T5018 and subcontractor reporting.
If you are in construction and you pay subs, the CRA wants the T5018. Getting the sub relationship right is how you stay out of trouble.
The CRA's cross-check on subcontractor income.
A business whose main activity is construction has to file a T5018 information return reporting amounts paid to subcontractors for construction services. It is the CRA's cross-check that subs actually report the income. Miss it or file late and you are exposed to penalties.
The test that turns on substance.
Whether a worker is a true subcontractor or really an employee turns on substance: control, ownership of tools, chance of profit and risk of loss. Not what the invoice says. Get it wrong and you can owe source deductions, CPP, EI, WSIB and penalties, going back years. See the WSIB guide.
A paper trail that protects you.
- Collect proper invoices, business numbers and WSIB clearances from subs.
- Track sub payments through the year so T5018 season is a non-event.
- Document the working relationship to support subcontractor treatment.
Unsure your subs are set up right?
Book a call before it becomes a CRA problem. I will pressure-test your classifications and the paper trail.
General information for Ontario businesses, current at the time of writing. Not tax, legal or accounting advice. Confirm your situation with a professional. Steel City CFO can help.