When $500 Triggers a T5018: CPA Workflow for Canadian Contractors

Last updated: October 16, 2026

If your business pays subcontractors for construction work and construction makes up more than half your income, you generally must issue a T5018 for any subcontractor paid over $500 during the reporting period, excluding GST/HST from that test. Start by pulling your payment records for the period and confirming whether you report on a calendar year or a chosen fiscal period, since that choice sets your filing deadline.

TL;DR:

• Subcontractors paid over $500 (excluding GST/HST) must be reported if construction makes up more than half of your income and you pay freelancers during the reporting period.
• Payments for materials or goods only do not require reporting on a T5018, and foreign currency payments need to be converted to Canadian dollars before reporting.
• You must file the T5018 within six months after your chosen reporting period, using the electronic format if you handle more than 100 slips, with accurate reconciliation to your bookkeeping records.
• Resident subcontractors require a T5018, while non-residents performing in Canada generally demand a T4A-NR with potential withholding, often at 15%.
• Precise recordkeeping, including signed residency declarations and reconciliation before submission, helps avoid penalties for misreporting or late filing.

Table of Contents

• Who must file a T5018 and how the $500 rule works
• What to report: box 22, recipient ID, currency and timing rules
• When to file and which filing method to use
• How to prepare, fill out and reconcile T5018 slips and the T5018 Summary
• Resident vs non-resident subcontractors and withholding implications
• Penalties and correcting errors
• CPA workflow tips to reduce filing errors
• When outsourcing T5018 filing is worth it
• How T-Ledgers supports contractors filing T5018 slips
• Sources
• FAQ

Who must file a T5018 and how the $500 rule works

The T5018 exists for one purpose: tracking payments in the construction industry, where subcontracting is common and income can otherwise go unreported. The obligation falls on the payer, not the subcontractor, and it applies regardless of legal structure.

You need to file when both conditions are true, according to the CRA’s T5018 guidance:

• Your business is an individual, partnership, trust, or corporation, and construction is your primary source of business income, meaning more than 50% of revenue comes from construction activities.
• You paid a subcontractor more than $500 in total during the reporting period, testing that threshold before GST/HST is added.
• The payment relates to construction services, not simply the purchase of materials or goods.

If your firm runs several payroll accounts, for example separate divisions with their own business number extensions, each account generally needs its own T5018 summary and slip set rather than one combined filing.

What to report: box 22, recipient ID, currency and timing rules

Box 22 is where the payment amount goes, and it needs to reflect the full amount paid to the subcontractor, tax included. According to CRA’s payroll deductions guidance, you report:

• The total payment in Canadian dollars, in dollars and cents, including GST/HST and any applicable PST.
• No CPP, EI, or income tax withholding for qualifying resident subcontractors, since these payments are not employment income.
• Payments made by cash, cheque, or barter, all of which count toward the reportable total.
• The subcontractor’s Social Insurance Number for a sole proprietor or their 15-character Business Number for an incorporated entity, using the placeholder your software or CRA form specifies when an ID is genuinely unavailable.

Box 22 includes GST/HST and PST where applicable, and qualifying resident subcontractor payments are exempt from payroll withholding. That distinction, drawn from CRA’s guidance on fees for services, trips up a lot of first-time filers who assume any payment to an individual needs source deductions.

If a payment was purely for materials or goods with no labour component, it does not belong on a T5018. Payments for professional or personal services outside construction may instead call for a T4A, a distinction worth reviewing in our T4 vs T4A guide if your payments mix categories. Foreign-currency payments should be converted to Canadian dollars using CRA’s accepted exchange rate methodology before you enter them in box 22.

When to file and which filing method to use

Your T5018 is due six months after the end of your reporting period, whether that period is the calendar year or a fiscal period you have chosen for this purpose, according to CRA’s filing deadline guidance. Choosing that period early matters because it fixes both your deadline and which payments belong in which filing year.

1. Decide whether you qualify to file, based on the construction-primary and $500 tests, before locking in a reporting period.
2. Use Web Forms if you are filing up to 100 slips, or internet file transfer for larger volumes or if your bookkeeping system supports direct electronic submission.
3. For 2026 filings, follow the T5018 e-file specification: include your complete 15-character BN15, use report type code O for original slips (A for amended, C for cancelled), and enter box 22 amounts in dollars and cents with no commas or spaces.
4. Run a test file through your software’s validation step before the final submission, since formatting errors are one of the most common causes of rejected e-files.

How to prepare, fill out and reconcile T5018 slips and the T5018 Summary

Build each slip from the date you actually paid the subcontractor, not the invoice date. That distinction matters because a payment made in January for December work belongs in the period it was paid, not invoiced.

