Payroll Services for Construction Companies
Subcontractor vs. employee classification, T5018 filing, WSIB mandatory coverage, per diem tracking, overtime across multiple job sites, seasonal layoffs and the errors that trigger CRA's Construction Industry Audit Program. From $125/month. T4s, T5018s and ROEs included.
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Construction Clients
Why CRA Audits Construction Payroll More Than Any Other Industry in Canada
CRA operates a dedicated Construction Industry Audit Program specifically because worker misclassification in this sector costs the government hundreds of millions in uncollected CPP, EI and income tax every year. A general contractor with 10 workers on T5018s who should have been on payroll faces a reassessment of $80,000 to $200,000 covering 3 years of unremitted deductions, employer contributions and penalties. Add $25/day per missing T5018 slip, per diem above CRA's $73/day reasonable rate not reported on T4s, overtime not tracked across multiple job sites, seasonal ROEs filed late and WSIB premiums calculated on the wrong insurable earnings. Every one of these is a separate penalty and they compound.
We handle construction payroll from $125/month. Every worker is classified at onboarding with a documented two-factor test. T5018 slips are reconciled against invoices and filed on time. Per diem is split into taxable and non-taxable. Overtime is aggregated across all job sites. ROEs are filed within 5 days of every seasonal layoff. WSIB premiums are calculated on actual insurable earnings. Construction accounting is a core specialization.
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Our Construction Payroll Services
Pay Run Processing
Weekly or biweekly pay runs. Variable hours from job site timesheets. Overtime aggregated across all sites. CPP, EI and income tax calculated correctly.
Worker Classification
Every worker classified at onboarding with a documented two-factor test. Employee vs. subcontractor determination defensible against CRA audit.
T5018 Filing
Subcontractor payments tracked. Business numbers verified. T5018 slips prepared and filed by deadline. Included FREE with payroll service.
WSIB Premium Tracking
Premiums calculated on insurable earnings by classification code. Quarterly payments tracked. Annual reconciliation filed. Sub clearance certificates verified.
Per Diem and Allowances
Per diem split into taxable excess above CRA's $73/day rate and non-taxable portion. Vehicle allowances and board/lodging evaluated. T4 reporting correct.
Seasonal Layoff ROEs
ROEs filed within 5 days of every layoff. Reason Code A assigned. Temporary layoff limits tracked. Recall dates monitored for ESA compliance.
Construction Payroll by a Licensed CPA
Every aspect of construction payroll handled correctly. From worker classification to CRA remittances. AFFORDABLE flat-fee pricing.
Worker Classification and Documentation
The most expensive payroll error in construction. We prevent it at onboarding.
- Apply CRA's two-factor test (control + economic dependence) to every worker before the first pay period.
- Document tool ownership, scheduling control, financial risk, exclusivity and business registration for each worker.
- Classify as employee (payroll with CPP/EI/tax) or independent contractor (T5018, no deductions).
- Maintain the classification file so it is immediately available if CRA issues an audit letter.
- If a worker's relationship changes (becomes exclusive, loses other clients), reclassify proactively before CRA does.
T5018 Subcontractor Payment Filing
Missing T5018 slips trigger $25/day penalties AND flag your company for a deeper CRA audit.
- Track all subcontractor payments throughout the fiscal year by vendor in your accounting software.
- Collect and verify each subcontractor's legal name and business number before the first payment.
- Prepare T5018 slips for every subcontractor paid $500 or more during the fiscal year.
- Reconcile T5018 amounts against invoices and bank payment records to prevent discrepancies.
- File all T5018 slips with CRA within 6 months of fiscal year-end. Included FREE with payroll service.
WSIB Mandatory Coverage and Premium Management
Construction is mandatory coverage. No exceptions. No opt-out.
- Register new construction employers with WSIB at onboarding if not already registered.
- Calculate premiums on insurable earnings by the correct classification code (general, heavy, specialty).
