Every February the same question comes around: this person did work for us and got paid — which slip? And the honest answer is that you can't choose the slip until you've answered a question that has nothing to do with slips at all.
The slip is a consequence, not a decision. Sort out what the relationship actually was, and the paperwork follows automatically.
- T4 = employment income. If the person was your employee, they get a T4 — with CPP, EI and income tax withheld all year, not sorted out in February.
- T4A = other income. Pensions, lump sums, self-employed commissions, scholarships, and fees for services in box 048.
- Directors' fees go on a T4, not a T4A. A director holds an office, and income from an office is employment income.
- Retiring allowances and severance go on the T4 too — codes 66 and 67 in the "Other information" area, not box 14, and not on a T4A.
- Box 048 is the genuinely murky one. The requirement to report service payments over $500 exists in law, but the CRA has long declined to assess penalties for missing box 048 — a concession it began withdrawing for the trucking industry starting with the 2025 tax year.
- Issuing a T4A does not make someone a contractor. If the relationship was employment, the slip you chose doesn't change that, and a CRA ruling will say so.
Read on for the one question that decides it, what belongs on each slip, the box 048 situation in detail, a case-by-case table, and the deadlines.
You're not choosing a slip. You're classifying a relationship.
Everything downstream — which slip, whether you withheld, whether you owe the employer's share of CPP and EI, whether you're exposed to a reassessment — flows from one determination: was this person an employee or were they in business for themselves?
The CRA weighs control over how the work is done, who supplies the tools, whether the worker can profit or lose money, whether they can subcontract, and how integrated they are into your business. What the contract calls them is a factor, not the answer. The detailed analysis is in employee or contractor?
Once you have that answer, the slip is mechanical.
What belongs on a Statement of Remuneration Paid
The T4 reports employment income and what you withheld from it. Salary and wages, bonuses, commissions paid to employees, vacation pay, tips you controlled, and the value of taxable benefits — a company vehicle, group life premiums, certain allowances.
Two things belong here that people routinely put on a T4A:
- Directors' fees. A director holds an office, and income from an office is employment income. Directors' fees go on a T4 and are subject to CPP (though generally not EI, since an office-holder isn't usually in insurable employment).
- Retiring allowances and severance. These go on the T4 in the "Other information" area — code 66 for the portion eligible for transfer to an RRSP or similar plan, code 67 for the non-eligible portion — and specifically not in box 14.
Source: CRA, Payments of retiring allowances and the Employers' Guide — Filing the T4 Slip and Summary (RC4120) — the eligible portion is reported with code 66 and the non-eligible portion with code 67, and these amounts are not included in box 14.
The crucial point about a T4 is that it's the end of a process, not the start of one. If you're filling one out in February for someone from whom you never withheld CPP, EI or tax, the slip isn't your problem — the missing year of source deductions is. See payroll and source deductions 101.
The "everything else" slip
The T4A is less a category than a residual. It carries a long list of income types that aren't employment income:
- Pension or superannuation payments, and annuities
- Lump-sum payments from a plan
- Self-employed commissions
- Fees or other amounts for services — box 048
- Scholarships, fellowships, bursaries, and research grants
- RESP accumulated income and educational assistance payments
- Patronage allocations, death benefits, and various other payments
For a small business, only one of these usually matters: box 048.
Box 048, and the concession that's being withdrawn
This is where the honest answer differs from the technical one, so it's worth being precise about both.
The law. A person who makes a payment described in the withholding provisions must make an information return in prescribed form. The CRA's reporting-fees-for-service requirement applies that to business-to-business service payments: total payments for services exceeding $500 in a calendar year are to be reported, normally in box 048 of a T4A.
Source: Income Tax Regulations, s. 200(1), and CRA, Reporting fees for service.
The practice. For many years the CRA has stated that it is not assessing penalties for failure to complete box 048. That's why so many businesses have never issued a T4A to a contractor and have never heard from anyone about it. It's a genuine administrative concession — but a concession is not a repeal, and it can be withdrawn.
The withdrawal. In December 2025 the CRA announced it was lifting the moratorium for the trucking industry, beginning with the 2025 tax year. For 2025 and later calendar years, a business in the trucking industry that pays fees for services to a Canadian-controlled private corporation also in trucking, and doesn't report those payments in box 048 (with the CCPC's business number in box 013), can be assessed penalties.
Source: CRA, CRA strengthens compliance in trucking sector by lifting the moratorium on T4A penalties (December 2025), and Fact sheet — Reporting fees for service requirement.
So where does that leave an ordinary small business? Outside trucking, the general concession still stands. But the CRA has now demonstrated it will lift it sector by sector, and it's given no assurance about which sector is next. My own advice to clients is straightforward: if your bookkeeping is clean, producing box 048 slips for the contractors you pay is not much extra work in February, and it puts you permanently on the right side of a rule that's clearly tightening. If you're in trucking, it isn't optional anymore.
"They don't assess penalties for that" is a description of enforcement, not of the law. Enforcement changes with an announcement.
