What Is a T5018? Contract Payments Reporting in Construction

A T5018 is the Canada Revenue Agency's Statement of Contract Payments, the slip a construction business uses to tell the CRA how much it paid each subcontractor during the year. You have to file one if construction is your main line of work and you paid a Canadian-resident subcontractor more than $500 for services. If you are on the receiving end, the T5018 is a record of your income, and you report that income on Form T2125, not as a stray line of other income.

What a T5018 slip is

The T5018 slip identifies the total contract payments a contractor made to a recipient over a calendar year or fiscal period. It is the core of the CRA's Contract Payment Reporting System, the mechanism the agency uses to track money that flows from construction businesses to the subcontractors they hire.

The slip does one job: it tells the CRA that money changed hands between two businesses. Unlike a T4, it carries no CPP, EI, or income tax withheld, because a general contractor who hires a drywaller is not that drywaller's employer. The relationship is business to business, so each side handles its own tax. The T5018 gives the CRA a paper trail to match a payer's deduction against a recipient's reported income.

For most construction operators the confusion is not what the slip is, but which side of it they sit on. If your primary trade is construction and you hire out work, you are likely a filer. If you subcontract your services to a larger firm, you are likely a recipient. The rules below cover both.

Who has to file a T5018

Three conditions have to line up before you owe the CRA a T5018. The agency spells them out on the slip's guidance page.

First, your primary source of business income has to be construction. The CRA sets the line at more than 50%: if over half of your income-earning activity comes from construction, you are inside the system. A general contractor, a renovation company, and a framing crew all qualify. A restaurant that pays a plumber once does not, because construction is not its main business.

Second, the recipient has to be a subcontractor resident in Canada, paid for construction services. Payments to your own employees belong on a T4, not a T5018. Payments to a non-resident for services performed in Canada follow a different slip, the T4A-NR.

Third, the total you paid that subcontractor over the reporting period has to be more than $500. You measure that $500 without GST/HST, so the threshold turns on the value of the work, not the tax you paid on top of it.

The legal form of your business does not change any of this. The CRA applies the same rules to an individual, a partnership, a trust, or a corporation. A sole proprietor running a one-person contracting business files T5018 slips the same way an incorporated builder does.

Which payments you report, and which you skip

The T5018 covers construction services, and the details of what lands on the slip trip up a lot of first-time filers.

You report payments for construction services provided inside or outside Canada, including a contract that mixes labour and materials. If you hire a subcontractor to supply and install cabinets, the whole payment goes on the slip, not just the labour portion. You also report amounts paid or credited by any method: cheque, cash, barter, or an offset against something the subcontractor owed you.

You do not report payments made for goods only. Buy lumber from a supplier and that purchase stays off the T5018, because no construction service came with it. The dividing line is the service: a payment with construction work attached is reportable, a pure materials purchase is not.

Then there is the tax twist that catches people. The $500 threshold excludes GST/HST, but the amount you enter in box 22 of the slip includes GST/HST and PST where they apply. Those are two different numbers doing two different jobs, and mixing them up is the most common filing error.

Say you pay a drywaller $10,000 for labour plus 13% HST in Ontario, for a total of $11,300. The $500 test looks at the $10,000, which clears it easily, so the payment is reportable. But box 22 shows the full $11,300, tax included. Rates differ across the country, so a payment in a province with a different combined rate produces a different box 22 figure; our guide to GST/HST registration covers how those rates and the $30,000 registration threshold work.

Box 24 is where you record who you paid: the subcontractor's 15-character CRA account number, or their social insurance number if they operate without one.

When a T5018 is due

The T5018 has a filing rhythm that differs from almost every other CRA slip, and it is worth getting right.

You choose your reporting period. It can run on a calendar-year basis, ending December 31, or on your fiscal-year basis, ending whenever your business year ends. Pick one and stick with it. Whichever you choose, the return is due six months after the end of that period.

That six-month window is more generous than the last-day-of-February deadline the CRA sets for T4 and T4A returns, and the extra room exists because the CRA lets construction businesses align the slip with their own accounting year. When the due date lands on a Saturday, a Sunday, or a public holiday, the CRA treats the return as on time if it arrives the next business day.

Filing method depends on volume. Since January 2024 you have to file electronically if you file more than five information returns for a calendar year. Alongside the individual slips you send a T5018 Summary, which totals every slip you prepared for the period.

