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Should an employer of independent contractors report incentive payments on a T4A?

Expert: Gary Booth

Ko asked:

My question is in regards to independent contractors. I currently employ several independent contractors, and pay them "incentive payments." Do I need to report this in their T4a? (if they were considered employees, I would have included it on their T4a).

Also, provided a non-interest bearing loan. Is this a taxable benefit to them that should also be reported on their T4a?

Gary Booth answered:

In regards to the CRA issues guidelines on employees and independent contractors, normally independent contractors will issue invoices to cover their work. If they don't then a T4A would need to be issued.

I don't normally see incentive payments for subcontractors. If invoices are issued then this would be an additional invoice from the sub contractor, alternatively it would have to be put on T4A.

As for the question regarding the non-interest bearing loan, some questions need to be answered before this can be fully answered.

About the author

Gary Booth has over 20 years experience in the tax and accounting field. He operates his chartered accounting practice called Gary Booth CA Professional Corp. The six members of Gary’s team provide a wide variety of accounting and tax expertise to meet the needs of Gary’s clients.

Gary Booth CA Professional Corp is committed to providing excellent customer service and to exceed client’s business expectations. The services the firm provides includes:

  • All types of personal tax returns from basic to complex
  • Corporation tax returns
  • Financial statement preparation
  • Audits and review engagements
  • Bookkeeping, GST and PST returns and payroll
  • Certified quickbooks trainer and set up
  • Business plans and business consulting

Gary can reached at 416 626 2727 x23 and

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