Hiring talent outside Canada is easier than ever. Maybe you bring in a U.S. consultant for a project, pay a European speaker to present at your conference, or contract a coach who flies in for a tournament.
Then tax season hits and the question appears:
“Do we need to issue a T4A for non-resident contractors?”
The answer: sometimes you’re not in regular T4A territory at all—you’re dealing with non-resident rules and a different slip type (T4A-NR), along with possible withholding tax. This article gives you a practical, plain-language overview to help you spot when you may be in that world.
(Important: this is general information only, not tax or legal advice. Non-resident rules are complex. Always confirm with a professional or CRA before acting.)
Resident vs non-resident: why it matters
For T4As, the residency question isn’t just “Where does this person live right now?” It’s about whether they’re considered a resident of Canada for tax purposes.
Broadly:
• Residents of Canada – Typically fall under regular T4/T4A rules.
• Non-residents – May fall under T4A-NR rules and non-resident withholding, depending on the nature of the payment and where the services were performed.
If the person is a non-resident and they performed services in Canada, you’re in a different compliance bucket than a standard domestic contractor.
Three questions to ask about non-resident contractors
When you pay a non-resident, walk through these questions:
1. Are they a non-resident of Canada for tax purposes?
• If yes, move to question 2.
• If no (they’re a Canadian tax resident), you may be in regular T4/T4A territory instead.
2. Did they perform services in Canada?
• If the work was performed entirely outside Canada, non-resident withholding and T4A-NR may not apply in the same way as services physically performed inside Canada.
• If they travelled to Canada to perform services (teaching, speaking, refereeing, consulting, performing, etc.), that’s a red flag for T4A-NR and withholding.
3. What type of payment is it?
• Fees, commissions, and similar payments for services rendered in Canada are typical T4A-NR candidates.
• Pure product purchases or reimbursements alone are usually not in T4A/T4A-NR territory.
T4A vs T4A-NR in a nutshell
• T4A – Used primarily for certain payments to Canadian residents (or deemed residents) for specific income types.
• T4A-NR – Used for amounts paid to non-residents of Canada for services rendered in Canada.
In many non-resident cases, T4A-NR and withholding tax are the primary concern, not a regular T4A.
Withholding tax: the extra wrinkle
When you pay a non-resident for services performed in Canada, you may be required to:
• Withhold a percentage of the payment (non-resident withholding tax).
• Remit that amount to the CRA.
• Provide the non-resident with appropriate documentation so they can claim or recover tax if applicable under a tax treaty.
Failing to withhold when required can leave your organization on the hook for the tax that should have been withheld, plus interest and penalties. That’s why it’s crucial to ask the non-resident question early—not at year-end.
Practical steps if you work with non-resident contractors
1. Ask about residency up front
• Include a simple residency question in your contractor onboarding process:
– “Are you a resident of Canada for tax purposes?”
• For non-residents, collect additional details your accountant may need (country of residence, expected nature of the services, where they will perform the work).
2. Flag non-resident cases in your records
• In your accounting system or T4A tool, tag non-resident contractors so they’re easy to identify later.
• Keep notes about where the services were performed.
3. Talk to your accountant before payments get large
• Don’t wait until year-end. As soon as you expect to pay a non-resident for services in Canada, ask your accountant:
– Whether withholding applies
– What rate to use
– What slips or forms are required (for example, T4A-NR)
4. Keep a clear paper trail
• Save contracts, invoices, and correspondence that describe the work and where it’s performed.
• Keep records of any tax withheld and remitted to CRA.
Common misconceptions
“They’re not in Canada very often, so it doesn’t matter.”
Frequency doesn’t erase the rules. Even a one-off visit to perform services in Canada can trigger non-resident withholding and T4A-NR issues.
“We paid them through PayPal or a platform, so it’s not our problem.”
The payment channel doesn’t change your obligations. If you’re the payer and you’re using the expense as a business deduction, you’re potentially the one with the reporting and withholding responsibilities.
“We’re a small organization; CRA won’t care.”
Size doesn’t exempt you. If CRA reviews your payments and sees non-resident service fees with no withholding or slips, questions will follow.
Where T4ASlip fits in
T4ASlip itself focuses on organizing and generating T4A slips, but the same discipline around data helps with non-resident situations:
• You can tag contractors as non-residents and keep their information separate.
• You can track payees who may require different treatment, such as T4A-NR handled outside the standard T4A workflow.
• You get a clearer picture of all contractors—resident and non-resident—so nothing is overlooked.
Key takeaway
If you’re paying non-resident contractors, you’re not just asking “Do I need a T4A?” You’re asking a broader set of questions about:
• Non-resident status
• Where services are performed
• Whether T4A-NR and withholding rules apply
The safest approach is to flag non-resident cases early, get professional advice, and document your decisions. From there, tools like T4ASlip help you stay organized with your Canadian-resident contractors so you can focus your attention where the rules are most complex.