A classic year-end question goes like this:
“We only paid this contractor a few hundred dollars. Do we really have to issue a T4A?”
Many business owners hope there’s a magic threshold where “small” payments don’t require any reporting. In reality, the rules can be more nuanced—and they change over time—so you always need to check current CRA guidance or speak with a professional.
This article won’t quote specific dollar thresholds (those can change), but it will help you think about small payments in a more structured way so you’re not guessing every February.
(Important: this is general information, not tax advice. Always rely on current CRA rules or a qualified advisor.)
Why small payments still matter
From CRA’s perspective, lots of “small” payments can add up to:
• Meaningful income for the recipient
• A significant amount of business expenses for the payer
Even if a single payment is under a commonly-discussed threshold, repeated small payments to the same person may still warrant a slip. That’s why focusing on total annual payments per recipient—not just one invoice—is so important.
Think in totals, not transactions
Instead of asking, “Do we issue a T4A for this $250 payment?” ask:
“How much did we pay this person in total during the year, and what was it for?”
A better process looks like this:
1. Track all payments to each contractor for the entire year.
2. At year-end, look at total paid per person or entity.
3. Apply CRA’s current rules for T4A reporting to those totals.
This approach is much more accurate than trying to remember or guess at individual invoices.
What really drives the decision
When you’re deciding whether to issue a T4A, the key factors typically include:
• The nature of the payment
– Was it for services, fees, commissions, or other income that CRA expects to see on a T4A?
• The total amount paid in the year to that recipient
– Not just one invoice, but cumulative payments.
• The recipient’s status
– Individual vs corporation, resident vs non-resident, employee vs contractor.
• CRA’s current thresholds and guidance
– These can change, so you should never rely only on old habits or rules of thumb.
Practical steps for handling sub-$500 payments
1. Capture everything, even small amounts
• Don’t ignore small invoices in your records.
• Make sure every payment to a contractor is coded consistently in your accounting system.
2. Use your accounting or T4A tool to summarize by recipient
• At year-end, run a report showing total paid to each contractor, including those with small amounts.
• Tools like T4ASlip can make this very easy by centralizing contractor and payment data.
3. Review the totals with CRA guidance in hand
• Look at totals per contractor and compare them to current T4A reporting rules.
• Make notes about borderline cases and discuss them with your accountant if you’re unsure.
4. Decide on an internal policy (with professional input)
• Many organizations, with advice from their accountant, set a clear internal rule that aligns with CRA expectations.
• For example, “If we pay a contractor more than $X for these types of services, they go on our T4A list.”
• Document this policy and apply it consistently year after year.
Common misconceptions about “small” payments
“If it’s under $500, we never have to issue a T4A.”
• That’s an oversimplification and may not match current CRA guidance. Never rely on hearsay alone.
“We only paid them once, so it doesn’t count.”
• One payment can still be reportable, especially if it’s for services that clearly fall into T4A categories.
“The contractor said they’ll handle their own taxes.”
• Contractors are responsible for their own returns, but that doesn’t remove your obligation to file information slips when required.
Why it’s risky to rely on rules of thumb
The problem with “I heard you don’t need T4As under $X” is that:
• The amount might be outdated.
• It may only apply to specific types of payments.
• It doesn’t account for edge cases in your industry.
If CRA reviews your records and finds many unreported, “small” payments that clearly fit T4A categories, they may ask tough questions—and potentially assess penalties.
How T4ASlip helps you manage small amounts correctly
A tool like T4ASlip makes it easier to handle small payments properly because it:
• Pulls in payment data from your accounting system.
• Summarizes totals by contractor automatically.
• Helps you build a complete “who we paid” picture for the year.
• Lets you apply your accountant-approved policy consistently across all recipients.
Instead of relying on memory and scattered spreadsheets, you can look at a clean list of totals and make informed decisions.
Key takeaway
The real question isn’t “Do I have to issue a T4A for payments under $500?” in the abstract. It’s:
“For each person we paid, what’s the total amount, what was it for, and what do current CRA rules say about reporting it?”
If you track contractor payments carefully and review totals with up-to-date guidance, you won’t have to guess. And with a tool like T4ASlip helping you organize the data, small payments become just another part of a clear, manageable T4A process—not a source of confusion every year.