- Track quarterly premium payments and file the annual reconciliation to actual insurable earnings.
- Collect WSIB clearance certificates from every subcontractor before they start work on your site.
- If a sub has no clearance and is injured on your site, your WSIB account absorbs the claim. We prevent this.
Per Diem, Travel Allowances and Taxable Benefits
CRA's $73/day rate is the line. Every dollar above it is a taxable benefit on the T4.
- Compare per diem amounts against CRA's reasonable rate ($73/day for meals in 2026) on every pay run.
- Calculate the taxable excess and include it on the T4 with CPP, EI and income tax deducted.
- Document the non-taxable portion with job site location and distance from employer's establishment.
- Evaluate board and lodging at remote sites for the 80-km exemption from taxable benefit treatment.
- Calculate vehicle allowances against CRA's per-km rate ($0.72/km first 5,000 km, $0.66 thereafter in 2026).
Overtime, Multi-Site Tracking and ESA Compliance
Hours must be aggregated across all job sites. Missing this is an ESA violation.
- Track total weekly hours per worker across all job sites for the 44-hour overtime threshold.
- Calculate overtime at 1.5x the regular rate for every hour over 44 in a work week.
- Verify written agreements exist for daily shifts exceeding 8 hours and weekly schedules exceeding 48 hours.
- Monitor the 11-hour rest period between shifts and the 24-hour weekly rest requirement.
- Calculate public holiday pay using the variable-hours formula (4 weeks wages / 20) per employee per holiday.
CRA Filing, ROEs and Year-End
Every deadline met. Every remittance on time. Every T4 accurate.
- Submit CRA remittances (CPP + EI + income tax + employer contributions) by the deadline every pay period.
- File ROEs within 5 calendar days of every seasonal layoff, termination or leave of absence.
- Track temporary layoff duration against the 13-week ESA limit to prevent constructive termination.
- Prepare all T4s with accurate per diem taxable benefits, vehicle allowances and employer-provided housing.
- Reconcile T4 Summary to total annual remittances. File T5018 slips for all subcontractor payments.
Free Construction Payroll Consultation
Free Construction Payroll Consultation
Case Studies: Construction Payroll
General Contractor, Vaughan (Worker Reclassification Averted)
A GC with 8 workers on T5018s had 5 who failed the two-factor test (exclusive to the GC, used GC tools, GC-controlled schedule). CRA had not yet audited. We reclassified the 5 workers to payroll proactively, filed voluntary disclosures for the prior 2 years and negotiated penalty relief. Total exposure avoided: $165,000 in retroactive CPP, EI, income tax and penalties. Cost: $125/month ongoing. Construction Accounting →
Renovation Company, Mississauga (Per Diem Not on T4s)
A renovation company paying 12 workers $120/day per diem (180 days/year) had never reported the $47/day taxable excess on T4s. Total unreported taxable benefits: $101,520 per year. CRA audited. We calculated the correct taxable/non-taxable split, filed amended T4s and negotiated the assessment. Going forward, per diem is split correctly on every pay run. Cost: $125/month ongoing. Payroll Services →
Framing Contractor, Brampton (Seasonal ROEs Late)
A framing contractor laid off 15 workers every November but had never filed ROEs on time. Workers' EI claims were delayed by weeks. Service Canada flagged the employer. We took over payroll, filed all outstanding ROEs within 48 hours and set up a seasonal layoff protocol. Every ROE now filed within 5 days. No more Service Canada flags. Cost: $125/month ongoing. Get Started →
Excavation Company, Hamilton (WSIB Premium Reassessment)
An excavation company had been calculating WSIB premiums on gross payroll instead of insurable earnings (which excludes amounts above the $112,500 cap per worker). Overpayment: $18,400 over 3 years. Additionally, 3 subcontractors had no WSIB clearance certificates on file. We corrected the premium calculations, recovered the $18,400 overpayment and implemented a sub clearance verification process. Cost: $125/month ongoing.
