ARCHIVED Clause related to the requirements of the Income Tax Act - Preparation of T4-A Supplementary Slips for Individuals or Businesses receiving payments pursuant to service contracts

Please note that the present Policy Notification replaces PN-31 and Annex A which were modified to replace any reference to the term "fee for services" with "value for services" since fee is interpreted as profit in some areas. Furthermore, a reference to Harmonized Sales Tax (HST) was added, which would apply instead of Goods and Services Tax (GST) in some provinces.

A Treasury Board Information notice was issued to Departments and Agencies' Senior Financial Officers on February 24, 1998 to advise them of the new service contract payment reporting requirements announced in the 1998 budget. Pursuant to paragraph 221 (1) (d) of the Income Tax Act, Departments and Agencies are required to prepare T4-A Supplementary Slips for all Individuals or Businesses receiving payments under service contracts during a calendar year, beginning with the period of January 1, 1998 to December 31, 1998. This directive also applies to contracts involving a mix of goods and services whenever the value of the services component totals at least 10 percent of the total value of the contract.

For Departments and Agencies to comply with the reporting requirement for payments made to individuals or businesses pursuant to services contracts, all applicable contracts are required to contain a term which will require the contractor to provide the information which is essential to the preparation of the T4-A, through its invoice. This information includes the legal name of the contractor; the status of the contractor, i.e. an individual, unincorporated business or a corporation; associated business number, GST/HST number, Social Insurance Number or T2 Corporate Tax number, as applicable; nature of the invoice, i.e. strictly services or a mix of goods and services where the value of the services represents 10 percent of the total value of the contract; and, a certification as to the completeness and accuracy of the information signed by the contractor or an authorized representative.

In support of this new directive, dual clause H3023D - Supplemental Invoicing Instructions (Annex A), has been developed for incorporation into all applicable services requirements effective immediately. All solicitation and resultant contracts or standing offers will stipulate that the contractor is to provide the required information directly to the client department's payment office, as part of the invoicing procedure.

Related changes to the Standard Acquisition Clauses and Conditions Manual, attached as Annex A, will be included in amendment 98-2, which is scheduled for release on June 15, 1998.

Annex A

Remarks: The following clause must appear in all solicitations and resultant service contracts, and goods and services contracts where the value of the services represents at least 10 percent of the total value of the contract. This includes contracts to Canadians undertaking government contracts abroad, and non-resident contractors undertaking government contracts in Canada.

H3023D    (__/__/98)    Supplemental Invoicing Instructions

1. Pursuant to paragraph 221 (1)(d) of the Income Tax Act, payments made by departments and agencies under services contracts (including goods and services contract whenever value of the services comprises at least 10 percent of the total contract value) must be reported on a T4-A supplementary slip. To comply with this requirement, contractors are required to provide the following information on each invoice:

1. the legal name of the entity or individual, as applicable, i.e. the name associated with the Social Insurance Number or Business Number (BN), as well as the address and the postal code;
2. the status of the contractor, i.e. individual, unincorporated business, or corporation;
3. for individuals and unincorporated businesses, the contractor's SIN and, if applicable, the BN, or if applicable, the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) number;
4. for corporations, the BN, or if this is not available, the GST number. If there is no BN or GST/HST number, the T2 Corporation Tax number must be shown;

   Certification signed by the Contractor or an authorized officer:

   "I certify that I have examined the information provided above, including the legal name, address, and Revenue Canada identifier, (c) or (d) as applicable, and that it is correct and complete, and fully discloses the identification of this Contractor."