consistently through the year rather than reconstructing them in January. That habit turns a once-a-year scramble into a five-minute task at year-end, and it's a natural extension of the same discipline behind the CRA record-keeping requirements that keep the rest of a business's books clean.

T4A compliance is a small piece of running a business with contractors, but it's one of the easier ones to get wrong quietly — and one of the cheapest to get right with a bit of planning before February rolls around.

Who Can Help Set Up Contractor Payment Tracking and T4A Filing?

Goodaccounting is a consumer-centric accounting platform working with individuals and businesses across the Greater Toronto Area for bookkeeping, payroll, real estate tax, and incorporation. Below are links for business owners across the region looking for help tracking contractor payments through the year and filing T4A and payroll slips correctly before the deadline.

Bookkeeping services for small businesses : Toronto, Pickering, Mississauga, Barrie, Scarborough, Brampton, Markham, Vaughan, Oakville, Richmond Hill

Payroll services for employers issuing T4 and T4A slips : Toronto, Pickering, Mississauga, Barrie, Scarborough, Brampton, Markham, Vaughan, Oakville, Richmond Hill

 

FAQ

Q1: When do I need to issue a T4A slip to a contractor?
A1: Generally when you pay a resident contractor, sole proprietor, or partnership $500 or more in a calendar year for services.

Q2: Do I need to issue a T4A if I pay an incorporated contractor?
A2: Usually not, except for certain professional fees like legal fees, which still require a T4A even when paid to a corporation.

Q3: What's the deadline for filing T4A slips?
A3: T4A slips must be issued to contractors and filed with the CRA by the last day of February following the calendar year of payment.

Q4: What happens if I miss the T4A filing deadline?
A4: The CRA can assess penalties ranging from $100 to $7,500 depending on how late the filing is and how many slips are missing.

Q5: Do I need a T4A for a non-resident contractor?
A5: No — payments to non-residents are generally reported through a T4A-NR or NR4 slip instead of a regular T4A.

Q6: What's the risk if I misclassify an employee as a contractor?
A6: Misclassification can trigger retroactive CPP and EI assessments and payroll penalties, which are typically far more costly than a late T4A filing.

Q7: Do I need to issue a T4A if I paid a contractor less than $500?
A7: No — it's not required below the $500 threshold, though some businesses still issue one for their own record-keeping purposes.

 

Sources
Source Accounting Professional Corporation — T4A Requirements for Contractors: When Do You Need to Issue a T4A Slip?
Canada Revenue Agency — T4A Slip: Information for Payers
Canada Revenue Agency — Employee or Self-Employed? Four-Factor Classification Test
Canada Revenue Agency — Penalties for Late-Filed Information Returns

 

Disclaimer: This article is for general informational purposes only and does not constitute professional accounting, tax, or financial advice. Every business situation is different, and tax laws can change. Please consult a licensed accountant in Brampton or the GTA before making any financial or tax decisions based on this content.