Book Consultation

Gondaliya CPA

Gondaliya CPA Professional Corporation logo
100% Canadian Owned badge
Menu
Construction Compliance · Canada · Licensed CPA

T5018 Filing Requirements: The Construction Subcontractor Payment Return

Who has to file a T5018, the more-than-50-percent construction test, the $500 per-subcontractor threshold, what goes in the payment box, holdback timing, the six-month deadline, and the penalties for filing late. Written by a licensed Canadian CPA who works with contractors.

Book Free ConsultationKnow Exact Fees within 2 Minutes

A T5018, Statement of Contract Payments, must be filed by any business whose primary source of income is construction, for each Canadian-resident subcontractor it paid more than $500 for construction services in the reporting period, including GST/HST. The return is due six months after the end of the chosen reporting period, and the amount reported is the gross tax-inclusive amount actually paid, not billed. It is the construction industry's version of the T4, and the CRA uses it to trace subcontractor income.

What the T5018 Is and Why It Exists

The T5018 is an information return, part of the CRA's Contract Payment Reporting System, that reports the payments a construction business makes to its subcontractors. The construction industry has long been a CRA concern for unreported income, particularly where payments are made in cash, so the T5018 exists as a reporting control: it gives the CRA a payment trail even when the payer's own tax balance is unaffected. In practice, the CRA cross-references your slips against each subcontractor's own return, which is why accuracy matters. It sits within our construction accounting work.

Who Has to File

The obligation turns on a single test: whether more than fifty percent of your business's income-earning activities are construction. If they are, and you paid subcontractors for construction services, you file. If construction is a minor part of your business, you generally do not, even if you do significant construction work.

SituationT5018 Required?
Construction is more than 50% of business incomeYes, for qualifying subcontractor payments
Construction is 50% or less of business incomeGenerally no (non-construction fees may go on T4A)
Payment to a non-resident subcontractorNo, use T4A-NR instead
Wages to an employeeNo, use T4 instead

The $500 Threshold and What Goes in the Box

You must report a subcontractor when the total you paid them for construction services in the period was more than five hundred dollars, and two details catch people out.

The $500 test is per subcontractor, per period, and includes GST/HST. Several small payments that add up across the year still cross the threshold. And the amount you report is the gross, tax-inclusive amount actually paid, not the net expense and not the amount billed.

  1. Per subcontractor, per period: pay a framing sub $300 in spring and $350 in fall, and the $650 total means a slip is required.
  2. Tax-inclusive: the threshold test and the reported amount both include GST, HST and any provincial sales tax.
  3. Mixed invoices: where an invoice combines materials and services, it is reportable when the service component reaches $500, and the full amount, including materials, is then reported.

Payments, Not Billings, and the Holdback Rule

The T5018 reports amounts actually paid during the period, not amounts billed. This is what makes holdbacks straightforward once you know the rule: a statutory holdback that is still being retained at the end of the period is not yet a reportable payment. It enters the payment box in the later period, when the holdback is released and actually paid to the subcontractor. Reporting a holdback before it is paid, or missing it when it is released, are both common errors. Our holdback accounting in construction guide covers the mechanics; for the T5018, the rule is simply: report what you paid.

The Deadline and the Reporting Period

You elect to report on either a calendar-year or a fiscal-year basis, and once chosen you must keep using that period unless the CRA authorises a change in writing. The return is then due six months after the end of that period.

Reporting Period EndsFiling Deadline
December 31 (calendar year)June 30 of the following year
March 31 (fiscal year)September 30
Business ceases operationsGenerally within 30 days

A Worked Example

Take a general contractor with a December 31 year-end who paid three subcontractors during the year.

  1. Finishing carpenter, $4,200 across six invoices: over $500, so a T5018 slip is required.
  2. Framing sub, $300 plus $350 on two jobs: $650 total, over $500, so a slip is required.
  3. One-time debris hauler, $475: under $500, so no slip is required for that subcontractor.

