T4A Box 048 Fees for Services: Where It Goes on Your T2125

What does "fees for services" in T4A box 048 mean?

Box 048 is where a payer reports fees or other amounts it paid for services, for the calendar year it paid them, with GST/HST and PST left out (CRA, RC4157). Under CRA administrative policy, a payer issues the slip when its payments to you in the year total more than $500, or when it deducted tax from any payment.

The payer is paying you outside an employment relationship, and for most Canadian residents it does not withhold CPP, EI or income tax from these fees (CRA). Box 048 shows an amount paid, not tax paid. Payers file their slips with the CRA and give you a copy by the end of February (RC4157).

If you earned these fees in your own business, report them as self-employment income on a T2125 built from your own invoices. The slip is the payer's record, a cross-check and not the number to copy. A case is not simple when:

• the slips do not tie to your invoices;
• a slip repeats work you reported on last year's return;
• you hold slips for several years;
• some income came with no slip at all;
• the slip is in your name but your corporation did the work;
• an agency or platform kept a cut before paying you.

Gather every invoice, every T4A for the year, your bank deposits, your GST/HST records and last year's T2125.

Is a T4A for fees for services self-employment income, and do I file a T2125?

Yes, if you earned the fees by carrying on your own business: it is self-employment income, calculated on a T2125. The CRA's slip guidance says to enter the box 048 amount on the applicable self-employment line of your return, lines 13499 to 14300. A T4A with self-employed commissions in box 020 is a different box: the same guidance puts gross commissions on line 13899 and net commissions on line 13900.

Business income generally includes income from any activity you carry out for profit or with a reasonable expectation of profit. Employment income is not business income (CRA). The T2125 is the form that calculates it: fill in a separate one for each business or profession and send it with your return. The CRA's slip guidance points box 048 to the self-employment lines only, so if your fees did not come from a business, settle where they go before you file.

The slip does not replace the form. The T2125 starts from what you earned and invoiced across all your clients, not from one payer's slip.

A T4A also does not settle whether you are self-employed. The payer treated you as outside employment, and the CRA looks at the facts of the working relationship. If yours looks more like a job than a business, see contractor or employee.

Where does the box 048 amount go on the T2125 and my return?

Gross fees go in Part 3A of the T2125 (Part 3B for professionals), the GST/HST collected comes out one line later, and the result flows to line 8000, line 8299 and your return. The line numbers below are from the latest published T2125; check the form for your year.

Amounts 3A to 3C sit in Part 3A, which is for business income. A professional uses Part 3B instead: amount 3H starts from gross professional fees including work-in-progress and GST/HST, amounts 3I and 3J do the work of 3B and 3C, and amount 3N feeds line 8000 (T2125). Amounts 3D to 3F (3K to 3M in Part 3B) are for a business on the GST/HST Quick Method; see the Quick Method in your books. The CRA guide describes both parts. Whether your work counts as professional is a point to settle before you file, and a person with both kinds of income files a separate T2125 for each.

If box 022 shows income tax the payer deducted, it is claimed on line 43700 of your return, with the tax deducted on your other slips (CRA, T4A slip).

Expenses reduce the net on later lines: see self-employed expense lines. Tax, CPP and instalments on the net are in how self-employed income is taxed.

Why doesn't my T4A match my invoices?

The two count different things. The slip shows what the payer paid in a calendar year, without GST/HST. The T2125 shows what you earned in your tax year, with the GST/HST collected, and then takes it out. Self-employment income other than farming, fishing and commission income must be reported on the accrual method (income counts in the period you earn it, not when it is paid), and self-employed individuals generally have to use a December 31 year-end. An eligible individual may report on another year-end under Form T1139, and then the slip's calendar year and your business year do not line up (CRA, T4002).

To reconcile one client:

1. List the client's invoices for your tax year, including work billed late that should have been billed in it (Income Tax Act, s. 12(1)(b)), and take out the GST/HST. That is the net fee earned.
2. Subtract invoices still unpaid at year-end.
3. Add payments received this year for work earned in an earlier year, and any deposit or retainer paid ahead of work you have not yet invoiced, also without GST/HST.
4. The result is what the client should have paid you in the year. It is the figure to compare with the slip.
5. If a gap remains, ask the payer what the slip includes, and check for an agency's cut, a refund or credit, a second payer, or a slip that is wrong.

A deposit for work still to be done is income when you receive it (s. 12(1)(a)), and a reserve can offset it (s. 20(1)(m)); see customer prepayments and unearned revenue. For which year a job belongs to, and the fiscal-period rules, see December sales paid in January.

Do I report T4A income again if I reported it last year?

Not if you already reported it in the earlier year. If a T4A includes amounts you earned and reported in a previous year, do not claim that income again in the current year. Write a letter showing the amount and the year you reported it. On a paper return you may include the letter; if you file electronically, keep it in case the CRA asks (CRA, T4002).

The overlap is normal, not an error. Income is reported on a T4A for the year it is paid, regardless of when it was earned (RC4157).

If the earlier year's return left the amount out, the income is missing there, and ignoring this year's slip does not fix it. See December sales paid in January for fixing a wrong year, and unreported income and voluntary disclosure for income left off a filed return.

Do I report income that has no T4A, or from a client who paid under the slip limit?

Yes. You must report all your income in your income tax return (CRA, T4002). The $500 figure is the CRA's administrative threshold for a payer to issue a slip, not a floor for what you report. The CRA states that it is not assessing penalties on payers for failing to complete box 048, apart from a trucking-industry policy (RC4157). A client that pays less, or forgets to issue a slip, does not take the income off your T2125.