Subcontractor vs. Employee: The #1 Construction Payroll Risk
| Factor | Employee (payroll) | Independent Contractor (T5018) |
|---|---|---|
| Control over work | You direct what, when and how. You set schedule and supervise. | Worker controls how and when. You specify result, not process. |
| Tools and equipment | You provide tools, equipment, materials and PPE. | Worker owns or leases their own tools and equipment. |
| Financial risk | Paid hourly/daily regardless of outcome. No risk of loss. | Worker quotes fixed price, absorbs cost overruns, may profit or lose. |
| Exclusivity | Works exclusively or primarily for your company. | Multiple clients. Your company is one of several. |
| Business registration | No BN, no HST registration, no corporation. | Has BN, HST registration, often their own corporation. |
| Integration | Integral to operations. Attends meetings, uses your email. | Operates independently. Own business identity and insurance. |
CRA Reclassification: 5 workers reclassified over 3 years at $60,000/year each = $150,000 to $250,000 reassessment in unremitted CPP, EI, income tax, employer contributions and penalties. We document every classification at onboarding.
T5018: Statement of Contract Payments
| Requirement | Details |
|---|---|
| Who must file | Any construction business paying $500+ to subcontractors in a fiscal year. |
| What is reported | Sub's name, address, BN and total amount paid. One slip per sub. |
| Deadline | 6 months after fiscal year-end. |
| Penalty | $25/day per slip (min $100, max $2,500). Plus CRA flags for deeper audit. |
| Audit trigger | CRA matches T5018 against sub's reported income. Mismatches audit both parties. |
WSIB: Mandatory Coverage for Construction
| Requirement | Details |
|---|---|
| Mandatory coverage | All Ontario construction employers. Not optional. Sole props and partners included. |
| Premium rate | General: $2.50-$6.00 per $100 insurable earnings. Heavy: $4.00-$8.00. Depends on claims history. |
| Insurable earnings max | $112,500 per worker (2026). |
| Sub clearance | Verify sub has WSIB clearance before payment. No clearance + injury on your site = your claim. |
| Reporting | Annual reconciliation. Quarterly payments based on estimated payroll, reconciled at year-end. |
Overtime, Hours of Work and ESA Rules
| Rule | Application | Common Violation |
|---|---|---|
| Overtime: 44 hours/week | 1.5x after 44 hours. Aggregate across all sites. | Not tracking hours across multiple job sites. |
| Daily limit: 8 hours | Written agreement needed for 10 or 12 hour shifts. | Scheduling 10-hour days without agreement. |
| Weekly limit: 48 hours | ESA Director approval needed above 48 even with employee consent. | 55-hour weeks during peak season without approval. |
| Rest: 11 hours between shifts | Finish 8 PM, cannot start before 7 AM next day. | Early starts after late finishes during deadlines. |
| Weekly rest: 24 hours off | 24 consecutive hours per week or 48 per 2 weeks. | 7-day work weeks during busy periods. |
| Public holiday work | Holiday pay PLUS 1.5x premium for hours worked. | Paying regular rate for holiday work. |
Per Diem, Travel Allowances and Board and Lodging
| Type | Taxable? | CRA Treatment |
|---|---|---|
| Reasonable per diem ($73/day meals) | Not taxable | At or below CRA rate, worker away from employer's municipality. Not on T4. |
| Excess above $73/day | Taxable | $120/day paid, $47/day excess is taxable benefit on T4 with CPP/EI/tax. |
| Home to regular job site | Taxable if paid | Commuting is personal. Employer-paid mileage is taxable benefit. |
| Between job sites | Not taxable | Business travel. Mileage or transport not taxable. |
| Board/lodging at remote site | Taxable (with exception) | Exempt if 80+ km from nearest 40,000+ community. Otherwise FMV on T4. |
| Vehicle allowance | Taxable if flat rate | Per-km at CRA rate ($0.72/km first 5,000 km) is not taxable. Flat monthly is taxable. |
Per Diem Errors: 20 workers x $47/day excess x 180 days = $169,200 in unreported taxable benefits. We split every per diem correctly on every pay run.