The contractor issues slips for the carpenter and the framing sub, files a T5018 summary totalling them, and files by June 30. Each reported amount is the gross, tax-inclusive amount actually paid.

Where contractors get the T5018 wrong: reporting the net-of-tax amount instead of the gross tax-inclusive figure, reporting billings instead of payments, missing a holdback when it is released, putting a non-resident subcontractor on a T5018 instead of a T4A-NR, mixing an employee's wages onto the slip, and forgetting that several small payments to one sub can cross the $500 line.

The Penalties for Getting It Wrong

Late filing carries a penalty of a set amount per day per slip, with a minimum and a maximum per slip, so a contractor with many subcontractors can accumulate a large total quickly. There are also penalties for failing to obtain a subcontractor's identification number and, at the serious end, for conspiring to avoid reporting. The exact figures are set by the CRA's current grid, which we confirm before filing, but the practical point is that these penalties are entirely avoidable by filing complete and on time. Filing above a certain number of slips must also be done electronically.

Why Accuracy Protects Your Subcontractors Too

The T5018 is not just a courtesy to your subcontractor; it is the document the CRA uses to verify that subcontractor's income. If your slip shows more than the subcontractor reported, the CRA may send them a review letter, and a pattern of mismatches across several subs can prompt a look at your own books. Filing accurate slips, built from reconciled payment records, protects everyone in the chain. That is why we build the T5018 from clean bookkeeping and coordinate it with your payroll compliance and remittances.

Case Study: General Contractor, Ontario

A contractor came to us after a CRA review letter revealed they had never filed T5018s, despite construction being their whole business and paying a dozen subcontractors each year. We confirmed the fifty-percent test was met, reconstructed the payments from invoices and bank records, separated out one non-resident sub who belonged on a T4A-NR and one worker who was partly an employee, corrected the gross tax-inclusive amounts, handled the holdback timing, and filed the outstanding returns, pursuing penalty relief where it was available. Going forward we file the slips and summary electronically each year by the deadline. The figures here are illustrative of the work we do, not a specific client file.

Back-filings caught up. Slips corrected. Penalties minimised.

Need Your T5018s Filed Right and On Time?

We confirm the obligation, reconcile the payments, and file the slips and summary by the deadline. AFFORDABLE flat fees. All fees include HST.

