TaxCycle | Products | Pricing | Training | Documentation | Support | News

Amended T4A Slips

How do you change the file type for T4A when you want to Amend the Slip.

What are the steps to Amend T4A slips?

Hi Tammie,

About 1/2 way down the page there is information about how to mark a slip amended:
https://www.taxcycle.com/Documentation/Slips-and-relevés/Prepare-T4-and-T4A-slips/Enter-T4-or-T4A-slip-data

Once you’ve amended the slips, go to transmit tab and click “Dismiss results and start again”. You will then see how many amended slips there are, click on that number (it will be blue), and follow the normal submission process.

And welcome to the group :wink:

Hi…new here, and I have a question about a T4A issued by a company for whom I did some assembly work for, and sub-contracted some of it to a couple of friends. We did fairly large chunk of work in December of 2018, and I invoiced them by December 23 2018. No payment was issued until February, but lo and behold, I was issued a T4A for 2018 for all of the amount. I (stupidly?) ignored it and didn’t file any of the income for 2018.

Last month I got a notice from CRA that I owed more tax, based on the entire amount as business income. I didn’t claim any deductions (payments to my friends) so I owed on the entire amount, plus bags of interest. I contacted CRA and they told me that since no money was paid in 2018, I should not have been given a T4A for 2018, and the company must delete that T4 from their filing. So far they have not demonstrated an interest in doing this.

What should I do? Thanks in advance!

Hi

CRA should know that you cannot ask a company to remove or delete T4a ot T4.

You invoiced ir billed tge company for your work. Even though you did not get paid until 2019. How you declare the income depends on how you handle your books. If

Keep records as Cash Method you will declare the income as you recieve it. ACCURAL METHOD of keeping your records you declare it as you have earned it even though you have not recieved it yet.

Once you have determined that now you determine if you are a contractor self employed or employee.

Employee gets a T4

Contractor gets a T4A in the name of the business.

Now this is where you need to know how your client handles his books. It most likely is by the ACCURAL METHOD.

So what i reccommend is you adjust your 2018 return and dig up all your expenses against that income. When you file the adjustment include a letter explaining everything you have gone yhrough and ask that the interest for debg if owed be removed.

Unless this work related to farming or fishing (which would be unlikely for assembly work), you are required to report your business income on an accrual basis. This means money earned in the tax year but not yet paid to you must be declared and related bills received for the tax year can be claimed as an expense even though they were paid in the following year.

Thank you i am aware of that just trying to be gentle with the gentleman.

My reply related to the above comment. Sounds like CRA was affirming cash accounting instead of accrual.

You appear to be talking about two different things.
If you asked CRA about a T4, they seem to have given you the correct answer.

HOWEVER, your situation seems to be not that, as you have described it. You seem to have described running a business, and therefore it is December 2018 income for tax (and accounting) purposes, and you must be taxed on it in December 2018. The Company also seems to have correctly entered this on a 2018 T4A.

Note that Section 230 provides very strict requirements for keeping proper Books and Records of a business, with extremely harsh potential penalties for non-compliance, so always a good idea to make sure that good records are kept. (Including recording December 2018 Sales as December 2018 sales…) :slight_smile:

“and sub-contracted some of it to a couple of friends”
…Hopefully you also issued your friends the appropriate T4/T4A by end Feb 2019 if needed… :innocent:

“Business accounting and tax rules can get quite complex” is quite a large understatement… :grinning:

Thanks for all of that. It sounds like the company did the right thing, and the CRA is in error with their statement to me. I pay the tax for 2018 on the BILLED amount, but don’t count the income for 2019, during which time I will have higher expenses, so I end up with less to claim then. It all kinda comes out in the wash, depending on which bracket I end up in for each year.

I didn’t receive any money in 2018, so I wasn’t able to pay my friends until February of 2019. They don’t bill me. The deal was I pay them when I get paid.

Again, thanks so much for all your replies, more or less all pointing in the same direction.

When we ask questions of CRA best to remember they only give answers with info you give them. We have to becareful not ask and presume they understand.

The gentleman was self employed so your first comment was correct. Only way he can have avoided this problem is if he invoiced they with a due date of paper in 2019. Then the company could do what he wanted if they wanted to.

Then there is the requirement to Invoice when the job is complete, probably still in December.

I agree that I would not accept the word of a CRA customer service agent, they often are not that knowledgeable and they accept no
liability if they are wrong.

image001.jpg

1 Like

You should still record the expense in 2018, it is a liability to be paid in the next period.

image001.jpg

In other words submit a revision for 2018 with the added business part of the return, which will include the expenses. The fact is though I didn’t actually pay them then, nor did they “bill” me. It will then mess them up, because THEY will need to report the income, which I’m sure they didn’t yet. It’s a bit of a mess!