Vacation Pay, Public Holiday Pay and Seasonal Layoffs
| Entitlement | Amount | Notes |
|---|---|---|
| Vacation pay (under 5 years) | 4% of gross wages | Most construction cos pay on each cheque. Permissible if employee agrees. |
| Vacation pay (5+ years) | 6% of gross wages | Rare due to seasonal layoff/rehire cycles. |
| Public holiday pay | 4 weeks wages / 20 | Per employee per holiday. Variable hours = different amount each holiday. |
| Seasonal layoff ROE | Filed within 5 days | Reason Code A. Must include all insurable hours and earnings. |
| Temp layoff limit | 13 weeks in 20 weeks | Beyond this = termination with pay obligations. |
What Our Construction Payroll Service Includes
| Service | What We Do |
|---|---|
| Pay run processing | Weekly or biweekly. Variable hours from job site timesheets. Overtime across sites. Per diem taxable/non-taxable split. |
| Worker classification review | Two-factor test at onboarding. Documented. Contracts, invoicing, tool ownership reviewed. Defensible against CRA. |
| T5018 filing | Every sub paid $500+. BNs verified. Reconciled against invoices and bank. Filed by deadline. FREE. |
| WSIB premium tracking | Premiums by classification code. Quarterly payments. Annual reconciliation. Sub clearance certificates verified. |
| Vacation pay | 4% (or 6%) on every pay run. Paid per cheque or accrued. Year-end verified. |
| Public holiday pay | Variable-hours formula per employee per holiday. Premium pay for holiday work. |
| Per diem tracking | Compared against CRA rate. Taxable excess on T4. Non-taxable documented. |
| CRA remittances | CPP + EI + tax remitted by deadline. Monthly, quarterly or accelerated. Never late. |
| ROE filing | Within 5 days. Seasonal layoffs coded correctly. Recall tracked for ESA. |
| T4 and T4 Summary | Filed by Feb 28. Per diem benefits, vehicle allowances, housing reported. Reconciled to remittances. |
Worked Example: Weekly Payroll for a 15-Employee Construction Company
| Line Item | Amount | Notes |
|---|---|---|
| Gross wages (15 employees) | $22,800 | Labourers $22-$28/hr, carpenters $30-$38/hr, supervisor $42/hr. |
| Overtime (3 workers over 44 hrs) | $1,890 | 4, 6 and 8 OT hours across 3 workers at 1.5x. |
| Per diem (6 workers, out-of-town) | $3,066 | $73/day x 6 x 7 days. At CRA rate = non-taxable. |
| Vacation pay accrued (4%) | $988 | 4% of gross + overtime. |
| Employee CPP | $1,374 | 5.95% on pensionable earnings above basic exemption. |
| Employee EI | $405 | 1.64% on insurable earnings. |
| Income tax withheld | $3,420 | Federal + Ontario based on TD1. |
| Employer CPP match | $1,374 | 1:1. |
| Employer EI (1.4x) | $567 | 1.4x employee amount. |
| WSIB premium | $1,110 | $24,690 x $4.50/$100. Paid quarterly. |
| Total CRA remittance | $7,140 | Employee ($5,199) + Employer ($1,941). Due 15th of following month. |
10 Common Payroll Errors Ontario Construction Companies Make
| # | Error | Consequence |
|---|---|---|
| 1 | Classifying employees as subs | CRA reclassification. $150K-$250K reassessment for 5 workers over 3 years. |
| 2 | Not filing T5018 | $25/day per slip + deeper CRA audit trigger. |
| 3 | No sub WSIB clearance | Sub injury on your site = your WSIB claim. $50K-$500K+. |
| 4 | Not aggregating overtime across sites | ESA violation. Back pay at 1.5x for all affected weeks. |
| 5 | Per diem excess not on T4 | 20 workers x $47/day x 180 days = $169,200 unreported. |
| 6 | No WSIB registration | Compliance order. Retroactive premiums. WSIA offence. |
