A T4 reports employment income and the CPP, EI and tax withheld from an employee. A T4A reports other income such as fees to contractors, pension income, or certain benefits, and generally has no CPP or EI. The one you issue depends on whether the person is an employee.
A T4 is the slip for an employee. It reports their employment income for the calendar year plus the amounts you withheld: income tax, CPP contributions and EI premiums. The employer's matched CPP and EI do not appear as the employee's deduction but are remitted alongside.
If someone is genuinely your employee, working under your direction, using your tools, on your schedule, they get a T4. This is the slip that ties to your payroll account and its remittances.
A T4A reports income that is not employment income. It covers a range of payments, including fees or other amounts for services from someone who is not your employee, pension and annuity income, retiring allowances, and certain scholarships and benefits.
The defining feature is that a T4A for contractor fees generally carries no CPP or EI, because a genuine contractor is responsible for their own contributions. It reports the amount paid, not amounts withheld from a payroll relationship.
The choice between T4 and T4A is really the choice between employee and contractor, and the CRA cares intensely about it. Treating an employee as a contractor avoids employer CPP and EI, payroll remittances and the associated costs, which is exactly why the CRA scrutinises it.
If the CRA re-characterises a contractor as an employee, the payer can be assessed for the unremitted CPP and EI, both the employee and employer portions, plus penalties and interest. The label on the invoice does not decide it; the real nature of the working relationship does.
The CRA weighs several factors, none decisive on its own:
A worker who sets their own hours, uses their own tools, works for multiple clients and can profit or lose looks like a contractor. One embedded in your operations under your direction looks like an employee, whatever the contract says.
Both slips are due to the recipient and the CRA by the last day of February following the calendar year. If you pay contractors, keep clear records supporting the contractor characterisation, because that documentation is your defence if the relationship is ever questioned.
Some payers over-issue T4As out of caution; others miss them entirely. Getting the slips right, and the underlying classification defensible, avoids both the penalty for missing slips and the far larger cost of a re-characterisation.
Reviewed for the 2025 tax year by Udit Gupta, CPA, CA. General information, not advice for your specific situation — book a free 15-minute call to discuss your circumstances.
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