Do i have to mail out t5018 to contractors
In Canada, as a general rule, you are required to issue a T4 Statement of Remuneration Paid to report the income you paid to contractors who are considered employees. However, there are some exceptions and nuances to consider.
When to issue a T4:
You must issue a T4 to contractors who are considered employees, which includes:
- Individuals who perform services for your business on a regular and continuous basis.
- Individuals who are under your direction and control.
- Individuals who are entitled to benefits, such as vacation pay, sick leave, or other benefits.
When not to issue a T4:
You do not need to issue a T4 to contractors who are considered independent contractors, which includes:
- Individuals who perform services on a one-time or occasional basis.
- Individuals who are not under your direction and control.
- Individuals who are not entitled to benefits.
T5018 vs. T4:
The T5018 Statement of Contract Payments is used to report payments made to contractors who are considered independent contractors. You are required to issue a T5018 if you paid a contractor more than $500 in a calendar year.
When to issue a T5018:
You must issue a T5018 to contractors who are considered independent contractors, which includes:
- Individuals who perform services on a one-time or occasional basis.
- Individuals who are not under your direction and control.
- Individuals who are not entitled to benefits.
Key takeaways:
- If you consider a contractor to be an employee, you must issue a T4.
- If you consider a contractor to be an independent contractor, you must issue a T5018.
- You do not need to issue a T4 or T5018 to contractors who are paid less than $500 in a calendar year.
It's essential to keep accurate records and consult with a tax professional or accountant to ensure you are meeting your obligations correctly.