Leaving income off a return can carry penalties (CRA, T4002); see unreported income and voluntary disclosure.

Build the total from your invoices and bank deposits, then use the slips as a check. Payers file their slips with the CRA, so a payment with a slip is on record with it. For a payment with no slip, your books are the record.

Does the T4A include HST, and do I have to register?

No: the slip leaves GST/HST out, so when you charged tax it is lower than your invoices. The CRA tells payers not to include GST/HST or PST in box 048 (RC4157).

If you are a GST/HST registrant not on the Quick Method, the tax you collected is not your income. You hold it in trust until you send it to the CRA (RC4022), so it is not part of your fee income. The T2125 shows this by including the collected tax in amount 3A and taking it out at amount 3B, so the net fee ties to the slip. On the Quick Method, the GST/HST collected less the amount worked out at the quick-method remittance rate is added as income at amount 3F, so the T2125 total will not tie to the slip the way a regular registrant's does (T2125).

Whether you must be registered depends on your total taxable sales, not on the slip. The limit, which sales count, and what to do if you charged tax without registering or never charged it are in when to register for GST/HST.

An agency or platform kept its cut before paying me: what is my gross income?

It depends on your contract and your books, and the CRA's slip and platform pages do not settle it. The slip shows the amount the payer reported as paid for services, which may be your fee before the cut or after it.

Two CRA pages bear on it. A platform that reports to the CRA states the total consideration paid or credited to you and, separately, any fees, commissions or taxes it withheld or charged (CRA). The CRA's platform page also lists the cost of using a platform to sell as an example of an eligible expense (CRA). If you report a lower figure than a platform reported, be ready to explain the difference from your contract and statements.

It turns on who sold to the end client and what your contract says you earned, a point to settle before you file. Payouts with US withholding are in app store and video platform payouts, and what platforms send the CRA is in CRA digital platform reporting.

What if the slip is wrong, never came, or is in my name for my corporation's work?

Ask the payer first. The CRA's guidance for a questionable amount is to contact the issuer of the slip (CRA). A payer that filed a wrong amount can send an amended or cancelled slip (CRA). Ask in writing and keep the reply.

If a slip never came, you should have most slips by the end of February, and you can get a copy of a current or prior-year slip that is missing or lost (CRA). The income is reportable whether or not the slip arrives.

If the payer will not correct a slip you believe is wrong, the T2125 is built from your records, and the CRA may still see a difference from the slip the payer filed. Keep the correspondence. Which amount and year your records support can be a point to settle with a professional before you file.

A slip in your own name for work your corporation did is a different question: whose income it is decides which return reports it. See a fees slip issued to you, not your corporation.

What records prove my total if the CRA asks?

Your income records must show the date, amount and source of each item, backed by original documents such as sales invoices, receipts, bank deposit slips, fee statements and contracts (CRA). Keep them for at least six years from the end of the last tax year they relate to.

For a fees-for-services business, keep:

• every invoice, with its date, the client and the GST/HST shown;
• contracts or messages that set the fee and the payment date;
• every T4A, and any letter about income already reported;
• bank statements that tie each deposit to an invoice;
• agency or platform statements that show the gross amount and the cut;
• GST/HST records and returns;
• last year's T2125.

Example

These examples are illustrative; all figures are in Canadian dollars.

HST on a designer's invoices

A Toronto designer, registered for HST and not on the Quick Method, invoices one agency C$30,000 plus C$3,900 HST. The agency's T4A shows C$30,000, because box 048 leaves HST out. On the T2125, amount 3A is C$33,900, amount 3B takes out the C$3,900, and amount 3C is C$30,000. The net figure ties to the slip.

A December job paid in January

A consultant who reports on the accrual method with a December 31 year-end bills C$6,000 before HST in December and is paid in January. The slip for the January year shows C$6,000, but the work was earned in the December year, so that year's T2125 reports it. In the January year, the consultant does not claim it again and writes the letter described above.

A slip that does not tie

A freelancer's invoices to one client in the year total C$40,000 before HST. C$8,000 of that was unpaid at year-end, and C$5,000 of work invoiced last year was paid this year, both before HST. The client should have paid C$40,000 minus C$8,000 plus C$5,000, which is C$37,000, so a slip of C$37,000 ties. A different figure points to a deposit paid ahead, an agency's cut, a credit, a second payer or a wrong slip. A client that sent no slip at all is still added to the T2125 from the invoices.

Different for you?

• You hold T4As that do not tie to your invoices, several years of slips, or income that may be reported twice or not at all: each slip needs a year and an amount, then a decision on whether a corrected slip or an amended return is needed and what to file. See individual tax help.
• Your records are thin and years are unfiled: see rebuilding books from bank statements and bookkeeping help.
• A slip is in your name for your corporation's work: see a fees slip issued to you, not your corporation.
• You left income off a filed return: see unreported income and voluntary disclosure.
• The CRA sent a letter about a slip or about income on your return: see reviews, audits and voluntary disclosure.
• You may be an employee, not a contractor: see contractor or employee.
• You are on the GST/HST Quick Method: see the Quick Method in your books.
• You are the payer issuing slips: see reporting payments to subcontractors.
• You live in Quebec: this guide covers the federal T4A and T2125. Quebec residents also file with Revenu Québec, which this guide does not cover.