What is a T5018 slip?
A T5018 form is a slip provided to subcontractors only in the construction industry and to CRA for information purposes only. The form details the total amount paid to the subcontractor(s) from an employer of a privately owned business for contract services completed during the entire year. The amount paid may also include payments made for products, expenses, and reimbursements.
Who receives a T5018 slip?
The T5018 only applies to businesses that have more than 50% of their business income coming from construction activities. As for distribution of T5018 slips, only subcontractors in the construction industry that receive payments for contract work over $500 need to be completed; payments to a subcontractor for any contract work that is less than $500 a T5018 slip is not necessary.
A T5018 slip must be filed for each sub-contractor along with a summary slip report submitted to Canada Revenue Agency (CRA). All T5018 slips include;
- Report period
- Name of subcontractor
- CRA identification number which could be either the corporation business number or sole-proprietor social insurance number
- Total amount paid to subcontractor within the calendar or fiscal year including any GST/HST and provincial/territorial sales tax
- Subcontractors address (if available)
When does a T5018 slip need to be submitted?
T5018 payment slips can be reported on a calendar-year or fiscal year basis and due six months after the reporting period ends. Failure to report within these timeframes will result in penalties. CRA will issue late filing penalties based on the number of slips filed along with number of days late. These late filing penalties will continue to accrue interest until payment is completed in full.
Why CRA requires T5018 slips?
The construction industry has a reputation to be heavy in cash base payments. The CRA recognizes this practice and the reason T5018 slips are required to be completed. This is to ensure all earnings and taxes are paid by subcontractors. T5018 slips are used by CRA as a reference guide to track employers and subcontractors are reporting on time and the correct earnings. The slips also act as a cross-reference towards penalties for late filings or failure to report earnings from employers or subcontractors.
In summary, T5018 slips and CRA summary reports are to help the construction industry conduct business legally, ethically, and avoid operating underground. Another area T5018 slips that helps CRA keep track of is identifying subcontractors that do not;
- File returns or report their full income
- Register for GST
- Report total sales and GST remittance
Where can you learn more about T5018?
To learn more go to CRA website page: Information for payers of the T5018
Contact Banka & Company, CPA if you own a construction business and require T5018 slips and CRA summary done for your subcontractors. If you are a sub-contractor and have questions, contact us today.