What is a T4A-NR and When is it Required?

A T4A-NR, or Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada, is a Canadian tax information slip. It is used by any person or business in Canada that pays a non-resident for services performed within Canadian borders. The slip reports these payments to both the non-resident service provider and the Canada Revenue Agency (CRA). This process helps the CRA track income earned in Canada by non-residents.

Determining When a T4A-NR is Required

A T4A-NR slip is required when a Canadian payer pays a non-resident individual, corporation, or partnership for services performed in Canada. This requirement applies regardless of where the payment is made or where the payer is located. The key factor is that the service was physically provided in Canada. Payments for work performed as an employee are reported on a standard T4 slip, not a T4A-NR.

Common examples of reportable payments include fees for consulting, professional services by lawyers or accountants, and performance fees for entertainers or public speakers. Any fee, commission, or other similar amount falls under this rule. Payments for goods or for services performed entirely outside of Canada do not require a T4A-NR.

The CRA has an administrative policy that a T4A-NR is only required if the total payments to a non-resident in a calendar year exceed $500. A slip is also required if any tax was withheld from the payments, regardless of the total amount. This policy simplifies reporting for smaller service payments.

Regulation 105 Withholding and Waivers

Payers are bound by Regulation 105 of Canada’s Income Tax Act, which mandates they withhold 15% from the gross amount paid to a non-resident for services in Canada and remit it to the CRA. This withholding is not a final tax but an installment payment toward the non-resident’s potential Canadian tax liability. If services are performed in Quebec, an additional 9% provincial withholding is also required.

The CRA provides a waiver process for non-residents who believe the 15% withholding is excessive. To apply for a waiver to reduce or eliminate the tax, a non-resident must submit Form R105, Regulation 105 Waiver Application. The application should be submitted at least 30 days before the services begin or the first payment is made. There are two types of waivers: treaty-based and income and expense.

A treaty-based waiver is for residents of countries with a Canadian tax treaty who can prove they will not have a permanent establishment in Canada. An income and expense waiver is for any non-resident who can show that their actual Canadian tax liability will be less than the 15% withholding due to deductible expenses. If the CRA approves a waiver, it notifies the payer to reduce or stop withholding, but the payer must still issue a T4A-NR to report the gross income.

Information and Documentation for T4A-NR Preparation

To complete a T4A-NR slip, a payer must collect specific information from the non-resident service provider. This includes the recipient’s full legal name and address. A Canadian tax identification number is also required: an Individual Tax Number (ITN) for individuals or a Business Number (BN) for corporations. If an individual does not have an ITN, they may need to apply for one from the CRA.

The payer uses this information to complete the T4A-NR slip. Box 18, “Gross income,” shows the total amount paid before any withholding. Box 22, “Income tax deducted,” reports the total Regulation 105 tax withheld. The payer must also enter the three-letter country code for the non-resident’s country of tax residency.

Reimbursed travel expenses may need to be reported in Box 20, “Travel expenses.” Reimbursements for documented out-of-pocket expenses are not subject to withholding if they are separated from service fees. Accurate completion of the slip is important for both the payer’s compliance and the non-resident’s tax filing.

Filing the T4A-NR Slip and Summary

Payers must submit all T4A-NR slips for a calendar year to the CRA on or before the last day of February of the following year. Failure to meet this deadline can result in a penalty of $25 per day, with a minimum of $100 and a maximum of $2,500.

The CRA requires electronic filing for anyone issuing more than five T4A-NR slips in a year. If filing on paper, a T4A-NR Summary form must also be submitted to reconcile the totals. This summary is not required for electronic filings.

Payers must also provide two copies of the T4A-NR slip to the non-resident recipient by the February deadline. This can be done by mail or electronically if the recipient has given written consent. This provides the non-resident with the documentation needed for their tax obligations.

Obligations for the Non-Resident Recipient

Upon receiving a T4A-NR slip, the non-resident has their own obligations. The slip is an official record of Canadian-source income and confirms the amount of tax withheld. Most recipients will need to file a Canadian income tax return, as the 15% withheld is often higher than the final tax liability.

Filing a Canadian tax return allows the non-resident to claim business-related expenses against the gross income reported on the T4A-NR. This determines their net Canadian income and the actual tax owed. If the tax withheld is more than the final tax liability, filing a return is the only way to get a refund.

Provisions of a tax treaty between Canada and the recipient’s home country may also reduce or eliminate the Canadian tax owed, but these benefits can only be claimed by filing a return. Individuals must file their return by April 30 of the following year, or by June 15 if they carried on a business in Canada. Any tax owing is due by April 30.