Are you in the construction business? Then the T5018 is for you. This article covers all the crucial things you should know about the T5018 form, including who should fill it out, the contractor definition, where to submit it, and more.
What is a T5018?
The T5018, also known as the Statement of Contract Payments, is the Canada Revenue Agency (CRA) taxpayer slip designed for individuals, partnerships, trusts, and corporations in the construction business. If construction activities and payments account for more than 50% of your business income, the CRA expects you to file a T5018 slip. You must also report all amounts awarded to subcontractors, whether paid by cash, cheque, barter, or other offsets. If the subcontractor operates from Canada, you must fill out the T5018, which consists of a summary and one slip. If the subcontractor is a non-resident, you will be required to fill out the T4A-NR instead of a T5018. If the construction activity is not the primary business, issue a T4A slip instead of a T5018.
The T5018 must also be submitted within six months after the end of your fiscal year except where special situations apply. Not all businesses that perform construction work are required to fill out the form. For instance, a gas distribution company may complete construction for the pipework, but this doesn't make construction the company's primary income source.
T5018 is shorter than most tax slips and includes fewer boxes and lines. Here's a breakdown:
Box | Meaning |
|---|---|
| Box 20 | This box is designated for the period ending, which is the last day of the taxpayer's reporting period for the T5018 form. |
| Box 22 | This is where the construction subcontractor payments are included. Include GST/HST and PST (where applicable) in the amount reported in this box. If the payment was the bartering of goods or services, the fair market value of the barter should be included in the amount reported. |
| Box 24 | This is where the subcontractor's program 15-digit account number (for example 123456789RT0001) or the social insurance number is entered. You can check whether the subcontractor is registered for GST/HST (goods-and-services-tax/Harmonized-Sales-Tax). Subcontractors and other professionals that offer taxable supplies worth more than $30,000 are required to have a GST/HST number and collect and remit GST/HST. |
| Recipient’s business name and address | This is where you enter the name and address of the business or person to whom the payments were made. |
| Payer's name | This is where you enter the name of the contractor who made payments to a subcontractor. |
| Payer's program account number | Enter the account number of the payer's program account on copies sent to the CRA and those you retain only. Do not include your business number on any copies issued to the subcontractor. |
Who fills out the T5018?
The Statement of Contract Payments is to be filled by any person, partnership, trust, or corporation with construction as the primary source of business income. Construction activity includes but isn't limited to erection, excavation, installation, modification and alteration, improvement, repair, destruction, and demolition. The T5018 slip should be completed by authorized persons that represent the construction entity paying out subcontractors. You can complete and submit the T5018 online, but if you are filling out more than 50 T5018 slips, you should download, print, fill, and mail them to the proper tax centers. Here's a look at the payments to report in your T5018 form:
All payments made to subcontractors for their construction services
GST/HST and provincial sales tax (where applicable)
Mixed services and goods payments for service components above $500
You shouldn't report payments made to subcontractors for services rendered in the reporting year if they're less than $500. Similarly, wages paid to employees shouldn't be added to the T5018 as they are reserved for the T4 slips.
Failure to submit the T5018 summary and related slips will result in penalties from the CRA, the amount of which is dependent on how many information returns (slips) are filed late. The minimum and maximum fines are $100 and $7,500, respectively. Conspiracy with contractors to avoid filling the T5018 can also result in penalties of up to 200% of the tax amount you were trying to avoid.
What defines a contractor for the T5018?
A contractor is a business that makes payments to subcontractors. A subcontractor can be an individual, partnership, trust, or corporation that provides construction services to the business (contractor). Subcontractors include all individuals registered for GST/HST and non-GST/HST registrants below the $30,000 mark. If your business makes payments to such subcontractors for their construction services, the CRA recognizes you as a contractor. However, more than 50% of your business income should come from construction to mandate filing the T5018.
Where can I submit the T5018?
There are two primary ways to complete and submit your T5018 Statement of Contract Payments tax slip. The first method involves logging in to your CRA My Business Account and navigating to tax returns where you will have access to various taxpayer slips. Choose the T5018 and begin adding the relevant information as required by the CRA. This method offers convenience and swift service. However, if you cannot complete the online form submission, you can submit your T5018 the traditional way. This involves downloading a saveable/fillable form, adding the required information, and mailing hard copies to specified tax centers.
Reporting a T5018 on your tax return
If you have received a T5018 slip (you’re the receiving subcontractor), include this income as part of your self-employment income.
