Contractor accountant

T5018: the filing most contractors do not know about

If construction is your primary business activity and you pay subcontractors, you have to report those payments to CRA on a T5018 information return. It applies once your cumulative payments to a subcontractor pass five hundred dollars in the reporting period, and the return is due six months after your fiscal year end.

This catches out a lot of otherwise organised contractors, because it is separate from your corporate return, separate from payroll, and nothing prompts you to file it. Missing it carries penalties, and the return also has to reconcile to what you claimed as subcontractor expense. Our T5018 guide covers the thresholds and the mechanics.

Employee or subcontractor, and where the risk sits

Trades run on a mix of crew and subs, and the classification question is more consequential here than in almost any other industry. If someone you paid as a subcontractor is reclassified as an employee, the unremitted source deductions, plus penalties and interest, land on your business. Because withheld deductions are trust funds, directors can be personally liable.

The tests turn on control over how the work is done, whose tools are used, who can subcontract the work out again, and who bears the risk of profit or loss. Our guide on T4 versus T4A sets those out.

WSIB is not optional in construction

Coverage is mandatory across most of construction in Ontario, including for many independent operators who would be exempt in other industries. Premiums are set by classification and reported on payroll, and clearance certificates are commonly required before a general contractor will release payment.

Our guide on WSIB for Ontario employers covers who needs coverage and how the rates work.

Holdbacks change what your books should say

Under Ontario’s Construction Act, a portion of each payment is held back for a statutory period. That holdback is revenue you have earned and cannot yet collect, and it needs to sit in your books as a receivable rather than being ignored until it arrives.

Contractors who record only cash received systematically understate both revenue and what they are owed, which makes every margin figure and every financing conversation harder than it needs to be.

Job costing is the point

The number that runs a contracting business is margin by job, not revenue by month. That requires labour, materials, subcontractor costs, and equipment time coded to the job as they happen. Done properly you learn which work types and which crews actually make money. Done as a monthly lump you learn only whether the business as a whole survived the month.

Vehicles and equipment are capital assets claimed through capital cost allowance, and the personal-use split on vehicles has to be tracked to be deductible. Our guide on vehicle expenses through a corporation covers the rules.

Also: General contractors in Ontario · Plumbers in Toronto · Trades & contractors. More for this industry: Contractor accounting · Contractor bookkeeping · Contractor payroll and T5018

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