T4 Code 81 — Placement or employment agency — gross earnings
Gross pay to a self-employed placement or employment agency worker — never included in box 14.
At a glance — Code 81
- Box name
- Placement or employment agency — gross earnings
- T1 line
- Form T2125, lines 13499 to 14300
- Check against
- Your agency pay records, and box 29 on the same slip — code 81 is always paired with employment code 11.
What Code 81 means
Code 81 reports the gross income an agency or its client paid to a placement or employment agency worker who is not their employee. The CRA's instruction to the payer is explicit: report the amount under code 81, enter employment code 11 in box 29, and do not report the amount in box 14.
The situation arises where a worker is placed by an agency under the direction and control of the agency's client. That employment can be pensionable for CPP and insurable for EI by regulation even though the worker is not an employee in the ordinary sense, so a deemed employer withholds those contributions while the income itself is not employment income.
Which deductions come off depends on who actually pays you. Where the agency pays, it withholds CPP contributions and EI premiums but not income tax. Where the agency's client pays, it withholds income tax and CPP contributions but not EI premiums.
The income is business income. The CRA directs the worker to report the code 81 amount on Form T2125, Statement of Business or Professional Activities, which feeds the self-employment lines 13499 to 14300 of the return rather than the employment income lines.
Tax return implications
- Report the code 81 amount as gross business income on Form T2125, not as employment income.
- Because it is business income, you deduct your own expenses against it on the same form rather than using Form T777 and a T2200.
- Where the agency paid you, no income tax was withheld at all, so plan for the bill at filing time and expect CRA instalment reminders once you owe enough in consecutive years.
- Expect the slip to also carry box 24 for EI insurable earnings, box 26 for CPP or QPP pensionable earnings and, for Quebec work, box 56.
- The pensionable earnings in box 26 do build your CPP entitlement, even though the income itself is reported on the self-employment lines.
Common pitfalls & things to check
- Code 81 is not included in box 14 and must not be added to line 10100. Treating it as employment income is the most consequential error on this code, because it puts the income on the wrong lines and forfeits the expense claim you are entitled to.
- A T2200 does not help here. Employment expense rules do not apply to business income; your deductions belong on Form T2125.
- Where the agency's client paid you, income tax should have been withheld, so check box 22 before assuming nothing was.
- If you are genuinely self-employed and the agency simply paid you for services without placing you under a client's direction and control, the correct slip is a T4A rather than a T4 with code 81. Receiving a T4A in that situation is not an error.
- If you are the agency's own employee working under its own direction and control, none of this applies. You get an ordinary T4 with box 14 filled in and the full set of deductions withheld.
FAQ
Where do I report code 81 on my return?
On Form T2125 as gross business income, which flows to the self-employment lines 13499 to 14300. The CRA directs agency workers to that form rather than to the employment income lines.
Why was CPP deducted if I am not an employee?
Because employment through a placement agency can be pensionable by regulation when the placement meets the CRA's conditions. The payer is deemed to be your employer for CPP purposes and withholds accordingly.
No income tax was withheld. Is that a mistake?
Not if the agency paid you. In that case the CRA tells the agency not to withhold income tax and leaves it to you. If the agency's client paid you, income tax should have been withheld.
Can I claim expenses against this income?
Yes, as a business would. Reasonable expenses incurred to earn the income are deducted on Form T2125 under the ordinary business expense rules.
Related T4 boxes
Code 82 — Driver of taxis or passenger-carrying vehicles — gross earnings
Gross earnings paid to a self-employed taxi or passenger-vehicle driver — never included in box 14.
Code 85 — Employee-paid premiums for private health services plan
PHSP premiums you paid through payroll — eligible as medical expenses on Schedule 1 / Line 33099.
Code 87 — Emergency services volunteer exempt amount
Up to $1,000 of honoraria from volunteer emergency services — exempt from tax; excess counts as employment income.
Box 14 — Employment income
Your total gross employment income for the year before any deductions — salary, wages, bonuses, commissions, taxable benefits and most other pay.
Filing your return? Use the payroll deductions calculator to verify the amounts on your T4 match expected CPP, EI and income tax withholdings, and the income tax calculator to estimate your refund or balance owing.
Sources
T4 box definitions from CRA T4 employer guide. Rates and thresholds current for 2025; file your 2025 T1 by April 30, 2026 (self-employed June 15).
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