T5018 filing for Ontario contractors

If more than half of your business income comes from construction, you have to file a T5018 for every subcontractor you paid more than $500 in your reporting period, and the return is due six months after that period ends. The slip reports nothing about your own tax. It tells CRA what you paid other people, so CRA can check that those people reported it.

No other industry has an equivalent return. That is the reason the obligation often sits undiscovered for years, until a letter arrives asking where the T5018s are, or a general contractor asks for your account number so they can put you on theirs.

Who has to file

CRA's test is about the source of your income. Its published wording is that "if more than 50% of a business' income-earning activities are construction, the primary source of business income is considered to be construction" (T5018 slip, CRA). The obligation applies to an individual, a partnership, a trust or a corporation.

The test is on income, not on what you call yourself. A business that does construction alongside something else has to work out the split before it can decide whether it files.

Take an excavation company with $820,000 of revenue for the year. $500,000 is site work and $320,000 is retail sales out of an aggregate yard. Construction is 61% of the income, so the company files. Reverse those numbers, so that yard sales are $450,000 against $370,000 of site work, and construction is 45%, and there is no filing requirement for that year. The split moves with the business, so check it at each year end rather than assuming last year's answer still holds. Our accounting for contractors page covers where this sits in the rest of a contractor's compliance calendar.

What counts as construction, and what counts as a payment

CRA's list of construction activities is long and specific. It includes electrical work, plumbing, roofing, asphalt paving, drywalling, masonry, painting, air conditioning work and demolition, among more than thirty examples. The common thread is work on a structure or on surface and sub-surface land, so apartment buildings, highways, bridges, industrial buildings and power transmission lines are inside the definition. Work on planes, satellites and ships sits outside it.

A reportable payment is an amount paid or credited to a subcontractor resident in Canada for construction services, "whether by cheque, cash, barter, or offset against an amount owing". If you settled part of a subcontractor's account by bartering goods or services, the fair market value counts toward the threshold. Payments to non-residents are not reported here. Those go on a T4A-NR.

Payments for goods only are excluded. Where an invoice covers both goods and services, the service component is what brings it into the return.

The threshold is more than $500 paid to that subcontractor in the reporting period. This is where the GST/HST question starts, and CRA answers it two different ways in the same set of instructions.

Both sentences sit on CRA's own page. A sub paid $480 plus $62.40 of HST has not passed the threshold, because the test looks at the $480. A sub paid $46,000 plus $5,980 of HST is reported at $51,980, because box 22 takes the tax-included figure.

Choosing your reporting period

You choose whether to report on a calendar-year basis or on your fiscal year. The return is due six months after the end of the period you chose (CRA, when to file information returns).

Choose one basis and stay on it. Payments are reported once, in the period in which they were made, so switching mid-stream creates either a gap or a double count in what CRA sees. If the period you picked is genuinely wrong for the business, raise the change with CRA before you make it rather than filing on a new basis and explaining afterwards. Our CRA deadline checker carries the T5018 date next to your T2, HST and payroll dates.

What actually goes on the slip

The identification number is the field that causes the trouble, because it is the one piece of information a contractor has no operational reason to collect. The crew knows the sub as a phone number and a truck. Collect the legal name, the address and the business number the first time you pay someone, in the same file where you keep their WSIB clearance certificate.

The three mistakes that cause most of the penalties

Nobody knew the return existed. The business grows into the 50% test without anyone noticing the year it crossed. Nothing in the corporate return prompts it, and subcontractors do not chase you for the slip, because unlike a T4 recipient they do not need it to file their own return. The exposure builds quietly across several years.

GST/HST handled inconsistently. The subcontractor totals get pulled from an expense account that is net of HST, and the slips are filed net while box 22 wants the tax-included figure. Every slip is then understated by 13%, and every one of them mismatches what the subcontractor reported. This is the error most likely to generate a query, because the mismatch is mechanical and easy to spot.

A missing or wrong identification number. A transposed digit in a 15-character account number, or a slip filed with the field blank because nobody could reach the sub in June. That carries a penalty of its own, separate from anything to do with filing on time.

What it costs to get wrong

The late-filing penalty for information returns is calculated on how many slips are late and how many days they are late, with a minimum of $100. CRA sets the schedule out this way in its slip guides (RC4445, as published in August 2026):

A separate $100 penalty applies for each failure to provide a required identification number. CRA's published position is that this one does not apply where the person "had applied for, but had not yet received, a SIN, a BN, or program account number at the time the return was filed", so the defence is having asked in writing and having kept the request.

Where more than five returns are filed on paper instead of electronically, a further penalty applies that starts at $125.

Those numbers on their own are survivable for a contractor with twenty subs. The larger exposure is what a T5018 review turns into once CRA has your subcontractor list in a usable form.

The second problem that arrives with the first

A T5018 tells CRA who you paid for construction services. The next question it invites is whether those people were subcontractors at all, or whether some of them were employees who should have had CPP, EI and income tax withheld at source. These are two separate problems with two separate outcomes, and they show up together because filing the first one hands over the list that starts the second.

The answer turns on control, ownership of tools, chance of profit, risk of loss and several other factors that CRA weighs together. We have built the full test into our subcontractor or employee check, which walks the thirteen factors and shows where a given crew member lands. A payment can be perfectly reportable while the relationship behind it is wrong, so do not try to settle the second question out of the first one's rules.

Making the books produce the return

The T5018 is a record-keeping problem long before it is a filing problem. Where subcontractor payments all land in one expense account with a supplier name attached and nothing else, the return has to be rebuilt from bank statements and memory every June.

Set the accounts up so the return falls out of them instead. Each subcontractor gets a supplier record carrying the legal name, address and business number. Subcontractor cost gets its own accounts, kept away from materials, so that a mixed invoice is split when it is entered rather than six months later. If you are already running job costing and work in progress properly, most of that structure exists already, and producing the T5018 in June comes down to running a report and checking it.

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General information only, current at August 2026. Tax rules change and GST/HST status is fact-specific. Confirm your own position before relying on anything here.