Accountant for Demolition Contractors in Ontario and Across Canada

Incorporating gives you limited liability, a 12.2% Ontario combined rate on the first $500,000 of active business income, and access to the $1.25M Lifetime Capital Gains Exemption on a future sale, none of which operating as a sole proprietor offers. Running a demolition business unincorporated means your equipment loans, WSIB claims and job-site liabilities sit against your personal assets, and every dollar of profit is taxed at your personal rate whether you draw it or leave it in the business. Once the company is consistently profitable, incorporation lets you split income between salary and dividends and defer the surplus at the small-business rate. Many contractors also hold the excavator and high-reach fleet in a separate company so the operating risk is kept away from the equipment. When you convert, we complete the section 85 rollover on Form T2057 so your machines and goodwill move across without triggering tax. Incorporation does add annual T2 filing, a minute book and higher compliance costs, so we model the break-even on your actual numbers rather than a rule of thumb. When the answer is yes, we handle the incorporation, the WSIB and HST registration and the whole setup; when it is not yet, we say so and revisit it next year.

An incorporated demolition company files a T2 corporate return and pays roughly 12.2% in Ontario on the first $500,000 of active income under the Small Business Deduction, with the balance taxed at the general rate. Your demolition contract revenue and your salvage and scrap income are both taxable, and your heavy equipment, disposal, subcontractor and payroll costs are deductible. Larger jobs are recognized on percentage-of-completion with work in progress, and the Construction Act 10% holdback is not income until it is released. We keep the whole picture onside with CRA.

Short jobs can be billed and recognized as you complete them, but larger commercial and industrial contracts are recognized on the percentage-of-completion method, with the unbilled portion carried as work in progress on your balance sheet. That matches revenue to the costs you have actually incurred, so a job that spans your December 31 year-end is not overstated in one year and understated in the next. We set the WIP schedules in QuickBooks Online or Sage 50 and tie them to your T2 so CRA sees a clean, consistent basis.

On construction and improvement work in Ontario, the Construction Act requires 10% of each progress payment to be held back until the lien period expires. Until that holdback is certified and released, it is not yet yours, so we carry it as a holdback receivable rather than booking it as income. That keeps your corporation from paying tax on cash it has not collected. When the holdback is released we recognize it, so the revenue lands in the right year and CRA has no basis to reassess.

Your excavators, high-reach demolition machines and skid steers go in CCA Class 38 at 30% on a declining-balance basis. Your dump and pickup trucks sit in Class 10, also at 30%, while your breakers, grapples, buckets and other attachments go in Class 8 at 20%. Small tools under the threshold can be written off in full through Class 12, and computers sit in Class 50 at 55%. We claim each on Schedule 8 and time major purchases before your year-end so the first-year deduction lands against a profitable season.

The metal, fixtures and reclaimed material you sell off a demolition site is taxable revenue, not a windfall you can leave off the books. We set up a salvage and scrap income account so every reclaimed-metal cheque and scrap-yard receipt is recorded, and we charge HST where it applies. CRA looks closely at scrap income on construction files, so booking it properly protects you if the deposits are ever compared to your reported revenue.

Your disposal, tipping and bin-rental costs are major deductible expenses, and the 13% HST on them is an input tax credit you can recover. Asbestos and designated-substance abatement is regulated under O. Reg. 278/05 and the Ministry of Labour and is almost always subcontracted, so those payments are deductible and reportable on a T5018. We post disposal and abatement costs to each job through Dext so the margin on every teardown is real and nothing deductible is lost.

Yes. If your primary business is construction and you pay subcontractors for hauling, abatement or site work, you must file a T5018 Statement of Contract Payments each year reporting what you paid them. Missing or late slips carry a $100-per-slip penalty, and unreported subcontractor payments are one of the first things CRA checks on a demolition audit. We track subcontractor costs through the year and file the T5018 return on time.

Yes. If you employ eligible apprentices in a qualifying Red Seal trade, the Apprenticeship Job Creation Tax Credit is worth 10% of their eligible wages to a maximum of $2,000 per apprentice per year, claimed on Schedule 31 of your T2. A demolition company training operators and labourers often leaves this on the table. We identify which of your crew qualify and claim the credit every year they are eligible.

Home-reno demolition is a cash-heavy corner of construction, and CRA treats the underground economy as a priority. Every cash job has to be recorded as revenue, because CRA can run an indirect verification of income that compares your deposits and lifestyle to what you reported and assess the gap plus a penalty. We build books that capture cash properly so you keep your deductions and are never exposed to a net-worth assessment.

Your operators, labourers and apprentices are employees on a T4 payroll, not subcontractors, so we set up source deductions, remit the PD7A to CRA on schedule, and register you for high-risk WSIB and EHT once you cross the payroll thresholds. We run pay through Wagepoint and reconcile it to your books. Treating a genuine employee as a subcontractor is a reassessment risk we fix before CRA finds it.

CRA expects six years of records: your job files and contracts, work-in-progress and holdback schedules, equipment purchase and CCA records, salvage and scrap receipts, disposal and tipping invoices, subcontractor payments and T5018 slips, payroll and HST filings, and bank statements. We keep them organized in the cloud through Dext so a construction audit is a quick document handover rather than a scramble.

Book a free consultation and you will know your exact fees within two minutes. Call 647-212-9559 or email info@gondaliyacpa.ca.