7 October 2016 APFF Roundtable Q. 1B, 2016-0652761C6 F - T4A filing -- translation

Principal Issues: 1. What is the status of the CRA's administrative position with respect to the filing of T4A slips for professional services rendered to a corporation? 2. Would it be possible for the CRA to administratively exempt payers from filing T4A slips for services rendered when the payee remits to them an invoice with a valid tax number?

Position: 1. Same as the previous position, keeping in mind that some exceptions are provided. 2. No.

Reasons: No changes are deemed necessary.

FEDERAL TAXATION ROUND TABLE 7 OCTOBER 2016

APFF - CONGRESS 2016

Question 1B - T4A Filing Requirements

In light of the very broad terms used in the tax provisions, there are still many situations where the issuance of a T4A slip seems mandatory, but for which this seems unjustified. For example, a corporation that pays more than $500 to its accountant, for preparing its financial statements and income tax returns, would be required, according to our understanding of the tax provisions, to provide a T4A slip to the accountant.

Over the past year, practitioners have been confronted with situations where a CRA representative, as part of an audit of a payer, has required the production of a T4A slip with regard to situations that are administratively burdensome. As one example among many, the CRA required, in the 2015 taxation year, the production of T4A slips in respect of fees paid by a dentist to its external accountants (CPAs) as well as its legal advisers.

As the federal government wants to ease the administrative burden on small businesses, the obligations associated with producing T4A slips clearly merit review. Otherwise, this could result in the issuance of a phenomenal number of T4A slips arising from all the relationships between customers and service providers. Moreover, practitioners no longer know the precise circumstances in which they must issue such slips.

Questions to the CRA

(a) At the 2011 APFF Federal Roundtable, the CRA reiterated that the administrative practices with respect to T4A slips were being studied. Is it possible to know the progress and results of this study?

(b) Would it be possible for the CRA to provide an exemption from the requirement for issuing a T4A slip where an invoice for the services rendered (whether by an individual or a corporation), bears a valid tax number (such as ST and QST numbers), is provided by the payer?

CRA response to question 1B (a)

The CRA position remains unchanged regarding the requirement to complete an information return in prescribed form in respect of the payments referred to in paragraph 153(1)(g) of the Act. Thus, fees, commissions or other amounts for services paid by an enterprise must be reported in an information return (T4A) pursuant to subsection 200(1) of the Income Tax Regulations (footnote 1). However, the CRA notes that there is already administrative relief for the production of the T4A in specified limited circumstances such as:

(i) where the payment made is less than $500, to the extent that no tax is withheld in respect of the amount, and

(ii) where personal services are rendered to an individual by a professional or anyone else practising a trade, or where the services are rendered for the repair or maintenance of the principal residence of an individual.

The Canadian tax system is one of self-assessment based on voluntary compliance. The CRA expects enterprises to comply with their legal obligations. Thus, no administrative relief, other than as stated in the previous paragraph, is available regarding payments made by an enterprise for services.

CRA response to question 1B (b)

The CRA is not currently disposed to consider such relief.

Sophie Larochelle
Dave Beaulne
October 7, 2016
2016-065276

Answer prepared in collaboration with:
Marlene Sylvest
Manager
Legislative Policy and Research Section
Employer Compliance Division
Business Observation Branch
Recovery and Audit Branch

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1. C.R.C., C. 945 ("C.R.C.").