The situations that actually come up
| Who you paid | Slip | Notes |
|---|---|---|
| Full or part-time employee | T4 | CPP, EI and tax withheld every pay period |
| Casual or seasonal worker you directed | T4 | "Casual" is not a tax category — if they're an employee, they're an employee |
| A director (fees for serving) | T4 | Income from an office; CPP applies, EI generally doesn't |
| Departing employee's severance | T4 | Codes 66 and 67 in "Other information", not box 14 |
| Genuine freelancer who invoices you | T4A box 048 | Over $500 in the year; no source deductions |
| Incorporated subcontractor | T4A box 048 | Same rule; enter their business number in box 013 |
| Trucking subcontractor (a CCPC) | T4A box 048 — required | Penalties apply from the 2025 tax year |
| A supplier of goods | No slip | The rule is about services, not products |
Two clarifications that come up constantly. A contractor charging you GST/HST is a sales-tax matter and tells you nothing about which slip to file — a registered contractor can still be reportable in box 048. And issuing a T4A does not convert an employee into a contractor. If the CRA rules the relationship was employment, you'll owe the CPP and EI that should have been withheld — including the worker's share — regardless of what slip you produced.
Both slips, same date
T4 and T4A information returns are both due by the last day of February for the preceding calendar year, and the recipient's copy has to be delivered by then too. This runs on the calendar year regardless of your fiscal year-end.
Penalties bite per slip. Failing to give a recipient their slip on time can draw $25 per day per slip, minimum $100 and maximum $2,500, and late filing with the CRA carries a separate penalty scaled to the number of slips, minimum $100.
Source: CRA, When to file information returns, and Guide RC4157 — Filing the T4A Slip and Summary.
Delia's five "contractors"
Meet Delia, who runs Rosebank Event Co., a corporate and wedding event company in Kamloops, British Columbia. Peak season runs May to September, and she scales up with five regular event staff — setup crew, two servers, a coordinator.
She'd always paid them as contractors. They invoiced her, she paid the invoices, and every February she issued T4As with amounts in box 048. She'd been told that's how you handle seasonal help, and the slips looked official, so it felt handled.
But look at the actual relationship. Delia set the schedule and told them where to be. She provided the equipment, the linens, the vehicles. She specified how the work was to be done, down to table layouts. None of them could send a substitute, none of them worked for anyone else during the season, and none of them could lose money on a job. They were paid an hourly rate she set.
Every fact pointed to employment. The only thing pointing to contracting was the paperwork she'd chosen — which is the one factor that doesn't decide it.
When one of the servers was let go at the end of a season and applied for EI, the file went to a CRA ruling. The determination came back as employment, and it applied to the group — five workers, across the seasons in question. Rosebank was assessed the unremitted CPP and EI, including the employees' share, plus penalties and interest. The T4As she'd carefully issued didn't help; they were simply the wrong slip.
What should have happened
Ask the classification question honestly at the point of hiring, not at the point of a ruling. On these facts the answer was clearly employee, which means a payroll account, source deductions through the season, and T4s in February — more administration, no reassessment.
There's a real contractor version of this business, too: a coordinator who runs her own events company, brings her own kit, works for several planners, sets her own rates and can send someone in her place. That person invoices, gets a T4A with box 048, and there's nothing to argue about. The difference isn't the paperwork — it's the arrangement the paperwork describes.
Get the relationship right and the slip is obvious
If someone works under your direction, with your tools, on your schedule, with no real chance of profit or loss — they're an employee, they need withholdings all year, and they get a T4. If they genuinely run their own business and invoice you for services, they get a T4A with box 048, and you should be filing it even though the CRA's penalty concession has so far made it optional for most sectors.
And if you find yourself hoping a particular slip will settle the question, that's usually a sign you already know the answer and don't like it. February is a bad month to discover the classification was wrong — that's exactly when the payroll year you needed is already over.
Unsure which slips you owe this February?
Classification is worth getting right before the season starts, not after a ruling. A 15-minute call is enough to sort out who's an employee, who's a contractor, and what you should be filing.
Book a Free 15-Minute CallThis article is for informational purposes only and does not constitute tax, legal, or accounting advice. Slip requirements, box numbers and CRA administrative positions change — in particular, the reporting-fees-for-service penalty moratorium is being withdrawn sector by sector. Confirm the current position with the CRA and consult a qualified professional about your own filings. The example is illustrative.
Primary sources, linked so you can read and interpret them yourself. Government links open on official Government of Canada websites.
- Income Tax Regulations — s. 200(1) (information returns); Income Tax Act — s. 153 (withholding at source)
- CRA — T4 slip: information for employers and T4A slip: information for payers
- CRA — Reporting fees for service and the reporting fees for service fact sheet
- CRA — CRA strengthens compliance in trucking sector by lifting the moratorium on T4A penalties
- CRA — Payments of retiring allowances (T4 codes 66 and 67)
- CRA — Employers' Guide RC4120 (T4), Guide RC4157 (T4A), and When to file information returns
- Related reading: Employee or Contractor?, Hiring Your First Employee, and Can a Sole Proprietor Have Employees?
Rodney Maiato is the founder of CDL Accounting Solutions, a remote bookkeeping practice helping Canadian incorporated small businesses keep clean, audit-ready books without the year-end scramble. He brings 15+ years in accounting — from junior accountant to assistant controller, where he managed a team of 7 and oversaw the books of 25+ companies, plus payroll for 100+ employees across several provinces — and is a Payroll Compliance Professional (PCP) Candidate with the National Payroll Institute. He also builds the automation behind CDL, including its text-in receipt intake system.