Book Free Consultation

Frequently Asked Questions: T5018 Filing Requirements

What is a T5018?
The T5018, Statement of Contract Payments, is the information return Canadian construction businesses use to report payments made to subcontractors for construction services. It is effectively the construction industry's version of the T4, and it is part of the CRA's Contract Payment Reporting System. Its purpose is to give the CRA a payment trail so subcontractor income is properly reported.
Who has to file a T5018?
Any individual, partnership, trust or corporation whose primary source of business income is construction generally has to file. The test is whether more than fifty percent of your income-earning activities are construction. If you meet that test and paid subcontractors for construction services during the period, T5018 reporting applies. We confirm whether the test is met for your business.
What is the more-than-50-percent test?
The T5018 obligation applies when more than half of your business's income-earning activities are construction. A business that does some construction but earns most of its income elsewhere, such as a utility that builds its own pipelines, is generally not caught. Whether you cross the fifty-percent line is a facts question, and we assess it before deciding your filing obligation.
What is the $500 reporting threshold?
You must report a subcontractor on a T5018 if the total you paid them for construction services in the reporting period was more than five hundred dollars, including GST/HST. It is a per-subcontractor, per-period test, so several small payments that add up over the year can cross the threshold. Payments under five hundred dollars do not need a slip, though you may report them.
Does the $500 threshold include GST/HST?
Yes. The five-hundred-dollar test and the amount you report in the payment box both include GST, HST and any applicable provincial sales tax, not the net-of-tax figure. This trips up many contractors who report the pre-tax expense instead. We make sure both the threshold test and the reported amount use the gross, tax-inclusive payment.
What amount do I report on the slip?
You report the total contract payments made to each subcontractor during the period, including GST, HST and any applicable provincial sales tax, in Canadian dollars. It is the gross, tax-inclusive amount actually paid, not the net expense and not the amount billed. Getting this box right is the single most common T5018 accuracy issue, and we reconcile it to your records.
Do I report amounts billed or amounts paid?
You report amounts actually paid during the period, not amounts billed. This matters for holdbacks: an amount retained and still held at the end of the period is not yet a reportable payment. It enters the reporting box in the period when the holdback is released and actually paid to the subcontractor. We track payments, not invoices, for the slip.
How are holdbacks handled on the T5018?
Because the T5018 reports payments made, a statutory holdback that is still retained at period-end is not yet reported. The held-back amount is reported in the later period when it is released and paid out. This keeps the slip aligned with actual cash to the subcontractor. Our holdback accounting work keeps the timing correct.
What is the T5018 filing deadline?
The return is due six months after the end of your chosen reporting period. A calendar-year filer with a December 31 period-end has a June 30 deadline, and a fiscal-year filer with a March 31 year-end has a September 30 deadline. The deadline follows your period-end, not one fixed date. If you cease operations, the return is generally due within thirty days.
Can I choose calendar year or fiscal year for reporting?
Yes. You elect to report on either a calendar-year or a fiscal-year basis, but once you choose, you must keep using that period for future returns unless the CRA authorises a change in writing. Consistency keeps your filings aligned with CRA records. We set the reporting period sensibly at the start so it fits your year-end.
What is a T5018 slip versus a T5018 summary?
You issue a T5018 slip for each reportable subcontractor and file a single T5018 summary that totals all the slips, whether you have one subcontractor or many. The slips report the individual payments and the summary reports the totals to the CRA. We prepare both so the return is complete.
Do I give the subcontractor a copy of the slip?
Providing the subcontractor a copy is encouraged and good practice, because it lets them verify the amount and use it when filing their own return, though the core obligation is to file with the CRA. Sharing the slip also reduces mismatches that trigger CRA review letters. We can produce subcontractor copies as part of the filing.
What counts as a construction service?
The CRA defines construction broadly, following the work rather than the trade, and it includes activities such as erection, excavation, installation, alteration, improvement, repair, and demolition of buildings, structures, roads and other surfaces. If you are unsure whether a subcontractor's work qualifies, the safer default is to issue the slip, because over-reporting does not carry a penalty and under-reporting does.
What about mixed goods-and-services payments?
If a subcontractor's invoice combines materials and services, the payment is reportable when the service component for the period is five hundred dollars or more, and the full reportable amount then includes the materials. Payments purely for goods, with no service component, are not reported. We separate the service element correctly so the right invoices are captured.
Do I report payments to non-resident subcontractors on a T5018?
No. Payments to non-resident subcontractors for construction services are reported on a T4A-NR return, not a T5018, and non-resident payments carry their own withholding considerations. Only Canadian-resident subcontractors go on the T5018. We identify residency for each subcontractor and use the correct slip for each.
