Information for Contractors
Contract Payment Reporting for Federal Departments, Agencies, and Crown Corporations
Frequently Asked Questions (FAQs)
What happens if DND asks for a Business Number or social insurance number and I refuse to provide it?
The Income Tax Act gives DND the authority to ask for a Business Number or social insurance number for the Contract Payment Reporting System. You have to provide this number. If not provided three things may occur depending on the timing of the request:
- When the request for the goods and/or services is advertised by DND as part of the contracting process - The standard Government contracting clauses now mandate that the appropriate tax reporting numbers be provided. If not provided may influence the contract process.
- When your invoice DND - If no tax reporting information is evident in DND's financial system then a request will be made that it be provided. If you refuse then payment will not be made until such a time as the information is provided. Furthermore, no interest will accrue on your behalf.
- When the T1204s are produced by DND - In accordance with the Income Tax Act DND must report all contractors who have not provided the information. The CRA will now determine what action will be taken.
I have contracts with a number of DND organization and/or bases. Will I now receive separate T1204s for each one of those contracts?
Only one T1204 will normally be issued to you regardless of which unit you dealt with in DND or the number of contracts. The T1204 will be issued using the vendor account that was set up in the Department's financial system to effect payment. In theory there should only be one vendor account set up but sometimes a second is created with slightly different information. In this case you may receive two or more T1204s.
I noticed that the amount includes reimbursement of travel, why is this included?
In accordance with both the Income Tax Act and the reporting regulations, all payments to contractors are to be reported.
What should I do if the amount on the information slip is different from the amount I actually received?
The amount reported for service contract on T1204 is on cash basis, which may differ from the accrual basis accounting. If you receive an information slip and you believe that the amount is different from what you received during the year; you should contact the appropriate base or unit with whom you originally conducted business. They will investigate and make corrections if necessary to ensure the amount reported is accurate.
Will barter transactions have to be reported on the information slip?
Yes. If a subcontractor was paid through the bartering of goods or services, the amount reported on T1204 is equal to the fair market value (FMV) of the goods or services being exchanged.
Are the contract payments to non-residents reported on a T1204 slip?
The government service contract payment reporting requirement only applies to Canadian resident contractors. All contract payments to non-residents continue to be reported on a T4A-NR form (with withholding of taxes, as required under the Income Tax Act).
Does this apply to individuals and businesses engaged by government departments/Crown corporations to provide services outside of Canada?
Yes, if the services are provided by Canadian citizens or other Canadian business entities, a T1204 information slip is issued.