What’s The Difference Between T4 and T4A?

T4 and T4A are tax forms that show employment income and deductions.

They may look similar, but there is a huge difference between a T4 and T4A: they show different types of income and apply to separate categories of employees.

Knowing the difference between the two will help you properly file your tax return.

What Is the Difference Between T4 and T4A

A T4 slip indicates the income you earn when working for an employer, while a T4A statement represents a record of your earnings as a self-employed individual.

Another thing to keep in mind when it comes to T4 vs T4A is that the latter doesn’t include Canada Pension Plan and Employment Insurance deductions like T4s do. This means you would need to file those separately.

What is a T4?

A T4 tax slip, officially known as a Statement of Remuneration Paid, is issued to you by your employer, It shows the income you have gained while working for a specific employer, as well as tax deductions, contributions you have made to the Canada Pension Plan (CPP) and your Employment Insurance.

If during the course of one financial year you switched several jobs with different employers, you will receive separate T4s from each employer.

What’s more, if you worked in different provinces across Canada, you might receive different tax slips, depending on their regulation. For instance, if you worked in Quebec, you will receive an RL-1 slip in addition to a T4.

As an employer, you need to fill out T4 slips for employees who received remuneration of over $500 within the calendar year and for whom you deducted either CPP/QPP contributions, EI premiums, PPIP premiums, or income tax from their salary/wages. You must submit your T4 slips to the Canada Revenue Agency (CRA) by the last day of February. 

Here is what you need to report.

What to report on a T4

What not to report on a T4

Employment commissions Tips, bonuses, vacation pay Taxable benefits or allowances Tax deductions Pension adjustments (if applicable)

Pensions, lump-sum payments, annuities, and other income (these go in a T4A) Payment for fees (with the exception of director fees) and commissions, other than what you paid as salary or bonuses Payments to non-residents for services rendered in Canada Payments to subcontractors for goods and services provided in connection with construction activities (if you have a construction business as your main source of income) Payments from a retirement compensation agreement

This is what a T4 slip looks like:

What is a T4A?

The T4A, or  Statement of Pension, Retirement, Annuity, and Other Income, shows the income that is not covered by other tax slips, i.e. income generated outside of the traditional employer-employee relationship. 

T4A slips are filed if you’re self-employed or working on a contract.

Bear in mind that you may not receive T4A slips from all your clients, as these forms are issued by companies that consider you a consultant rather than a provider of services.

Nevertheless, you must report all self-employment and business income on Form T2125, whether you got a T4A slip from a client or not.

Pension or retirement income (if you are receiving any) and scholarship or bursary income must also be reported on a T4A, even though the latter are not taxable.

If you receive more than one T4A slip, you must report each separately on your tax return.

Different types of T4As

Those eligible for or receiving Old Age Security income will receive a different slip from the CRA. Known as the T4A(OAS), it shows the amount you have received, income tax deducted and any overpayment you might have recovered from the gross Old Age Security pension.

Canadians who are retired and on CPP benefits or the Québec Pension Plan (QPP) will get a T4A(P). CPP T4 slips display the type and amount of benefits you received and the income tax deducted. Québec residents who have received benefits under QPP will need to file an (RL-2) slip in addition to the T4A(P).

These are the types of income you need to report on a T4A form:

What to report on a T4A

What not to report on a T4A

Pension or superannuation Lump-sum payments Self-employed commissions Annuities Fees for services RESP Educational Assistance Payments Medical Premium Benefits COVID-Related Benefits Payments From a Wage-Loss Replacement Plan Income replacement payments made under the Veterans Well-being Act

Any payments made by an agency, department or crown corporation in return for goods and services Payments that have been made by individuals, partnerships, trusts, or corporations with construction as their main business activity to subcontractors for construction services Amounts paid or credited to a non-resident of Canada Tips and gratuities and group life insurance premiums for current employees Payments from a retirement compensation arrangement. Income paid from a life income fund (LIF) Payments made under the supplementary unemployment benefit plan (SUBP) that do not qualify as SUBP Amounts from a deceased taxpayer’s TFSA that have not been allocated at the end of the trust’s exempt period

Remember: With a T4A, it is your responsibility to ensure that you report accurately. 

The good news is that unlike the amounts reported in a T4 slip, here you can claim business expenses and reduce the amount of tax payable.

This is what a T4A slip looks like:

 

T4 vs. T4A: Which one do you need?

Although it may seem straightforward, it can be hard to distinguish whether you are an employee or a self-employed/contractor.

The best way to find out is by looking at your tax slip.

If the CRA sends you a tax slip where CPP and income tax are withheld at the source, your income is considered that of an employed person. On the other hand, if your T4 slip has neither taxes nor contributions remitted, then you are self-employed and are responsible for filing and paying your taxes and contributions.

When might you need to file using both a T4 and T4A?

If you’re employed and have additional income from a side hustle, you will likely need to file both a T4 and a T4A.

COVID-19 benefits fall in the same category. In other words, if you received COVID-19 benefits while getting paid by your employer you should file both forms.

How Do You Get Your T4 and T4A Slips?

Your T4 slips are typically received at the beginning of March. They are usually sent via email, or mail (provided you have given your employer permission to do so).

If you have not received it or want a copy of slips from previous years, you can register for CRA’s  MyAccount for Individuals.

Conclusion

Filing taxes is an important part of the yearly payroll and a must for both employers and employees. That’s why it is crucial to know which forms to file, when and how. And even though T4A vs T4 differences show a clear distinction between the two slips, it can still be confusing when it comes to actually deciding which form you need to fill out.

If this is the case, consider consulting a professional or using accounting software to help you out. Above all, remember to accurately fill out the form and file taxes on time, regardless of which tax slip you need to complete.