Are you in the construction business? Then the T5018 is for you. This article covers what you should know about the form, including who fills it out, how a contractor is defined, when it's due, where to submit it, and the penalties for filing late.
What is a T5018?
The T5018, also called the Statement of Contract Payments, is a Canada Revenue Agency (CRA) information slip used to report payments made to subcontractors for construction services. It's filed by individuals, partnerships, trusts, and corporations whose primary business is construction, and it consists of a summary and one slip.
You generally need to file a T5018 if:
Construction is your primary business: more than 50% of your business income comes from construction activities.
You pay subcontractors: you report all amounts paid to subcontractors, whether by cash, cheque, barter, or other offsets.
Not all businesses that perform construction work need to file. For instance, a gas distribution company may complete construction for pipework, but that doesn't make construction its primary income source.
The 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 goods and services tax/harmonized sales tax (GST/HST) and provincial sales tax (PST), where applicable, in the amount reported in this box. If the payment was the bartering of goods or services, include the fair market value of the barter 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. Subcontractors and other professionals who offer taxable supplies worth more than $30,000 are required to have a GST/HST number and to 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 filed 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 who represent the construction entity paying out subcontractors. You can complete and submit the T5018 by mail or online, but for any return filed on or after 1 January 2024, you must file online if you have more than five T5018 slips. (The old 50-slip threshold applied only to returns filed before 1 January 2024.).
You report the following payments on your T5018:
All payments made to subcontractors for their construction services
GST/HST and PST, 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 T4 slips.
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 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 require filing the T5018.
What's the difference between a T5018 and a T4A?
The T5018 and the T4A both report amounts paid to people outside your payroll, but they cover different situations. Use the T5018 for payments to subcontractors for construction services when construction is your primary business. Use the T4A for non-construction income, such as fees for services, commissions, or lump-sum payments.
If a subcontractor is a non-resident of Canada, you report their payments on the T4A-NR instead of the T5018. And if construction isn't your primary business, you report contractor payments on a T4A rather than a T5018.
When is the T5018 due?
You can report on a calendar-year basis or a fiscal-year basis. Once you choose a reporting period, you file every return on that same basis unless the CRA authorizes a change in writing.
The T5018 information return is due within six months after the end of your reporting period, except where special situations apply. If your business stops operating, you file the return within 30 days of the date operations cease.
Where can I submit the T5018?
There are two ways to complete and submit your T5018 Statement of Contract Payments slip. The first is to log in to your CRA My Business Account, go to tax returns, select the T5018, and add the information the CRA requires.
The second is for when you can't file online. Download a saveable, fillable form, add the required information, and mail hard copies to the specified tax centres.
What are the penalties for filing a T5018 late?
If you don't file a required T5018 information return on time, the CRA charges a late-filing penalty. The penalty is tiered by the number of slips you file late, ranging from a minimum of $100 to a maximum of $7,500. These amounts reflect the CRA's administrative penalty schedule under its small-business relief policy.
Number of slips filed late | Penalty |
|---|---|
| 1 to 5 slips | $100 flat |
| 6 to 10 slips | $5 per day, up to $500 |
| 11 to 50 slips | $10 per day, up to $1,000 |
| 51 to 500 slips | $15 per day, up to $1,500 |
| 501 to 2,500 slips | $25 per day, up to $2,500 |
| 2,501 to 10,000 slips | $50 per day, up to $5,000 |
| 10,001 or more slips | $75 per day, up to $7,500 |
Working with a subcontractor to avoid filing can carry steeper consequences, including penalties of up to 200% of the tax that was avoided. Filing on time and reporting accurately helps you avoid these penalties.
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.
