Many Canadian businesses rely heavily on contractors: coaches, drivers, designers, consultants, referees, and more. Paying people as contractors can be flexible and efficient—but it doesn’t remove your compliance obligations.
If you pay contractors, T4A slips are often part of the picture.
Employees vs contractors: why it matters
The distinction between an employee and a contractor affects:
• Which slip you issue (T4 vs T4A)
• Whether you withhold CPP, EI, and income tax
• How the CRA views your relationship with that worker
If CRA decides someone you treat as a contractor is actually an employee, there can be significant consequences in terms of payroll remittances and penalties.
What paying someone as a contractor usually means
When you pay someone as a contractor, it typically means:
• You’re not remitting payroll deductions for them
• They’re responsible for their own CPP, EI (if applicable), and income tax
• They invoice you or are paid under a contract for services
But from CRA’s perspective, certain payments to contractors still need to be reported via T4A when they fit specific categories and thresholds.
Where T4As come in
For many contractor scenarios, CRA expects the payer to:
• Track the total amounts paid during the year
• Issue a T4A slip when the payment fits certain categories (like service fees) and meets reporting requirements
The slip helps CRA match what you say you paid with what the contractor reports as income, reducing the chance of income being missed on tax returns.
Common contractor scenarios linked to T4As
Examples where the T4A question usually comes up include:
• A league paying referees and officials per game
• A business paying freelance designers, writers, or marketers
• A trucking company paying owner-operators as independent contractors
• A startup hiring self-employed consultants or advisors instead of full-time employees
These aren’t automatic T4A situations—but they are red flags that you should review them under current CRA guidance.
“But my contractor said they’ll handle their taxes…”
That’s about their personal tax return. It doesn’t change your obligation to file any required information slips.
Think of it as two sides of the same coin:
• You report what you paid (via T4A when required)
• They report what they received (on their business or personal return)
Practical steps if you rely on contractors
1. Identify who is truly a contractor
• Review how you work with each person—control, tools, financial risk—so you’re confident in the classification.
2. Collect info up front
• Make it part of onboarding to collect names, addresses, and SIN or business numbers where appropriate.
3. Track all payments by contractor
• Use your accounting system or a dedicated tool so that you can see annual totals quickly.
4. Check T4A rules before year-end
• Meet with your accountant or review CRA guidance to decide which contractors need slips.
5. Generate T4A slips and send them on time
• Use T4ASlip or similar software to make the mechanical part of slip generation much easier.
Reviewing classification regularly
Worker relationships can evolve. Someone who started as a casual contractor might end up functioning like an employee over time. It’s helpful to:
• Review key relationships annually
• Adjust classification (and slips) if there’s a clear change in how you work together
That proactive approach can reduce the risk of future disputes about whether someone was really an employee.
How T4ASlip supports contractor-heavy organizations
If contractors are a big part of how you operate, T4ASlip can help by:
• Keeping all contractor details in one place
• Pulling in payment data, so you’re not hunting through multiple systems
• Flagging who is likely to need a T4A under your rules
• Generating and organizing slips with less manual work
That lets you keep the flexibility of using contractors while still meeting your T4A obligations efficiently.