In order for the Canada Revenue Agency (CRA) to calculate how much taxes you owe, it first needs to determine not only how much income you made, but what kind of income you made. And there are a lot of types of income. As Cicero, the famed Roman orator, said,
Each category of income has its own personalized statement that you and the CRA receive by February of the following year; however, the deadline to receive some slips is later. These statements detail the gross amount of money you were paid and any deductions made at the source, such as tax already collected, contributions to Employment Insurance (EI), Canada Pension Plans (CPP), or union dues. These statements are called T-slips and are prepared by payers such as your employer, financial institutions, government departments, or pension administrators.
There are many categories and subcategories of T-slip: T5 slips detail investment income; T3 slips detail trust income; and RC slips detail income from various government benefit programs, such as the Universal Child Care Benefit and the Canada Workers Benefit. The most common kind of slips, however, is the series of slips that start with "T4."
When are the vaious T4 slips issued?
These T-slips are issued when you earned income from sources like an employer, a pension, OAS, CPP, EI, an annuity, or a withdrawal from your Registered Education Savings Plan (RESP) or Registered Retirement Savings Plan (RRSP). There are eight variations of T4 slips specific to the type of income earned, and an additional series of T-slips that state investment and trust income.
T4 slips have eight variations:
T4: paid from your employer
T4A: pension, retirement, annuity, and any other income
T4A (OAS): Old Age Security income
T4A (P): Canada Pension Plan income
T4E: Employment Insurance income
T4RIF: Withdrawals from a Registered Retirement Income Fund
T4RSP: Withdrawals from an RRSP
T4FHSA: Withdrawals from (as well as contributions to) a First Home Savings Account
We’re going to focus on the second category: T4A slips.
What is a T4A?
The difference between a T4 slip and a T4A slip is only that they detail earned income from different sources. A T4 – Statement of Remuneration paid slip records income received from an employer. In contrast, a T4A – Statement of Pension, Retirement, Annuity, and Other Income declares income from a much broader category. It includes pension, annuity, scholarships, grants, withdrawals from registered accounts, and more.
The kind of income that is recorded on a T4A slip is extremely broad — the CRA basically throws in all kinds of “other” income that it's not sure what to do with. If you’re freelancing for an organization, for example, it may choose to issue a T4A stating what it paid you throughout the year. Or if you receive an inheritance, that income may also be declared by means of a T4A slip. Or if you’re a scientist and you get a research grant, that money will be recorded here.
These are some of the types of income that may be reported on a T4A slip:
Pension
Annuities
Scholarships, bursaries, or research grants
Some self-employment income that totals over $500
Death benefits
Withdrawals from Registered Disability Savings Plans, RESPS, and RRSPs
Veterans’ benefits
Tax-deferred cooperative shares
Indian exempt income (the CRA uses the term “Indian” because of its legal meaning in the Indian Act)
Some cash awards
Bankruptcy settlements
Tuition assistance for adult basic education
Types of income not reported on a T4A slip:
Income from a Crown corporation
Construction contract income
Income to a non-resident of Canada
Income from a Life Income Fund
Tips
Maternity leave or parental leave top-ups amount
CPP, OAS, EI, and RIF withdrawals, which are all reported on their own specific subcategories of T4 slips — see the numbered list above
How to report a T4A
Reporting a T4A slip is identical to reporting income on any other kind of slip.
You’ll probably get a T4A slip, if applicable, by the end of February of the following year. The CRA also gets a copy. It’s normal to get multiple T4A slips if you have multiple streams of income.
Most of the income stated on your T4A slips will be taxed at your marginal rate. Unlike a T4 slip, it’s rare that any tax was deducted at the source, so it’s likely that you will owe taxes for the income. You were responsible for estimating and setting aside the appropriate amount of income tax throughout the year, as you received that income.
Some kinds of income, however, may be tax-exempt, or, in the case of self-employment income, you may be able to deduct eligible business expenses. If you suspect this is the case, ask a qualified accountant or call the CRA to confirm.
The most common example of exempt income is scholarship money, or OSAP grants for full-time post-secondary students. This income will probably be reported in box 105 on the slip. Box 105 states your scholarship, bursary, fellowship, grant, or prize income. Scholarships are tax-exempt for elementary and secondary school, and for full-time students at a post-secondary institution. Up to $500 for part-time students is tax-exempt. Post-doctoral fellowships are fully taxable. Call the CRA or ask a qualified accountant to check how much of this income you must report.
If you are doing your taxes by yourself using tax software, then the software will likely automatically import all the information from all your T-slips from the CRA using Auto-fill My Tax Return. Otherwise, you can just fill out the information yourself. The slips make it easy because the boxes are all numbered — simply type the information in each box to the corresponding one on your tax software. (If you lose your paper copy, a backup is available by clicking on "My Account" on the CRA website.)
How to fill out form T4A
So far, we’ve just been discussing receiving a T4A slip. But what if you have to issue one?
If you paid out any of the kinds of income that belongs on a T4A slip and it totals more than $500 in a calendar year, then you will need to fill out a T4A slip and send it to the payee and the CRA. Common payers include employers, trustees, estate executors, liquidators, administrators, or corporate directors.
Luckily, the slip is clear and easy to fill out — it is divided into numbered boxes that each serve a specific purpose. These boxes include:
Recipient’s name and address, social insurance number
Year
Amount paid in dollars and cents (reported in Canadian currency, even if they were paid in another currency)
Income tax deducted if any
At the bottom of the slip is an “Other information” area. Here you fill out the appropriate code that designates what kind of income it is. Veteran benefits, for example, are reported with Code 127 and a cash prize is Code 154.
Looking up the code may also give you more information on the details you need to include.
What is a T4A summary?
The T4A summary (T4ASUM) is a summary statement of the amounts from all T4A slips that you have to issue in the year. The T4ASUM combined with all the T4A slips you prepare make up what’s called the T4A Information return. This is filed with the CRA and each individual T4A slip is issued to its intended recipient.
Starting in 2020, you can file a T4A Information return electronically. In the CRA’s endeavour to be more efficient and to save many a tree, before January 1, 2024, if you have to issue more than 50 T4A slips, you must file your T4A Information Return electronically. Less than that, you can file them by mail. Come January 1, 2024, if you have to file more than five slips, you will need to do so electronically.
