# T4A and T2125



## zboow (Mar 3, 2015)

Hi Everyone,

Last year I joined the Board of Directors at my condo building (big mistake btw). So I am paid $50 per month from the property management company to attend the board meetings. They issued me a T4A with my income of $300 listed in box 48, Fees for Services.

While attempting to do my taxes with Turbo Tax, it is telling me because I have self-employment income, box 48 on the T4A, I must also fill out a T2125. I have little understanding of this form but from first glance, I do not have much of the info required on this form, ie Business Name, Business address, fiscal year, etc.

I must say I do not really agree that I am self-employed here.

So my question is do I really have to do the T2125 or is there another way to report this income ?


----------



## OptsyEagle (Nov 29, 2009)

Well, you are either employed by someone else or your are self-employed.

In any event, just put the amount in box 48 for the T4A and I would imagine Turbo Tax will put it on the T2125 for you. 

As for the other info, just type in "Board Director Condo Corporation" as the business name, ignore business number, the fiscal year will be January 1, 2014 to December 1, 2014, and you should look here for an industry code:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/ndstry/menu-eng.html

Pick any code that looks close to it. Your ownership will be 100% and if you are still doing this then check off that this is NOT your last year of business.

Now all that being said, you can review the rest of the form and decide if you want to declare any expenses related to earning this income. I cannot advise on that. 

Keep in mind that Turbo tax is going to allocate this $300, after expenses, to your income and tax it at your marginal rate. It is also going to charge you CPP, both your share and the employer's share, which add up to around 9.9% (around $30 before expenses). It will also apply for a CPP tax credit and employer deduction for this, as well, reducing your CPP costs, somewhat. The only exception to the CPP charge is if you have already maxed out on CPP from another occupation. I think they will still take more from your employer's share, which is a bone of contention with me, but that would be an entire new thread of unfairness griping, so we will leave that alone for now.

That's it. Welcome to the world of the self-employed.


----------



## zboow (Mar 3, 2015)

Thanks for the info.

Should I perhaps challenge the way the income was reported by the issuer of the T4A ?

Does it make sense that someone who joins a condo board would have to be consider self-employed ?


----------



## OptsyEagle (Nov 29, 2009)

No. You are self-employed, unless they hired you as an employee and then they would issue you a T4 instead of a T4A. There are really only two categories to earn income from work, employed or self-employed. I suspect they did the right move.

The income is taxable and this is how CRA wants them to record it. I don't disagree that it is a PITA but it is what it is.


----------



## zboow (Mar 3, 2015)

Thanks again.

I meant challenge the way the income was reported only because it is my understanding that there are many other boxes on the T4A, perhaps boxes that are more appropriate the situation and boxes that do not trigger the requirement for a T2125


----------



## OptsyEagle (Nov 29, 2009)

If you think you have a case. It sounds to me that you receive a "fee for your service" so I doubt you will win. Except to allow you to not fill out a form, the taxation costs and CPP charges will be the same. The T2125 allows you to deduct any legitimate expenses that you might have incurred to fulfill your duties/contract.


----------



## OhGreatGuru (May 24, 2009)

I think he should ask the condo to check with its accountant. Seems to me it should be a T4, based on this excerpt:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4a/xcptns-eng.html

_"The following types of income are not reported on a T4A slip:
....
- Amounts paid for management fees, *director's fees*, tips and gratuities, group term life insurance premiums paid for current employees, and other employment income. Instead, complete a T4 slip, Statement of Remuneration Paid."_


----------



## OptsyEagle (Nov 29, 2009)

I guess they call a director an employee. 

Anyway, he could do that. If might save him a bit on CPP but cost him on EI and of course it will cost the condo corporation a little more money, as they pay their part in those two programs.


----------



## Numbersman61 (Jan 26, 2015)

OptsyEagle said:


> I guess they call a director an employee.
> 
> Anyway, he could do that. If might save him a bit on CPP but cost him on EI and of course it will cost the condo corporation a little more money, as they pay their part in those two programs.[/
> 
> As a former director of a number of public companies, I can speak from experience. Director fees are subject to CPP and income tax deductions; they are not subject to EI premiums.


----------



## OhGreatGuru (May 24, 2009)

My first reaction was that I don't see that it is optional when CRA says Director's fees are not reported on a T4A

Maybe the problem is "Directors of What?" Perhaps the ruling applies to Directors of the business in question, which in this case is the Management Company. The OP is a Director of the Condo Association, not the Management Company But the cheque is being issued by the Management Company, acting as agent on behalf of the Board.

This is beginning to get above my pay grade.


----------



## Spudd (Oct 11, 2011)

I just wanted to add, that if you do go the self-employment route, your business name should simply be your own name, not "Board Director Condo Corporation" as was suggested above.


----------



## zboow (Mar 3, 2015)

Hi Everyone,

Thanks for all the response and info.

I have asked the property management company who issued the T4A to look into this and get back to me.

I certainly don't think I'm self-employed and I do not think it is reasonable to consider some who sits on a condo board as a self-employed individual. 

I will update when I have heard back


----------



## Numbersman61 (Jan 26, 2015)

OhGreatGuru said:


> My first reaction was that I don't see that it is optional when CRA says Director's fees are not reported on a T4A
> 
> Maybe the problem is "Directors of What?" Perhaps the ruling applies to Directors of the business in question, which in this case is the Management Company. The OP is a Director of the Condo Association, not the Management Company But the cheque is being issued by the Management Company, acting as agent on behalf of the Board.
> 
> This is beginning to get above my pay grade.


In the past, director fees were reported on a T4A but CRA clarified their policy and insisted that these fees be reported on a T4. Due to the small amount of these fees, no income tax or CPP is required to be deducted.


----------

