Tax & Trade Blog

A T4A slip is an essential Canadian tax form that businesses must issue to contractors and other self-employed individuals when payments are made for services rendered within Canada.

For Direct Selling businesses, properly issuing T4A slips and understanding withholding requirements are crucial for ensuring smooth, efficient operations and compliance with the Canada Revenue Agency (“CRA”).

As a general rule, non-resident employers who send their employees to Canada to perform various tasks for them are required to withhold tax in respect of the employees earnings while in Canada, and remit same to the Canada Revenue Agency (CRA).  Employees, are then required to file Canadian income tax returns to recover those taxes, if meeting certain tax treaty tests for determining taxability of those earnings in Canada.

Perhaps not surprisingly, these rules have made sending US employees to Canada an extremely cumbersome process for US employers, with full technical compliance with these rules perhaps honored more in the breach that the observance.

Thankfully, the CRA has instituted a brand new program addressing this situation, aimed at certifying non-resident employers, and then allowing a stream-lined process for sending US employees to Canada.   The program will apply for all payments made to US employees after 2015, and offers possible relief from the withholding tax requirements referred to above, upon certification.