This initiative is part of the government's efforts to fight the underground economy. Research has identified a high rate of non-compliance in the construction sector. Federal departments and Crown corporations have been included as a pre-requisite to requiring the private sector to undertake this measure. The CCRA continues to do research to identify areas of non-compliance and other sectors of the economy may be included in this initiative at some time in the future. Starting with the 2001 tax year, the use of the T1204 is mandatory.
All payments are gross business, professional or corporate income.
Only the net income counts from the tax point of view, and whether it is taxable or not is determined by filing the appropriate tax return. The form indicates the total contract payments a government organization made to the contractor during the calendar year for services. In addition to the payments for services, the amount may also include payments for products, expenses, or reimbursements. The information is also used by Tax Services Offices for purposes of revenue collections, the department's identification, compliance and audit programs, the International Tax Office and the statistical services function. The SIN number will not appear on contracts and remains secure in the records of the government department, agency, or Crown corporation.