To add to your problem, you also did not file a T4A summary for 2018 (depending on if your friends were employees or contractors, if they were in fact employees then nothing was required for 2018), and you will incur late filing penalties on those…

@lylerobinson

NOTE - I have corrected and clarified this post below.

CRA administers the rules for the issuance of T4 and T4A.
Both are on a CASH BASIS only.
Employers can make mistakes when issuing a T4 or a T4A.

As a sub-contractor you are well within your rights to notify your employer regarding their mistake and asking for a correction.

The administrative policy within CRA is three written notifications to your employer first. If no correction is made then you are entitled to send a letter to CRA Employer Services with proof of your three requests. A copy should be sent to T1 Matching.

In the meantime you should copy T1 matching with both your letters to your employer as well as with you CASH BASIS reconciliation.

If you have any questions or concerns about how the T4A should be prepared refer to the T4A video.

https://www.canada.ca/en/revenue-agency/news/cra-multimedia-library/businesses-video-gallery/transcript-preparing-t4-t4a-information-returns-slips-summaries-segment-introduction-t4-t4a-information-returns.html

Earlier this year I shared the CRA powerpoint and transcript for the full webinar. Here is the link to my post.

It is a matter of fact and not conjecture or opinion that the T4A is prepared on a cash basis. It is my opinion that it is best to fix the original mistake rather than to compound the problem with an unrecognized and invalid work-around. In this case you will need to issue T4A’s to your sub-contractors as well. If you prepared these T4A’s on an ACCRUAL BASIS then you would only be further compounding the problem.

In our experience where the employer refuses to amend (if required), CRA has not been helpful to do anything.
Our client had T4A issued by employer and CRA deemed all contractors to be employees and CRA issued T4s. Employer would not and doesn’t care to delete/amend the incorrect T4A. Client now has been reassessed by CRA and includes both slips (double the income). Multiple letters and phone calls first to employer and then to CRA have provided no results. (going on 1 year now). If you have any advice on how to get results on this i would appreciate it. Thanks

Whether or not a T4A was correctly prepared by a customer is actually irrelevant to the issue of proper tax compliance and income reporting of this BUSNESSPERSON for the 2018 tax year.

In running a business, it is December 2018 income for tax (and accounting) purposes, and the BUSINESS PERSON must be taxed on it in December 2018.

Again I note that Section 230 provides very strict requirements for keeping proper Books and Records of a business.
It is always a good idea to make sure that good records are kept. (Including recording December 2018 Sales as December 2018 sales, and December 2018 expenses as December 2018 expenses).

@joe.justjoe1
@lylerobinson

Re:
“We did fairly large chunk of work in December of 2018, and I invoiced them by December 23 2018. No payment was issued until February, but lo and behold, I was issued a T4A for 2018 for all of the amount. I (stupidly?) ignored it and didn’t file any of the income for 2018.”

If this was invoiced in 2018 then it should be reported in 2018.

However, if the income was received in 2019, per CRA the T4A should have been issued in 2019. Instead, the T4A was issued in 2018.

T2125 and T2 income is to be reported on an accrual basis.

T4A income and sub-contract expense are to be reported on a cash basis.

What to do?

That is what this year’s CRA sub-contractor income webinar was support to address. Instead, it raised more questions than it answered.

Per the matching principle you should report the income and the expense in the same year.

Per sub-contractor rules this should be reported in 2019.

Per T4A issuance and per accrual based accounting rules this should be reported in 2018.

I defer to the CRA, Income Tax Act, and CRA. Let them resolve the obvious issues.

As far as T1 matching is concerned, you must either ask for a CRA ruling to determine the correct income and expense periods, or, you must report both the income and expense in 2018 with supporting documentation.

One solution is a simple one do not invoice until 2019. Even if it is jan 1 2019.

Then you will recieve the income in the year of billing. But now to do handle the expenses connected with the income.

If you are invorporated you take the ecpenses when they happen.

So i think we can all agree income and expenses in the last months of a tax year can be tricky but fun to work out the problem

After a lengthy phone call to CRA I finally got bumped up to a “senior” representative. She told me that I can try to get them to cancel the erroneous T4A, in which case could re-submit by business expense form and get a refund, or just carry on from here and pay the tax on the income for 2018, then claim all of the expenses against the 2019 income for this year’s filing. She said it’s too late in the year to go back and to not worry about it. Just make sure I issue T4As to my payees for 2019. She DID say that a T4A was ONLY for cash method, and are to be issued for funds PAID. What the company did was not correct.

Thanks to everyone who responded! It was very helpful.