| 7 | Late seasonal ROEs | Service Canada penalties. Worker EI delayed. |
| 8 | Exceeding 13-week layoff limit | Becomes termination. Termination/severance pay owed. |
| 9 | Flat-rate public holiday pay | Formula (4 weeks/20) required. Underpayment = ESA complaint. |
| 10 | Late CRA remittances | 3% to 10% penalty. $7K remittance 7 days late = $490. |
CRA Payroll Audits for Construction Companies
| CRA Focus | What CRA Reviews | How We Prevent Issues |
|---|---|---|
| Worker misclassification | T5018 workers tested with two-factor test. Fails = reclassified as employees retroactively. | Every worker classified at onboarding with documented analysis. |
| Unreported per diem | Per diem rates vs $73/day. Excess not on T4 = taxable benefit reassessment. | Per diem split on every pay run. Taxable excess on T4. |
| T5018 cross-referencing | T5018 amounts vs sub's reported income. Mismatches audit both parties. | T5018 reconciled against invoices and bank payments. |
| WSIB compliance | Insurable earnings vs payroll records. Discrepancies = premium reassessment. | Premiums on actual insurable earnings. Annual reconciliation filed. |
Why Choose Gondaliya CPA for Construction Payroll?
Construction Specialists
Worker classification, T5018, WSIB, per diem, multi-site overtime and seasonal ROEs built into every engagement.
Never Late
CRA remittances, T4s, T5018s and ROEs filed on time every period. No penalties. No interest. No flags.
CRA Audit Defence
Worker classification documented. T5018 reconciled. Per diem split. If CRA audits, we represent you FREE.
AFFORDABLE Flat Fee
From $125/month. T5018 FREE. T4s and ROEs included. No hourly billing. 30-Day Money-Back Guarantee.
Transparent Flat-Fee Pricing
| Service | Fee | Includes |
|---|---|---|
| Construction payroll (first employee) | From $125/month | Pay runs, overtime tracking, per diem, WSIB, vacation, holiday pay, CPP/EI/tax, T4s, ROEs |
| Each additional employee | $75/month | Same full service per additional employee |
| T5018 subcontractor filing | FREE | Included with construction payroll. BN verification, reconciliation and CRA filing. |
| Monthly bookkeeping + payroll | From $275/month | Bookkeeping ($150) + payroll ($125). HST filing, T2 FREE. |
| T4 and ROE filing | Included | All T4s by February 28. All ROEs within 5 days. No additional charge. |
| Payroll software setup | FREE | Wagepoint or PaymentEvolution configured with multi-site, per diem and trade categories. |
Know Your Exact Fee Before We Start
Flat fee, fixed in advance. 30-Day Money-Back Guarantee. 60-Day Fees-Matching Policy.
Construction Payroll: Cities We Serve
We handle payroll for construction companies across every Ontario city and Canada.
Frequently Asked Questions: Payroll for Construction Companies
Meet Your Construction Payroll Specialists
Sharad Gondaliya, CPA
Founder & Managing Director
Gondaliya CPA Professional Corporation
Sharad manages all construction payroll engagements, worker classification reviews and CRA audit defence.
Vandana Goel, CPA
Senior Accountant
Gondaliya CPA Professional Corporation
Vandana handles pay run processing, per diem calculations, T5018 reconciliation, WSIB tracking and T4 preparation.
What Our Clients Say
1300+ five-star reviews from business owners across Ontario and Canada.
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Stop Risking CRA Reclassification. Let a CPA Handle Construction Payroll.
Worker classification, T5018, WSIB, per diem, overtime, T4s, ROEs. We handle every pay run correctly. From $125/month.