CRA indicates that the Ontario government avoids source deduction and T4A reporting obligations by routing PSW incentive payments to their employers

An Ontario government program to attract personal support workers (PSWs) provided for the payment to them of cash incentives, such as a clinical placement stipend of up to $5,400, and a recruitment incentive payment of $10,000.

CRA indicated that, given the program was designed to have employers deliver such payments directly to PSWs, the amounts received by the PSWs would be included in their employment income under s. 5(1); and would be subject to source deductions and T4 reporting by the employer.

It further noted that if the Province had instead designed a program to deliver the above payments directly to the PSWs, the amounts received by them would have been included in their income pursuant to s. 56(1)(r)(i) (i.e., as “earnings supplements provided under a project sponsored by a government … in Canada to encourage individuals to obtain or keep employment”) so as to impose source deduction and T4A reporting obligations on the Province.

Neal Armstrong. Summary of 22 January 2026 External T.I. 2025-1078871E5 under s. 5(1).