All businesses involved in construction activities as their main income source, and that pay subcontractors for construction services, need to report those amounts paid to the Canada Revenue Agency via the T5018 Statement of Contract Payments.

Information for Businesses

CRA states in the document titled Information for Payers of the T5018,  “If you are an individual, partnership, trust, or corporation involved in construction activities which provide your primary source of business income and you make payments to subcontractors for construction services, you must report amounts paid or credited (whether by cheque, cash, barter, or offset against an amount owing)”.

They have created the Contract Payment Reporting System (CPRS) requires construction businesses to record payments they make to subcontractors for construction services and to report those payments to them.

You are considered to have a construction business when more than 50% of your business’s revenue is earned through construction services, such as excavation, repairs, demolition, etc., of a building, structure, or surface.

When Do I Need to Complete a T5018 Information Return and issue T5018 Slips?

You need to complete this return, and these slips, if you have paid more than $500 to your subcontractors for construction services in the calendar tax year, not your fiscal year.

Like other tax slips you might have to generate, such as T4s for employees, or T4A slips for self-employed contractors, you have to provide a copy of the slip to the subcontractor before February 28th, as they require them for their income tax returns.

How Do I Complete the T5018 – Statement of Contract Payments Slip?

You will require general information from your subcontractor, as well as a listing or printout of all payments you have made to them. Enter the following information in the correct boxes:

  • Box 20 – For the period ending: Enter the last day of the payer’s reporting period here.
  • Box 22 – Construction subcontractor payments: Enter the total amount of payments you made to the subcontractor during the period, including any GST/HST or provincial/territorial sales tax, if applicable. If the total amount of payments was less than $500, you do not have to complete a T5018 slip for that subcontractor.
    • If the subcontractor was paid through the bartering of goods or services, you will need to determine the fair market value of the bartered goods or services.
  • Box 24: Enter the subcontractor’s CRA Business Number and/or Social Insurance Number in this box.

One of the simplest ways to complete these forms is using CRA’s Web Forms Online application.  You input all required information and the slips and summary are generated for you and submitted to the CRA.  Don’t forget to download your own copies to hand out to the subcontractors.

What if My Subcontractor is a Non-Resident?

If your subcontractor is a non-resident of Canada, then you need to complete a different form instead of the T5018. Complete a T4A-NR – Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada slip for Non-Residents you may have hired as subcontractors. This slip is somewhat more complicated than the T5018 slip, you should consult this CRA document, Filling out the T4A –NR slip for details on completing it properly. All of the money you report on this slip must be in Canadian dollars, even if you paid it in another currency.

Information for Subcontractors

Why Have I Received a T5018 Slip?

If you are a subcontractor in the construction industry or another industry, you may be surprised to receive a form T5018. While this company is not your employer and therefore is not providing you with a T4, they are required to provide you with a T5018.

The T5018 should help you when it comes time to prepare your tax return, as it is a record of at least some of the income that you will need to report. If you have not met your tax obligations, the completion of a T5018 form may alert the CRA that you have these unfulfilled obligations. You should attempt to get them in order as soon as possible.

The CRA also uses the T5018 in their fight against the Underground Economy. Remember, you are required to keep this form, and all others, for six years after filing your tax return.

What If I’m a Subcontractor and Didn’t Receive a T5018 slip?

If you believe that you should have received a form T5018 but did not, it is still your responsibility to report any income that would have been on this slip to the Canada Revenue Agency. If your client refuses to complete a form or does not believe it is necessary, you are not relieved of your tax responsibility for that income.

Report the income from the T5018 slip on your tax return using the T2125 – Statement of Business Activities, regardless if you received the slip or not. You will also be able to claim any offsetting business expenses here. For detailed information on the T2125, consult Guide T4002, Business, and Professional Income.

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