- A T4 is issued when a payer treats you as an employee.
- The slip a payer issues reflects a decision they made about how to classify the working relationship — and that decision has consequences that go well beyond tax season.
Two Ontarians can do very similar work and end up with two very different tax slips at the end of the year — one gets a T4, the other a T4A. The slip itself is just paperwork, but which one you receive says something about how the person paying you has decided to treat the relationship, and that decision has real consequences.
This guide compares the two slips side by side, explains why the difference matters beyond which box the number sits in, and what to do if you think you got the wrong one.
The Core Difference: Employee vs. Everyone Else
A T4 is issued when a payer treats you as an employee. It comes with tax, CPP, and EI withheld directly from your pay throughout the year.
A T4A is issued for a wide range of payments made to someone the payer has not treated as an employee for that payment — most commonly a self-employed contractor paid a fee for services, but also pensions, scholarships, and other income types. No tax is typically withheld at source on contract fees reported this way.
Side-by-Side Comparison
| T4 | T4A (contract/fee-for-service) | |
|---|---|---|
| Who receives it | Employees | Self-employed individuals, contractors, and others paid outside payroll |
| Tax withheld at source | Yes, by the payer | Generally no — the recipient sets money aside and remits it |
| CPP contributions | Split between employer and employee, withheld automatically | Self-employed recipient is generally responsible for both portions |
| Business expense deductions | Not available against T4 wages | Generally available against related business income |
| What it signals | Payer treats the relationship as employment | Payer treats the relationship as something other than employment |
Why the Slip Type Matters Beyond Paperwork
The slip a payer issues reflects a decision they made about how to classify the working relationship — and that decision has consequences that go well beyond tax season. CRA (and the courts) don't decide employee-versus-contractor status by looking at which slip was issued or what a contract calls the worker. They look at the substance of the relationship, generally weighing factors such as:
- Control — who decides how, when, and where the work gets done.
- Ownership of tools — who supplies the equipment or resources needed for the work.
- Chance of profit / risk of loss — whether the worker can genuinely profit from efficiency or lose money on the arrangement, the way a business owner would.
- Integration — how closely the person's work is woven into the payer's regular operations, versus operating as an independent supplier of services.
If the slip doesn't match the reality of the relationship, the paperwork hasn't settled anything — it's just created a mismatch waiting to surface later.
When the Slip Doesn't Match the Reality
Misclassification can cut in either direction, but the more common — and more consequential — pattern is a worker who's functionally an employee being paid on a T4A as if they were an independent contractor. If CRA later determines the relationship was really employment, the payer can face reassessment for unremitted source deductions, along with associated penalties and interest, going back over the years the misclassification continued.
For the worker, being on a T4A instead of a T4 also means missing out on employer-side CPP contributions and typical employee protections tied to payroll — while carrying obligations, like self-employed CPP contributions, that many people paid this way don't realize apply to them.
What to Do If You Think You Got the Wrong Slip
- Look honestly at the four factors above — who controls your schedule, whose tools you use, whether you can profit or lose from how you do the job, and how integrated you are into the organization.
- Talk to the payer. Sometimes the classification was a genuine oversight and can be corrected going forward.
- Keep records — your contract, your invoices or pay records, and notes on how the work actually happens day to day.
- Consider requesting a CRA ruling. Workers or payers can ask the CRA to formally determine employment status for CPP and EI purposes when there's a genuine dispute.
- Get advice before raising it, especially if you're still working for the payer, since the conversation can affect the relationship.
Frequently asked questions
Can I ask to be switched from a T4A to a T4?
You can raise the issue with the payer, but they ultimately decide how to structure payroll going forward — unless a CRA ruling or a legal dispute establishes that the relationship was employment all along.
Does getting a T4A mean I can deduct business expenses?
Generally, yes, if the T4A reflects self-employment or contract income — you can typically deduct reasonable expenses incurred to earn that income. This doesn't apply to T4A amounts that represent pensions, scholarships, or other non-business income.
What happens to my past tax returns if my status gets reclassified?
Reclassification can affect prior years, potentially requiring adjustments to CPP contributions and deductions already claimed. How far back it reaches depends on the specific facts and applicable reassessment rules, so get advice specific to your situation.
Is one slip type "better" than the other?
Neither is inherently better — they reflect different legal relationships with different trade-offs (withholding certainty and CPP splitting versus expense deductions and more autonomy). What matters is that the slip actually matches how the work happens.
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