Principal Issues: Whether the failure to file a T4A for professional services rendered to a corporation would lead to the application of penalties?
Position: Yes.
Reasons: The administrative relief provided since 2010 is an interim measure related to a change on the T4A of the box where these amounts should be indicated and not one relieving from the obligation of payers from filing T4A slips for services rendered. The fact that an invoice with a valid tax number is issued does not relieve the payer from the obligation to file a T4A.
APFF FEDERAL TAX ROUNDTABLE 6 OCTOBER 2017
APFF CONFERENCE 2017
Question 2 - Obligation to file T4A form
At the 2016 APFF Federal Tax Conference, the CRA stated in response to question 1B that its position remained unchanged with respect to the requirement to complete an information return on the form prescribed in respect of payments referred to in paragraph 153(1)(g). For example, fees, commissions, or other amounts for services paid by a corporation must be reported in an information return ("T4A") in accordance with ITR subsection 200(1).
The CRA also added that there were only two forms of administrative reliefs related to the filing of T4A:
- where the payment made is less than $500, to the extent that no tax is withheld in respect of the amount, and
- where services are rendered to an individual in a personal capacity by a professional or any other person practising a trade, or in the case of services rendered for the repair or maintenance of an individual's principal residence.
CRA Guide RC4157 deals with the filing of T4A slips. In the 2016 version of this Guide, the following is set out on page 13 regarding fees or other amounts for services rendered:
Box 048 – Fees for services
Enter any fees or other amounts paid for services. Do not include GST/HST paid to the recipient for these services.
Notes
The CRA is not assessing penalties for failures relating to the completion of box 048.
Question to the CRA
In the case where a service fee invoice with valid tax numbers is provided to the payer, can the CRA clarify whether the failure of the payer to file a T4A would result in the application of the penalty for failure to file an information return?
CRA response
In 2010, the T4A form was amended to add box 048 "Fees for services--Business income" on a permanent basis. All fees for services rendered that were previously reported in Box 028 "Other income" under "Other Information" should now be reported in Box 048. At that time, the CRA had announced a temporary measure specifying that taxpayers would not be penalized for failing to properly fill in Box 048. However, this has never had the effect of relieving taxpayers of their responsibility to report these payments.
Thus, a penalty under subsection 162(7) is applicable for non-filing if payments for services are not reported on the T4A form, even if an invoice with valid tax numbers is provided to the payer.
Sophie Larochelle
Nicolas Bilodeau
October 6, 2017
2017-070900
Response prepared in collaboration with:
Chu Ming Leung
Business Observation Branch