T4

Let me start by being super clear. I run a business. I make and sell digital artwork to customers. I charge sales tax. I have been doing mostly only this for more than 30 years. I am not an employee. I do not have any employment income.

Sometime around 2005, I think, one of my customers caused considerable consternation for many of its freelance suppliers by suddenly and unaccountably issuing T4 slips to them. Among the problems with this was the fact that that first T4 slip was thousands of dollars short. This happened because I had income from them that they had payed late, in the following year, but were for sales that belonged to the prior tax year. Not being into tax fraud, I had to report my actual income for the tax year not some random fraction of it.

So, I laboriously gathered all the information about the T4 with the wrong amount on it, provided annotated copies of my actual sales income and a cover letter explaining the mistake. I filed my taxes on paper with all this supporting material attached.

Because this was bullshit, there was considerable backlash from suppliers. So the following year, when that customer issued T4s to everyone, they came with a cover letter explaining that they were required to issue T4s to businesses they had purchased artwork from.

There are a couple of things to unpick with this.

When I called the CRA to ask how they meant for me to deal with this they confirmed that my customers were indeed required to issue T4 slips to suppliers for sales/purchases. So I asked the CRA if that meant I should have to issue T4 slips to my mechanic or grocery store. After a long “uhhhhh…” pause, I was was told, “yes.” 🤣

Of course you and I know this cannot be true. And part of the way I and other freelancers stuck with this problem knew it was not true is that only this one customer had ever issued T4s. Until quite recently no other company I have ever done work for has ever issued a T4.

And here is an interesting additional problem. Because that initial T4 was short, the missing amounts from the previous year appeared on the T4 for the following year. While at the same time, amounts that were past-due were omitted. Thus for many years, every T4 I was sent was for the wrong amount. Eventually like most people who got sent them, I just started to ignore them. Typically my customers, because I am in no sense their employee, do not have my Social Insurance Number. So, none of these T4s are associated with my Tax account anyway.

This year is super special however. I have three T4s. One from the company that first issued them. And two from companies that bought up divisions of that company. One of those T4s shows an amount of $500.00. Almost as soon as I received that T4 I also received an email from that company (2022/03/09) saying that the amount was in error and they would be emailing a replacement in a week. They have not however emailed another T4. This is especially problematic because they are a US company. I had a whole nightmare of getting set up as an approved supplier with them in 2020, where I had to play guess-what-info-they-need for tax-treaty purposes with respect to US withholding. And the thing I eventually correctly guessed, cause they would not say, is that they needed my Social Insurance Number. And because they have my SIN that wrong T4 is associated with my Tax account.

But it gets weirder. Cause not only is the $500.00 amount wrong. I didn’t have any sales income from that company in 2021. $0.00.

I have, I think, figured out how this mistake happened. In November of 2020 I had completed $150.00 worth of work for them and invoiced for it. That $150.00 was unambiguously part of my 2020 sales and I reported it as income for 2020. But they issued the check past-due for the November bill, late, in January. And have issued a T4 for that income as if it were in 2021. And to add insult to injury, they put in the wrong amount.

I can only guess what new hell will ensue when I have to explain to an inquisitive CRA agent what the hell has happened here.

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Dave

I am an experienced freelance graphic artist and sometime canoeist. I feel strongly about the quality of professional work and like sitting by a remote lake on a sun-warmed rock.

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