What if a subcontractor is also my employee?
If a person works for you both as an employee and as a subcontractor, the employment income goes on a T4 and the subcontract construction work goes on a T5018. The two are kept separate. Mixing employment and subcontract amounts on the wrong slip is a common error, and we split them onto the correct returns.
Do I report payments to a subcontractor's sub-trades?
No. You report only the subcontractors you deal with directly. If one of your subcontractors hires their own sub-trades, that subcontractor is responsible for filing the T5018 for those sub-trades. You report what you paid your direct subcontractor. We map the contracting chain so each party reports only their own direct payments.
Does it matter if I paid a subcontractor in cash?
No. All payments for construction services count, whether made by cheque, cash, barter, or offset against an amount owing, and cash payments must still be reported once the subcontractor crosses the five-hundred-dollar threshold. Cash does not remove the obligation. We capture all forms of payment so cash amounts are not missed.
What are the penalties for filing late or not filing?
Late filing generally carries a penalty of a set amount per day per slip, with a minimum and a maximum per slip, so with many subcontractors the total can climb quickly. There are also penalties for missing a subcontractor's identification number and for conspiring to avoid reporting. The exact figures are set by the CRA grid, which we confirm, but the practical point is to file on time.
Why is the T5018 such a CRA focus?
The construction industry has long been a CRA concern for unreported and underreported income, particularly with cash payments, so the T5018 exists as an information-reporting control to trace subcontractor income. The CRA cross-references the slips against subcontractors' own returns, and a gap invites a review letter. Accurate T5018 filing protects both you and your subcontractors.
Do I need a subcontractor's business number or SIN?
Yes. You report the subcontractor's business number, or their social insurance number if they are a self-employed individual without a business number. If a subcontractor will not provide it, a penalty can apply unless you show reasonable effort to obtain it. We help you collect this information up front so the slips are complete.
Do I have to file the T5018 electronically?
If you are filing more than a small number of slips, the return generally must be filed online, and paper filing above that threshold can trigger a separate penalty. The exact slip count that forces electronic filing is set by the CRA and has changed over time, so we confirm the current rule. We file electronically for you either way.
What if I have more than one payroll account?
If your payments were made from more than one payroll account, you file a separate T5018 return for each account, based on the account the payments came from. Combining them onto one return is incorrect. We separate the reporting by account so each return matches the source of the payments.
What records should I keep for the T5018?
Keep the subcontractor invoices, proof of payment, contracts, and the subcontractors' identification details, and keep both the original and any corrected returns. Good records let you tie every reported amount back to an invoice and a payment, which is exactly what a CRA reviewer will look for. We build the T5018 from clean, reconciled records as part of your bookkeeping.
What if I have not been filing T5018s?
Many contractors discover the obligation only after a CRA review letter, sometimes for several past years. If you are behind, the payments can usually be reconstructed from your records and brought up to date, and the Voluntary Disclosures Program may relieve some penalties where it applies. We assess your situation and get the filings caught up correctly.
How does the T5018 fit with my other construction filings?
The T5018 sits alongside your payroll and remittance obligations, your bookkeeping, and your corporate tax, and it draws on the same subcontractor payment records. Keeping them coordinated avoids mismatches. We handle the T5018 within your broader payroll compliance and remittances so everything reconciles.
Do you prepare and file T5018 returns?
Yes. We confirm whether the fifty-percent test is met, identify every reportable subcontractor and the correct slip, reconcile the gross tax-inclusive payments, handle holdback timing, prepare the slips and summary, and file electronically by the deadline. It is a natural part of our construction accounting and skilled trades work.
How much does T5018 filing cost?
We quote a flat fee based on the number of subcontractors and the state of your records, so you know the cost upfront with no hourly billing. All fees include HST. We give you a clear, fixed quote once we understand how many slips are involved and the condition of your payment records.
How do I pay your fees?
Payment is by Interac e-Transfer to info@gondaliyacpa.ca. Auto-deposit is enabled, so no security question is needed. We confirm the flat fee, including HST, before any work begins.
How do I get started with my T5018 filing?
Please book a free consultation and tell us roughly how many subcontractors you paid, your year-end, and whether you are current or behind on filing. We confirm your obligation, quote a flat fee, and set out what we need to prepare the return. Book Free Consultation →

What Our Clients Say

1300+ five-star reviews from contractors and business owners across Ontario and Canada.

T5018 Filing Handled. Confirmed, Reconciled and Filed On Time.

We confirm whether you must file, identify every reportable subcontractor and the correct slip, reconcile the gross tax-inclusive payments, handle holdback timing, and file the slips and summary electronically by the deadline. AFFORDABLE flat fees. All fees include HST.

Scroll to Top