By OptiVal Editorial Desk
Ask a room of builders about their T4s and everyone nods. Ask about the T5018 in Canada and the room goes quiet. That silence is expensive. If construction is your main business and you pay subcontractors, the Canada Revenue Agency (CRA) expects a T5018 slip, Statement of Contract Payments, for each one you paid more than $500 in a period. Plenty of solid firms have never filed one, usually because nobody told them the slip exists.
The CRA runs this reporting through the Contract Payment Reporting System, its push for compliance in construction and against the underground economy. The rules sit on the CRA’s T5018 slip page. Here is who has to file, what counts, and the deadline that catches people out.
Who has to file a T5018 in Canada
You must issue a T5018 slip, or send the CRA an equivalent listing, only when all three tests are met:
- Your primary source of business income is construction. The CRA reads that as more than 50 per cent of your income earning activities coming from construction work.
- You paid Canadian resident subcontractors for construction services, whether the work happened inside or outside Canada.
- You paid that subcontractor more than $500 in the reporting period, not counting GST/HST.
Individuals, partnerships, trusts and corporations can all be payers. The 50 per cent test is about your main business, not about how much building passes through your yard. The CRA gives the example of a natural gas company that builds pipelines to move its gas: its principal business is gas transmission, not construction, so it does not have to report, though the CRA will accept a return if it sends one.
Construction activity is defined broadly. The CRA list runs from excavation, concrete and framing to electrical, plumbing, roofing, drywall, painting and demolition. Heavy equipment rented with an operator counts as construction. The same equipment rented without an operator is just a rental, and it does not.
What to report, and what to leave off
Report amounts you paid or credited in the period, in the year you paid them, not the year the work was done. Cheque, cash, barter and offsets against money the subcontractor owes you all count. Bartered goods or services go in at fair market value.
Three traps show up again and again:
- The $500 test and Box 22 use different math. Test the $500 threshold without GST/HST. Once a subcontractor passes it, Box 22, the amount on the slip, includes GST/HST and PST where it applies. A sub you paid $800 plus $104 HST gets a slip showing $904, because $800 clears the threshold on its own.
- Goods alone are not reported. If an invoice mixes goods and services, look at the service part: if the services pass $500, the payment belongs on a slip.
- Joint cheques follow your direct contract. If you write one cheque naming your subcontractor and their subtrade together, you report the payment to your subcontractor only. That subcontractor reports the onward payment to the subtrade.
Leave some payments off the T5018 entirely. Payments to non resident subcontractors go on a T4A-NR instead. If construction is not your primary business, service payments belong on a T4A, the slip we covered in our guide to T4A slips for contractors in Canada. Wages for your own employees stay on a T4, and if the same person works for you both ways, employment income goes on the T4 and subcontract work on the T5018.
Filling in the slip and the summary
Each slip is short. Box 20 takes the last day of your reporting period. Box 22 takes the total paid to that subcontractor in the period, tax included, as above. Box 24 takes the subcontractor’s 15 character programme account number or their social insurance number. Your own programme account number goes on your copy and the CRA copy only, never on a copy you hand to a subcontractor.
The slips travel with a T5018 Summary. Line 80 is your total slip count and line 82 is the sum of every Box 22. File a separate return for each payroll account if you have more than one, and make sure the summary totals match the slips. A summary sent without its slips is treated as not received at all.
One relief surprises people: unlike a T4 or T4A, you are not required to give the subcontractor a copy of the T5018. You may still share one, and most subs appreciate it at tax time, but the legal duty is to file with the CRA.
The deadline is six months, not February
Most information slips are due at the end of February. The T5018 is not. You choose a calendar year or your fiscal period as your reporting period, then file within six months of its end. A December 31 year end means a June 30 deadline. A June 30 fiscal year end means December 31. Pick one basis and stay with it.
If your business stops operating, the return is due within 30 days of the day you stop. File electronically if you have more than five T5018 slips for a calendar year, a threshold in place for returns filed on or after January 1, 2024. Web Forms handles up to 100 slips and builds the summary for you.
Late filing costs money. Under the CRA’s relieving policy for small filers, five or fewer late slips draw a flat $100 penalty, and the scale rises with slip count and days late, up to $1,000 for 11 to 50 slips and higher beyond that. Filing on paper when you were required to file electronically draws its own penalty, $125 for 6 to 50 slips. These are small numbers next to the real risk: a missing T5018 trail invites questions about whether the subcontractor income was reported at all.
Getting the records right before June
The firms that file cleanly share one habit: they collect a subcontractor’s legal name, address and business number before the first payment, not in a scramble six months later. Pair that with job costing that separates labour, materials and subcontractor services invoice by invoice, the same discipline we set out in our guide to construction bookkeeping in Canada, and the T5018 becomes a printout, not a project.
If your subcontractor payments have never been reported, start with the current period and get advice on the earlier ones before the CRA asks first. OptiVal helps construction and trades businesses with bookkeeping from $199 per month, payroll from $29 per employee per month plus a $149 setup, and cleanup work at $45 per hour, all in Canadian dollars with HST extra. Led by qualified professionals with more than 75 years of combined experience, PwC-trained, our team keeps year end slips part of the routine. See our services and pricing, then book a free consultation and we will map your filing dates with you.
