T5018 (contractual payments in construction)

Form T5018, or Statement of Contractual Payments, is a tax form issued by the Canada Revenue Agency. A business whose primary activity is construction uses this form to report payments of $500 or more made to its subcontractors, other businesses hired to provide additional labour. This form helps the CRA combat the black market.

At a glance

Reports payments made to subcontractors (businesses hired to provide additional labour) in the construction industry
Reporting threshold: $500 or more per subcontractor, including taxes
Choose between: calendar year (January 1 through December 31) or fiscal year (the business’s accounting year)
Must be filed with the CRA within six months after the end of the selected period
Collect each subcontractor’s business registration number at the start of the contract to ensure accurate reporting

Why it matters

If construction is your main business, the T5018 is not optional: the CRA imposes a penalty for each late or missing form. Consider a general contractor who hires two subcontractors for plumbing and electrical work: he must report what he paid them. Specifically, if he paid $45,000 to the plumber and $8,000 to the electrician, both amounts exceed the $500 threshold and must be included on his T5018 forms, which must be filed within 6 months of the end of the selected reporting period. And the reverse is also true: if you are the subcontractor, your principal (the person who awarded you the contract) reports your amounts to the CRA, so your own reported income must match; otherwise, you risk a tax audit, which is often the starting point for a tax audit. The T5018 is intended for payments to businesses; it should not be confused with the T4A form for certain fees, nor the T5 form For dividends. The right approach: Starting with your very first contract, keep an up-to-date list of your subcontractors with their business registration numbers, and have your accountant handle the preparation of the forms. The official form can be found on the website of the Canada Revenue Agency. Bankeo connects you, at no cost to you, with a vetted accountant or CPA who specializes in the construction industry, and we’re here to support you every step of the way.

Frequently asked questions

What exactly is a T5018?

It’s the form a construction business uses to tell the CRA how much it paid its subcontractors during the year. Think of it as a statement that tracks money flows within the industry: it allows the CRA to verify that each subcontractor is properly reporting the amounts received, in order to curb undeclared work.

Who is required to file it, and what payments must be reported?

Any business whose primary activity is construction and that pays subcontractors for construction work, whether you are a general contractor with a company or a self-employed worker. You must report payments of $500 or more per subcontractor, including taxes. Purchases of materials alone do not count; a combined payment for both materials and labour does. Collect each subcontractor’s business number at the start of the contract.

I received a T5018 as a subcontractor, what does this mean for me?

The CRA keeps a copy of every form issued in your name and compares those amounts to your reported income from your tax return. A discrepancy raises red flags and may lead to an audit. To ensure your books are in order and your tax returns match, Bankeo will connect you, at no cost to you, with a vetted accountant or CPA who specializes in the construction industry, and we’ll continue to support you every step of the way.