CRA Audits and T4A Compliance: Guidance for Not-for-Profit Sport Organizations

Recently we have become aware that the Canada Revenue Agency (CRA) has been enforcing part of the income tax regulations that apply to not-for-profit sport organizations – particularly the requirement for organizations to issue T4As. This enforcement may come as a surprise. 

In fact, the CRA regularly audits not-for-profit organizations, including those in the sport sector, to ensure proper reporting of payments to individuals. The goal is to ensure that individuals (coaches, officials, and other volunteers) are declaring these payments on their income tax returns. Payments include honorariums, coaching fees, and consulting services. Is your organization regularly following these tax requirements? What might trigger an audit? 

What Triggers a CRA Audit? 

 The CRA uses a mix of randomly selected cases, which cannot be avoided. However, it also uses risk assessments to select people and organizations that they subsequently audit. Common triggers during risk assessments include: 

• Inconsistencies in filings (e.g., mismatched income/expenses). 

• Cash-heavy operations (common for local organizations). 

• High or unusual deductions/expenses. 

• Failure to issue T4As or to report payments. 

• Suspected non-compliance. 

For sport organizations, the CRA may discover issues during audits by reviewing financial statements, bank records and invoices. An audit will then focus on how the organization compensates volunteers, coaches, and officials. If your financial statements show payments without corresponding T4 or T4A slips, the CRA will want to investigate. Check here for more information on audits. 

What Is a T4A? 

A T4A (Statement of Pension, Retirement, Annuity, and Other Income) is a tax slip that your not-for-profit sport organization, as the “payer”, must issue to report certain non-employment income—such as fees for services or honoraria—paid to individuals during a calendar year.  

An organization is generally required to issue a T4A if the total payments to a recipient exceed $500 in the year. This requirement helps ensure recipients properly declare the income on their personal tax returns, which allows the CRA to track potential undeclared earnings, and helps prevent tax evasion. For sport organizations, it commonly applies to nominal "honoraria" or other payments made to non-employees (like officials, volunteers, coaches, and consultants). 

Who gets a T4A? Basically, any individual earning over $500.00 whether or not they have a business number.  These include: 

• Honorarium recipients (e.g., guest speakers, workshop facilitators, or volunteers for special events) 

• Coaches, officials, and lower-paid staff if these individuals are treated as independent contractors (not employees).  

• Individual consultants or service providers (e.g., trainers, event coordinators). 

So, who doesn’t get a T4A?  

Full-time or regular employees get a T4 slip for employment income – organizations should be familiar with how to issue T4 slips to employees. Payments to incorporated businesses are generally not reported on a T4A slip if the payment is for services provided in the course of the corporation’s regular business activities (this would apply to a consulting group like Sport Law). In these cases, the organization should obtain an invoice instead. However, a Past President delivering a keynote speech at an important event who is getting paid $1,000 should be given a T4A slip at tax time. 

More information from the CRA website is here. 

In preparation to issue T4A slips, an organization should ensure that it documents everyone to whom it pays any amount over $500. Some organizations might lose track of their payments when they pay cash (for example, to officials over the duration of a season) which underscores the need to document these payments. The individuals to whom these payments are occurring must also be aware the sport organization will be reporting the payments – and the individual must declare the payment on their tax return. The T4A slip is a helpful reminder to the individual to declare that income (because the organization will be declaring it as an expense). 

Practical Tips 

To comply with T4A rules and general provisions: 

• Track all payments over $500 to non-employees. Categorize each payment as honoraria, fees, etc. 

• Know who should receive T4As. The CRA does not automatically identify the individuals to whom you should issue T4As. Your organization must track these people proactively.  

• Get Social Insurance Numbers (SINs) from recipients before paying. Also note names, addresses, and payment details. 

• Issue and file T4As. Provide T4A slips to recipients and file them (along with the T4A Summary) with the CRA by the last day of February. 

Sport organizations must also ensure that they are classifying their workers and employees properly. Who is an employee? Who is a contractor? Who is a volunteer receiving an honorarium? The CRA has guidelines here.  

Late filing of T4A slips can trigger significant penalties. The CRA assesses late-filing penalties based on the number of slips filed late and the length of the delay – and amounts are calculated using a tiered schedule (for example, $10 per day up to a maximum of $1,000 for 1–50 slips). The minimum penalty is $100 but the actual amount can be much higher depending on the circumstances. Separate penalties may also apply for failing to issue slips to recipients.  

In addition, non-compliance can lead to tax reassessments, interest charges, and other sanctions. Plus, some national organizations may be registered charities – which creates different tax-related requirements and possible additional penalties. 

We hope this blog post has been informative. Any questions can be directed to Celia Lima or hello@sportlaw.ca.