Tax & Trade Blog

A T4A slip is an essential Canadian tax form that businesses must issue to contractors and other self-employed individuals when payments are made for services rendered within Canada.

For Direct Selling businesses, properly issuing T4A slips and understanding withholding requirements are crucial for ensuring smooth, efficient operations and compliance with the Canada Revenue Agency (“CRA”).

As we have blogged about here, in the world of “natural health products” (“NHPs”), the ability to import unlicensed products into Canada for personal use — colloquially known in the industry as “Not for Resale” (“NFR”) — is a hot topic for direct sellers.  Businesses need to understand the specific and narrow administrative policies which allow for these importations, so they do not draw the ire, and enforcement actions, of Health Canada!

When it comes to a Direct Selling Company’s legal relationship with its Distributors, Canadian direct sellers are treated differently from those in the US, where IRS deeming rules operate to clarify that Distributors are independent contractors and not employees!

In Canada, there is no such special status, and the “common law” determines employee vs. independent contractor (“IC”) status, making this a perennial compliance issue.

The direct selling industry poses a number of unique challenges for Canadian sales tax regimes.  The patchwork of separate federal GST/HST and provincial PST/QST regimes only further complicate the matter, making it difficult for new entrants to the Canadian market to determine their collection, remittance, and reporting obligations.  This revised article from our 2023 primer provides a brief overview these optional sales tax rules.