T5018: when a construction business reports payments to subcontractors

Short answer: a business whose main source of income is construction, meaning more than 50% of its business income, reports what it paid its Canadian-resident subcontractors. Each subcontractor paid more than CAD 500 in the reporting period, not counting GST/HST, gets a T5018 slip, and the T5018 summary is filed within six months after the period ends.

Who has to issue a T5018

• Your main source of business income is construction activities, which the CRA puts at more than 50% of business income.
• You paid a Canadian-resident subcontractor for construction services, performed inside or outside Canada.
• The payments to that subcontractor in the reporting period total more than CAD 500, not counting GST/HST.

The CRA’s page says a slip or a printout listing the payments must be issued under this administrative policy. A fictional example: a renovation company paid a tiler CAD 6,000 and a painter CAD 450 in the calendar year, both before GST. The tiler is over the CAD 500 test and is reported. The painter is under it, and so would be a painter paid CAD 480 plus CAD 24 GST, because the test uses the amount before GST/HST. The figures are invented.

What goes on it

You compare the payments before GST/HST with the CAD 500 test. The total you report is different: you enter the total you paid the subcontractor during the period, and the CRA’s page says that total in box 22 includes GST/HST and PST, where they apply. You file the T5018 slips together with the T5018 summary, which lists the totals.

When it is due

You can report on a calendar-year or a fiscal-year basis, and you file within six months after the end of the reporting period. A business with a 31 December period files by 30 June. A fictional business with a 31 March fiscal period files by 30 September.

What your books need to show

• Which payments were to subcontractors for construction services. Payments to suppliers for materials alone are a different kind of payment.
• The total paid to each subcontractor in the period, with the invoices behind it.
• The period you report on, the same each year, so the six months run from a fixed date.

When subcontractor payments are mixed into one account with materials and wages, the T5018 figures have to be rebuilt by hand. Separate accounts during the year make the report a summary of what is already there.

Employee or contractor? →

T4 and T5 slips: due dates and late penalties →

PST on materials for BC contractors →

Ask for a written quote →