Therefore, the contractor and sub-contractor report for the applicable amounts paid to the party with whom they hold their respective contracts. A failure to complete and file a T return will result in penalties and interest depending on the quantity of slips outstanding or filed late and the number of days filed late.
Interest on late filing penalties continue to accrue until payment is provided in full. If you have not completed your T slips, or if you have not reported all of the income you earned in any year, we can help! Call us today to learn more! This article provides information of a general nature only.
It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer. What is a Spousal Support Payment? In simple terms, a spousal support payment is financial support paid from an individual to a former spouse after If you have not met your tax obligations, the completion of a T form may alert the CRA that you have these unfulfilled obligations.
You should attempt to get them in order as soon as possible. Remember, you are required to keep this form , and all others, for six years after filing your tax return. If you believe that you should have received a form T but did not, it is still your responsibility to report any income that would have been on this slip to the Canada Revenue Agency.
If your client refuses to complete a form or does not believe it is necessary, you are not relieved of your tax responsibility for that income. Report the income from the T slip on your tax return using the T — Statement of Business Activities , regardless if you received the slip or not.
You will also be able to claim any offsetting business expenses here. TurboTax Self-Employed helps you easily manage your business earnings and expenses. A T is a CRA taxpayer information return known as the statement of contract payments. It applies to all individuals, partnerships, trusts, and corporations involved in construction activities and where their primary source of business income are those construction activities.
Basically, a T is like the version of the T4 for the construction industry. The primary purpose of the T is to allow the CRA to track income earned by subcontractors in the construction industry. As the construction industry often involves many subcontractors who are small business owners and self-employed, as well as transactions frequently being made in cash, the construction industry has long been a concern to the CRA for tax evasion.
Cash payments, in particular, are a risk factor when it comes to unreported or underreported income due to the relative lack of a paper trail. Furthermore, self-employed workers do not have income taxes withheld automatically when they are paid, increasing the chances of there being unpaid taxes and tax evasion. The T attempts to help document and track the payments by putting an additional onus on the construction business hiring the contractors.
However, once they pass that threshold, they are required to register an HST number and begin collecting and remitting HST. Call our experienced Toronto tax law firm to learn more about information returns and HST registration requirements. Where construction is a business' primary source of income, a T slip must be completed by the business for any amounts paid or credited to subcontractors who are Canadian resident taxpayers for construction services.
For non-resident subcontractors, a business would instead need to submit a T4A-NR return. Note that businesses may have significant construction activities but do not primarily earn their business income from those activities and in those cases would not need to complete the T for example, an oil company may construct pipelines but primarily earn its income from oil related business.
The T can be reported either 6 months after a business's fiscal year end or 6 months after the calendar year end. Given that a construction contractor may have numerous subcontractors on multiple jobs, the failure to file penalties can easily stack up and in total amount to huge penalties. Of course, the best thing to do is to keep on top of your filing requirements and avoid the penalties altogether.
However, if you are in the situation where you have not filed as required, the voluntary disclosures program is an opportunity to rectify the problems. If an application to the voluntary disclosures program is accepted, some or all of the penalties may be waived and you will also be exempt from criminal tax prosecution. For subcontractors, be aware that even if your contractor does not file a T, that does not mean the CRA does not know or is unable to find out about funds you are paid.
The voluntary disclosures program can also be used to disclose unreported income and comes with the benefit of waivers of penalties and interest.
Speak to one of our top Toronto tax lawyers and ask what we can do to help. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. All Rights Reserved. Password Passwords are Case Sensitive.
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