The penalty for filing late

A T5018 is an information return, so it carries the CRA's standard late-filing penalty, the same graduated scale that applies to T4 and T4A slips. The penalty is $100 or the amount from the chart below, whichever is greater, and it scales with how many slips you file late.

A separate penalty applies if you were required to file electronically and sent paper instead. That one starts at $125 for 6 to 50 returns and climbs to $2,500 once you cross 2,501 returns. For a small contractor with a handful of subcontractors the exposure is modest, but the flat $100 arrives whether you were one slip short or forgot the filing entirely, so the cheapest move is to diarize the deadline the day you pick your reporting period.

You received a T5018: how to report it

If you subcontract your trade to a bigger firm, a T5018 with your name on it will show up after their reporting period closes. Here is what to do with it.

The number in box 22 is a record, not your taxable income. Because that box includes the GST/HST you charged, it will run higher than the revenue you keep. You report your business income on Form T2125 from your own books: the fees you earned, with the GST/HST you collected set aside as tax you remit to the CRA rather than income you pocket. Report the box 22 gross as income and you will overstate your revenue by the tax you already owe the government.

The income is business income, which means it flows through the self-employment lines of your return, the same place any independent contractor's earnings go. It does not belong on the other-income line, and treating it as such strips out your ability to deduct the expenses you incurred to earn it.

The slip is also a matching tool the CRA reads on its side. If a general contractor reports paying you $40,000 and your return shows $12,000 of construction income, that gap invites a question. The fix is not to inflate your income to chase the slip; it is to keep clean records so the revenue you report reflects what you billed, whether or not every payer files a T5018 on time.

Where SparkReceipt fits

Whichever side of the T5018 you are on, the slip is only as trustworthy as the records behind it. A filer needs to know exactly what it paid each subcontractor and how much of that was tax; a recipient needs a clean record of billed revenue and the expenses that offset it. SparkReceipt captures every invoice and receipt the moment it lands, reads the vendor, amount, date, and GST/HST, and files it into categories that map to the expense lines on Form T2125. You can watch the year build up in the expense tracker and pull a tax-ready summary with expense reports, so the numbers behind your slips are documented before the CRA ever asks. Get Started for free.

Frequently asked questions

Do I have to file a T5018 if construction is a side business? Only if it is your main business. The CRA applies the T5018 requirement when more than 50% of your income-earning activity is construction. If construction is a minor part of what you do, subcontractor payments are not reported on a T5018.

Does the $500 threshold include GST/HST? No. You measure the $500 without GST/HST, based on the value of the work. But once a payment is reportable, the amount you enter in box 22 does include GST/HST and PST where they apply, so the threshold figure and the box figure are not the same number.

Are payments for materials reported on a T5018? Payments for goods only are not reportable. A contract that combines construction services with materials is reported in full. A pure materials purchase, such as buying lumber from a supplier, stays off the slip.

When is the T5018 due? Six months after the end of your reporting period. If you report on a calendar year, that is June 30. If you report on a fiscal year, it is six months after your fiscal year-end. A weekend or holiday due date moves to the next business day.

I received a T5018. Do I report the box 22 amount as income? No. Box 22 includes the GST/HST you charged, so it is higher than your taxable revenue. Report the fees you earned on Form T2125 from your own records, and treat the GST/HST as tax you remit, not income.

What is the penalty for filing a T5018 late? The CRA's information-return penalty applies. It is $100 or a per-day amount based on how many slips are late, whichever is greater, up to a maximum of $7,500 for the largest filers.

Key takeaways

• A T5018, the Statement of Contract Payments, is how a construction business reports payments to its subcontractors under the CRA's Contract Payment Reporting System.
• You must file when construction is more than 50% of your business income and you paid a Canadian-resident subcontractor more than $500 for services in the reporting period.
• The $500 threshold excludes GST/HST, but the box 22 amount on the slip includes it, so the two figures differ; goods-only payments are not reported.
• The return is due six months after the end of your chosen reporting period (calendar or fiscal year), a later deadline than the T4 and T4A last-day-of-February rule.
• Late filing carries the CRA's graduated information-return penalty, starting at a flat $100 and rising with the number of slips.
• If you receive a T5018, report your billed income on Form T2125 from your own books rather than the box 22 gross, because that box includes the GST/HST you remit.