T4 vs. T4A: What's the difference?

In Canada, teams handling payroll compliance and tax reporting need to fill out T4 and T4A forms for their workforce. While both forms report income, choosing the right form depends on the employment relationship. A T4 is for employees, and a T4A is for freelancers, contractors, and other non-traditional workers. 

For businesses with international or remote workers, knowing which form to use avoids tax missteps and penalties, especially since these employees don’t always fit the traditional mold. Whether hiring directly or working with an EOR or PEO, getting tax forms right keeps business running smoothly. 

In this guide, we’ll examine the nuances of a T4 versus T4A slip, noting their distinctions and providing practical tips to fill each one out accurately. 

What’s a T4?

A T4 slip (statement of remuneration paid) is a Canadian tax document issued by employers to report an employee’s earnings and tax deductions. It’s an essential tax filing document, providing the Canada Revenue Agency (CRA) with all the details about the income an employee earned and the amount of tax withheld. 

Employers (both residents and non-residents) who pay employees salary, wages, commissions, bonuses, or any other form of remuneration must complete a T4 slip. Employees need the slip to accurately file their income tax returns and determine if they’re eligible for a refund or federal workers' benefits. 

Here are the key components of a T4 slip:

• Total employment income: The total amount of money paid to employees, including all wages, salaries, bonuses, and commissions. 
• Canada Pension Plan (CPP) contributions: The total amount deducted for an employee’s CPP contributions, which provides retirement, disability, and survivor benefits to eligible Canadians. For businesses operating in Quebec, contributions go to the Quebec Pension Plan (QPP) instead. 
• Employment Insurance (EI) contributions: The total amount deducted for EI premiums, which provides temporary financial assistance to workers who lose their jobs through no fault of their own. 
• Income tax deducted: The amount of federal and provincial income tax withheld from total earnings. 

Filling in these details accurately ensures employees can properly calculate their total tax liability and adjustments when filing a return. 

What’s a T4A?

A T4A slip (statement of pension, retirement, annuity, and other income) is a Canadian tax form to report earned income by non-traditional workers. It’s typically used for individuals who receive several sources of income outside of regular salaries, wages, or bonuses. The T4A slip helps non-traditional workers accurately report their income to the CRA. 

Here’s who gets a T4A slip: 

• Self-employed individuals and independent contractors: If your business employs independent contractors and freelancers, the T4A slip covers the total amount earned on any total income of $500 or more. 
• Pensions and annuities: If you provide pensions to contract workers, you’ll report these payments on a T4A. And retirees receiving an Old Age Security (OAS) from the CRA will receive a T4A. 
• Scholarships, bursaries, and fellowships: If your business provides funding in the form of scholarships or bursaries (for educational purposes), you’ll report these on a T4A. This is common for businesses offering educational grants or research funding. 
• Consulting fees: Consulting work performed by non-employees is reported on a T4A, including external consultants, researchers, or industry experts paid for their services. 

Self-employed individuals who receive a T4A slip are responsible for managing their own tax deductions, unlike T4 employees, whose contributions are automatically withheld. 

5 differences between a T4 and a T4A

Choosing the right form is the best strategy to mitigate employment compliance headaches. Here’s how each stacks up.

1. Who it’s for

• T4 slip: Employees who receive a regular paycheck. 
• T4A slip: Independent contractors, freelancers, and other service providers who don’t receive regular salary or wages. 

2. Tax deductions

• T4 slip: Employers deduct and remit income tax, CPP, and EI on behalf of the employee. 
• T4A slip: Businesses issue payment without deductions—contractors handle taxes themselves.

3. Source of income

• T4 slip: Covers salaries, wages, bonuses, and commissions.
• T4A slip: Covers contractor payments, as well as research grants, pension income, and lump-sum payments.

4. Issuer

• T4 slip: Employers. 
• T4A slip: Anyone who makes a payment for services. 

5. Payroll responsibilities

• T4 slip: Part of a structured payroll, including regular deposits, benefits, and tax withholdings. 
• T4A slip: For flexible, project-based, or one-off payments with no ongoing payroll obligations. 

Which form do you need, and how do you fill it out?

Issuing a T4 or T4A comes down to the working relationship. If someone’s on your payroll and receives a regular paycheck with taxes already deducted, they get a T4 slip. If they’re an independent contractor or freelancer paid $500 or more in a tax year, they get a T4A slip. 

How to fill out a T4 slip

Before tackling that pile of paperwork, make sure you have all the relevant information handy, including the employee’s name, social insurance number (SIN), total earnings, and information about benefits and contributions. Then: 

• Fill out basic details: Include your business name, CRA business number, and the employee’s personal information, including their SIN. 
• Report employee income: List the total gross earnings, including wages, salaries, bonuses, and taxable benefits paid within the tax year. 
• Fill in key tax boxes: Input deductions like CPP or QPP, EI premiums, and federal and provincial income tax withheld. 
• Review and submit: Double-check all amounts for accuracy and file the T4 with the CRA, providing a copy to the employee. 

For most businesses, Canada’s T4 filing deadline is the last day of February. If the last day falls on a Saturday or Sunday, the deadline is the following business day. And if your business stops operating, the deadline is 30 days from the final day of business or 90 days from the date a partner or sole proprietor dies. 

How to fill out a T4A slip

Payroll can simplify filing a T4A slip for contractors by keeping a clear record of payments, including their personal details and total amount of payments received. This will help you avoid adding up scattered invoices, saving time and reducing the risk of errors. 

Here’s how to fill out this slip:

• Enter payer and recipient details: Start by inputting your business name, CRA business number, and the recipient’s name and SIN. 
• Categorize income: Determine the type of income. This could include contractor fees, pension payments, scholarships, or consulting fees. 
• Complete key boxes: Place the correct income in the appropriate boxes. For instance, Box 20 is for self-employed commissions, while Box 48 is for fees for services. 
• Double-check and submit: Review the form for mistakes before submitting it to the CRA and sending a copy to the contractor. 

The same T4 filing deadlines apply here. 

Let Oyster help you stay compliant

For businesses expanding into Canada, staying on top of local tax laws shouldn’t add unnecessary stress. Whether hiring employees or contractors, Oyster’s global employment platform helps you stay compliant with local payroll and tax regulations. You worry about finding the right people—Oyster looks after tax reporting and payroll compliance. 

For more information about hiring in Canada, check out Oyster’s hiring guide. 

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.