This is the complete guide to the most Canadian of all Tax Slips, the T4eh? (T4a)
One of the most commonly asked questions, is what goes on a T4A? In order to answer that, let’s talk about the T4 first. The T4 reports income earned, and the T4A has a reputation for being the slip that reports everything income-related that doesn’t go on a T4. Yes, self-employed income is reported on a T2125, not on a T4A, but let’s turn our focus to the T4A.
If you are a payer, such as an employer, a trustee, an estate executor, liquidator, an administrator, or a corporate director, and you pay any of the following types of income:
- 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 the Veterans Well-being Act
- Other income such as;
- Research grants
- Payments from a registered disability savings plan (RDSP)
- Wage-loss replacement plan payments if you were not required to withhold Canada Pension Plan (CPP) contributions and employment insurance (EI) premiums, death benefits, or certain benefits paid to partnerships or shareholders
If you, as a payer, has made any of the payments listed above, you have to fill out the T4A slip, Statement of Pension, Retirement, Annuity, and Other Income, if one of the following applies:
- The total of all payments in the calendar year was more than $500
- You deducted tax from any payment
On the flip side, if you received a T4A, then it’s very likely that your received one, or more, of the items from the list above.
You have to prepare a T4A slip for tax-free savings account (TFSA) taxable amounts paid to a recipient when the amount for the year is more than $50.
Do not fill out a T4A slip for / You will not receive a T4A if:
- Payments made by an agency, department or crown corporation for goods and services.
- Payments made by individuals, partnerships, trusts, or corporations with construction as their main business activity to subcontractors for construction services. (These go on / will be reported on a T5018 slip, Statement of Contract Payments.)
- Amounts paid or credited to a non-resident of Canada, such as interest, dividends, rental income, royalties, pension income, retiring allowances, or other similar types of passive income. Instead, they are reported on:NR4 slip, Statement of Amounts Paid or Credited to Non-Residents of Canada.
- Payments from a retirement compensation arrangement. There is a specific form for these payments. They are reported on the T4A-RCA slip, Statement of Distributions from a Retirement Compensation Arrangement (RCA).
- Income paid from a life income fund (LIF). Instead, they are reported on the T4RIF slip, Statement of Income from a Registered Retirement Income Fund. However, if a life annuity is bought from the proceeds of a LIF, the annuity payments have to be reported in box 024 of a T4A slip.
- Amounts paid for management fees, director’s fees, tips and gratuities, group term life insurance premiums paid for current employees, and other employment income. These, instead, go on the T4 slip, Statement of Remuneration Paid.
- Payments received under a supplementary unemployment benefit plan (SUBP) that do not qualify as a SUBP under the Income Tax Act (for example, employer-paid maternity and parental top-up amounts). These types of payments instead, get reported on the T4 slip, Statement of Remuneration Paid.
- Undistributed amounts left in a deceased taxpayer’s TFSA at the end of the trust’s exempt period.
Preparing a T4A
Report the payments and deductions on the T4A information return to the CRA. To do this, fill out the T4A slips, Statement of Pension, Retirement, Annuity and Other Income.
T4A Due Dates
Give recipients their T4A slips on or before the last day of February following the calendar year to which the information return applies. File the T4A Summary, together with the related T4A slips to the CRA, on or before the last day of February following the calendar year to which the slips apply.
Late filing and failing to file the T4A information return
You have to give the recipient their slip and file your T4A information return with the CRA on or before the last day of February after the calendar year the information return applies to.
If the last day of February falls on a Saturday, a Sunday, or a holiday recognized by the CRA, your information return is due the next business day.
The CRA considers your return to be filed on time if they receive it or it is postmarked on or before the due date.
The CRA may assess a penalty if you file your information return late. Keep in mind that Each slip is an information return, and the penalty the CRA assesses is based on the number of information returns that were filed late.
Late filing of T4A information returns, are a bit different and the CRA has an administrative policy that reduces the penalty they we assess so it is fair and reasonable for small businesses. The penalty is $100 or the amount calculated according to the following chart whichever is more:
Number of information returns (slips) filed late Penalty per day (up to 100 days) Maximum penalty
1 to 5 penalty not based on number of days $100 flat penalty
6 to 10 $5 $500
11 to 50 $10 $1,000
51 to 500 $15 $1,500
501 to 2,500 $25 $2,500
2,501 to 10,000 $50 $5,000
10,001 or more $75 $7,500
For more information, please visit the CRA website content on T4A’s, here: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4157/deducting-income-tax-on-pension-other-income-filing-t4a-slip-summary.html#other_information