7 May 2004 Internal T.I. 2004-0063401I7 - Info. Reporting Requirements for Commissions

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: The information reporting requirements for commissions paid to insurance brokers and real estate salespersons.

Position: Question of fact.

Reasons: The information reporting requirements for a person paying commissions depends on whether the amount is paid to an employee in a "contract of service" or an independent contractor in a "contract for service". The payment of commissions under a "contract of service" is "remuneration" for purposes of paragraph 153(1)(a). The payment of commissions pursuant to a "contract for service" is included under paragraph 153(1)(g). Therefore, commissions paid to insurance brokers and real estate agents who are employees are reported on a T4 slip, and commissions paid to those who are independent contractors are reported on a T4A slip.

		May 7, 2004

Mr. Mike Bola	HEADQUARTERS
	Vancouver Tax Services Office	Kathryn McCarthy, CA

		2004-006340

Information Reporting Requirements for Commissions

We are writing in response to your e-mail of February 19, 2004, wherein you inquired about the information reporting requirements for commissions paid to insurance brokers and real estate salespersons. You also asked if there are any general sources of information on the issue.

Our Comments

Generally, the information reporting requirements for a person paying commissions depends on whether the amount is paid to an employee in a "contract of service" or an independent contractor in a "contract for service". There is no single conclusive test that can be universally applied to determine whether a person is an employee or an independent contractor. However, the four tests discussed in Wiebe Door Services Ltd. v. MNR (1987 DTC 5025) of control, ownership of tools, chance of profit or risk of loss and integration, can assist in making the determination. For more information on the four tests, please refer to the RC4110, Employed or Self-Employed?

In accordance with section 200 of the Income Tax Regulations:

Every person who makes a payment described in subsection 153(1) of the Act (other than an annuity payment in respect of an interest in an annuity contract to which subsection 201(5) applies) shall make an information return in prescribed form in respect of the payment unless an information return in respect of the payment has been made under sections 202, 214, 237 or 238.

Paragraph 153(1)(a) of the Act includes the payment of salary, wages or other remuneration, and paragraph 153(1)(g) includes the payment of fees, commissions or other amounts for services. The prescribed information return for paragraph 153(1)(a) payments is the T4 Supplementary and Summary form, and for paragraph 153(1)(g) payments, it is the T4A Supplementary and Summary Form. In our view, the payment of commissions under a "contract of service" is "remuneration" for purposes of paragraph 153(1)(a) of the Act. The payment of commissions pursuant to a "contract for service" is included under paragraph 153(1)(g). Therefore, commissions paid to insurance brokers and real estate agents who are employees are reported on a T4 slip, and commissions paid to those who are independent contractors are reported on a T4A slip. For further information on the payer's responsibilities with respect to issuing information returns, refer to the RC4120, Employers' Guide - Filing the T4 Slip and Summary Form, and the RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary Form - 2003.

We trust our comments will be of assistance to you.

Randy Hewlett, B. Comm.

for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch