Dancer teachers T4a

Tax Topics
1

HI,
I have client that has several dance teachers that have a contract and submit invoices to employer (dance studio). They are responsible for gst/hst.
Should they be issued a T4A?

2

Annual amounts $500 and under don’t need a T4A. However, I don’t issue T4As for my bookkeeping clients for my services. I have never determined when T4As are actually required.

3

It could be a T4 or a T4A depending on the terms of the contract.

4

It is a T4A that’s required if they issue invoices and charge HST.

5

Are the dance teachers truly self-employed? Do they contract their services to other studios and students?
This is something I would worry about as an accountant, because it’s not uncommon to see people doing this when they really should be employees. I make all of my clients aware of this: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4110/employee-self-employed.html
Now, many of them ignore it and continue “contracting” when it’s obvious to me that the people should be employees. A few times I’ve seen companies called out by CRA and ended up paying for it steeply. So, I also document that I’ve let them know, just to be safe that it doesn’t come back to me as their accountant.

If they are truly self-employed, no, it can be argued that you do not issue a T4A. However, to be safe, you may want to issue one. The items that a T4A are issued for are:

  • Pension or superannuation
  • Lump-sum payments
  • Self-employed commissions
  • Annuities
  • Patronage allocations
  • Registered education savings plan (RESP) accumulated income payments
  • RESP educational assistance payments
  • Fees or other amounts for services {This is the part you MAY have to issue a T4A for.}
  • Income replacement payments made under the Veterans Well-being Act
  • Research grants
  • Payments from a registered disability savings plan (RDSP)
  • Wage-loss replacement plan payments if you were not required to withhold Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums
  • Death benefits
  • Certain benefits paid to partnerships or shareholders
    (https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/completing-filing-information-returns/t4a-information-payers/t4a-slip.html)

Why not? If they are truly self-employed, then they are responsible for submitting their income and filing their business taxes. I have had situations with CRA doing a review of businesses and not even blinked at no T4A’s being issued to subcontractors who provide services such as bookkeeping, payroll, janitorial/cleaning services, workshop instruction, and more. How risk averse is the dance studio owner?

6

thank you so much for all the input.