Subcontractor Payments in Ontario: T4A, Invoices, and CRA Red Flags

If you're a contractor in Ontario who pays other contractors or service providers, you're probably wondering: Do I need a T4A? What invoices do I need? What happens if I get it wrong?

This post breaks down subcontractor payments in plain English so you stay CRA-compliant without guessing.

What is a T4A (simple definition)

A T4A is a tax form you issue to someone you paid for services (not an employee).

If you paid a subcontractor $500+ in a year, you generally need to issue a T4A and report it to CRA.

Key point: T4A requirements can be complex depending on the situation. Don't guess—confirm your specific situation.

When you usually need to issue a T4A

In Ontario, you typically issue a T4A if you paid someone:

• For professional services (consulting, accounting, legal)
• As a subcontractor (trades, labour)
• For other services (cleaning, repairs, etc.)

Common threshold: $500+ in a year = T4A required.

But rules vary. Confirm your situation.

What invoices you need from subcontractors (before you pay)

Before paying a subcontractor, get:

• A proper invoice (name, date, amount, description of work)
• Their business number (if applicable)
• Clear description of what they did/what job it was for

This protects you and creates a clean audit trail.

The subcontractor payment checklist (Ontario)

When you pay a subcontractor, track:

• Their name and contact info
• What job/project they worked on
• Amount paid
• Date of payment
• How you paid (cheque, bank transfer, etc.)
• Their invoice number

Keep this organized. It makes T4A preparation easy.

T4A deadlines (don't miss these)

If you owe T4As:

• Issue copies to the subcontractor by February 28 (or March 15 in some cases)
• File with CRA by March 31

Missing these deadlines creates penalties. Don't ignore them.

Common subcontractor payment mistakes

• Paying without getting an invoice
• Not tracking who you paid and how much
• Paying in cash with no record
• Waiting until March to figure out T4As
• Not confirming if a T4A is required
• Issuing T4As late (penalties apply)

HST and subcontractor payments (Ontario)

If the subcontractor is HST-registered, they'll charge you HST on their invoice.

You can claim this as an ITC (input tax credit) on your HST return if you have a proper invoice.

Key: keep invoices organized and labeled by job.

The difference between subcontractor and employee (important)

• Subcontractor: issues invoices, you issue T4A, no payroll deductions
• Employee: you issue T4, you deduct taxes/CPP/EI, different rules apply

Don't mix these up. The consequences are different.

Quick contractor checklist (subcontractor management)

Before year-end, confirm:

• You have invoices for all subcontractor payments
• You've tracked total payments per subcontractor
• You know if T4As are required
• You have contact info for each subcontractor
• You can explain what each payment was for

FAQs