T5018 Slips: Which Subcontractor Payments Canada Wants Reported

If more than half of your business income comes from construction and you pay subs to frame, wire or plumb your jobs, you have a return to file. The Canada Revenue Agency (CRA) requires a report of what you paid each sub for construction services. That report is the T5018 Statement of Contract Payments. It is a legal obligation under section 238 of the Income Tax Regulations, not an optional CRA request. You file it within six months after the end of your reporting period. The T5018 is a report, not a tax: nothing is deducted from anyone’s cheque, and the slip only records what was paid.

It makes no difference whether you are a general contractor, a framing crew that brings in a drywaller or a renovator who pays an electrician. The first question is whether your business is in at all.

Whether your business has to file

Section 238 applies to a business paying for goods or services “in the course of construction activities”, on condition that its business income “is derived primarily from those activities”. Construction activities cover a lot: erecting, excavating, installing, altering, repairing, renovating, demolishing or removing all or part of a building or structure.

The CRA’s T5018 page turns “primarily” into a number. Where more than 50% of your business income comes from construction activities, construction is your primary source, and you are in. A landscaping company whose income is mostly maintenance and mowing may fall under the line. A landscaper whose income is mostly hardscaping and retaining walls may be over it. The test is your own income mix for the period, so check it each time rather than carrying last year’s answer forward.

You report only the subcontractors you deal with directly. If your drywaller hires a taper, the taper is on the drywaller’s T5018, not on yours.

What goes on a slip

Once you know you file, run each payment you made to a sub through this table. Materials, small totals, wages and non-resident subs stay off the slip.

Once a subcontractor is on a slip, box 22 shows the full amount. The CRA says to “include GST/HST and PST (where applicable) in the amount reported in box 22.” The $500 test excludes GST/HST; the amount reported includes it. In practice, check the threshold against the sub’s invoices without GST/HST, then report the full amount with the tax included.

Which period, and the deadline

You choose the reporting period, and you choose it once. Section 238(3) says the period “may be either on a calendar year basis or a fiscal period basis. Once a period is chosen, it cannot be changed for subsequent years, unless the Minister authorizes it.” A corporation with a March year-end can report on its fiscal year or on the calendar year, but either way it has to stay with the choice. If you are not sure which period your business chose, check what was filed last time or ask whoever filed it.

That choice sets your deadline. Under section 238(4), the return “shall be filed within six months after the end of the reporting period”. On a calendar year, that means 30 June. On a fiscal year ending 31 March, it means 30 September.

If your business is still a sole proprietorship, incorporating may change your year-end and with it this choice. The article on sole proprietor versus corporation covers when incorporating pays.

What to collect from each subcontractor

Each slip needs the subcontractor’s name and address. It also needs their 15-character business number (for example 123456789RT0001) or their social insurance number. The easiest time to ask is before the first payment, while the sub is keen for the work: a line in your first email asking for their business number, kept on file, is a written request you can point to later. Their business number is the one on a GST/HST invoice, covered in the $30,000 GST/HST line.

That written request matters if a subcontractor refuses a number. The Income Tax Act sets a $100 penalty for each failure to give required information, and section 162(5) excuses it where “a reasonable effort was made by the person to obtain the information”.

Filing, and what getting it wrong costs

More than five slips must be filed electronically; the rule applies to returns filed on or after 1 January 2024. If you are sending more than five, plan to file online, because paper filing where electronic filing was required has its own penalty, starting at $125 for 6 to 50 slips. Instead of slips, the CRA also accepts a listing of all payments to subcontractors with the T5018 Summary. The listing must show the total paid, the number of subcontractors and an authorized signature.

Late filing costs the greater of $100 or a daily amount, capped at 100 days. For fewer than 51 slips the daily amount is $10, so a return three months late can cost $900. Unlike most slips, you are not required to give copies to your subcontractors. The CRA’s “Distribute the slips” page lists the T5018 among those you do not have to send out. Still, a sub who asks what you reported is easier to answer if your figure matches what they invoiced.

To put figures on it, take a renovation company in Ottawa that reports on the calendar year; it is an illustration, not a real business. In 2026 it pays a plumber $38,500 and an electrician $12,400, both including HST. It also pays a painter $480 for a single small job. It files two slips by 30 June 2027, for the plumber and the electrician, with the HST included in box 22. The painter is under the threshold and does not appear.

Two questions for your bookkeeping

Did more than half of this year’s business income come from construction activities? If so, every Canadian-resident subcontractor you paid more than $500 for construction services goes on a T5018.

Do you know which reporting period you chose? And do you hold a name, address and business number or SIN for every subcontractor you paid? If not, sort out both now rather than in the last weeks before the six-month deadline.