• Create one slip per recipient, listing their name, SIN or BN15, and the total box 22 amount paid during the period.
• Prepare one T5018 Summary per payroll account, even if your business has multiple accounts under the same legal entity.
• Reconcile before submitting: line 80 on the summary must match your total slip count, and line 82 must equal the sum of every slip’s box 22 figure, a reconciliation step CRA’s T5018 Summary guidance requires along with an authorized signature.
• If you are not preparing formal slips for a small number of recipients, any CRA-acceptable printout or listing still needs the same core fields: recipient identity, total paid, and payer information, in a format CRA can process.
• For paper workflows, download the accessible fillable T5018 PDF and open it with Acrobat Reader 10 or later, since older viewers can distort the form’s fields.

Pro Tip: Reconcile box 22 totals against your bookkeeping ledger before you touch the summary, not after, so any mismatch gets caught while it is still cheap to fix.

Resident vs non-resident subcontractors and withholding implications

A subcontractor’s residency status changes which slip applies entirely. Resident subcontractors performing construction work get a T5018, but non-resident subcontractors providing services in Canada fall under T4A-NR reporting instead, with withholding often required.

• Non-resident service payments for work performed in Canada commonly require 15% withholding, though exceptions and waiver applications exist depending on the circumstances.
• Capture residency status, SIN or BN, and the location where work was performed at onboarding, before the first payment goes out, since correcting this after the fact is far more expensive.
• Keep a signed declaration on file for every subcontractor to support the classification you used, a step covered in our T4A guidance for contractors.

Penalties and correcting errors

Filing late, filing on paper when electronic filing is required, or misreporting box 22 amounts all carry consequences.

• Penalties apply for failing to file in the required electronic format, scaled by the number of slips involved, under the schedule described in CRA’s filing guidance effective January 1, 2024.
• Per-slip and per-return penalties also apply for late filing, separate from the electronic format penalty.
• To correct an error, use report type code A for amendments and only include the slips that changed, following CRA’s correction procedures: never mix original slips in with an amended batch.
• Common mistakes include treating subcontractor payments like payroll, missing GST/HST in box 22, and filing under the wrong reporting period, all avoidable with a clean payments ledger.

CPA workflow tips to reduce filing errors

A clean payments ledger keyed to recipient identity, payroll account, residency status, and payment date turns T5018 season into a reconciliation exercise instead of a scramble. Capture SIN or BN and residency at onboarding, store signed declarations, and run a test e-file through Web Forms before your final submission. When slip volume or cross-border payments grow, bringing in an accounting partner reduces the odds of a correction cycle eating your week.

When outsourcing T5018 filing is worth it

Outsourcing earns its cost once slip volume climbs, you run multiple payroll accounts, or you start paying non-resident subcontractors regularly. A CPA-led process catches classification errors before they become penalties, while a very small operation with tight bookkeeping controls can often manage T5018 filing on its own.

— Wajahat Ajmal (CPA)

How T-Ledgers supports contractors filing T5018 slips

Getting T5018 filing right depends on clean books all year, not a scramble every spring. T-Ledgers runs bookkeeping services that keep your subcontractor payments reconciled by recipient and payroll account, so building the slips and summary is a formality rather than a project. You can find current prices on the pricing page.

Depending on where your business sits, a few packages fit the job:

• Bookkeeping Services maintain the payment ledger your T5018 slips are built from.
• Payroll Services handle the accounts your summaries need to reconcile against.
• Corporate Tax and GST Filing covers the GST/HST that feeds into your box 22 totals.
• Virtual CFO suits contractors who want ongoing financial oversight beyond compliance filing.

Reach out through our service packages page to request a T5018 review or start bookkeeping onboarding before your next reporting deadline.

Sources

For the forms and technical rules behind everything above, go directly to CRA. The T5018 Statement of Contract Payments page has the fillable PDF for paper filing, while the 2026 e-file specification covers field formats for electronic submissions. Check the T5018 Summary guidance for reconciliation rules and the T4A-NR guidance if any of your subcontractors are non-resident. For recordkeeping systems that keep this data organized year-round, Bossy’s task and team management tools and 247Techify’s IT support for construction businesses are worth a look.

This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.

• T5018 Statement of Contract Payments

FAQ

Who is required to file the T5018 slip?

Any individual, partnership, trust, or corporation whose primary source of business income is construction, meaning more than 50% of revenue, and who paid a subcontractor more than $500 in the reporting period must file a T5018. The threshold excludes GST/HST when testing whether the $500 mark was reached.

What happens if I don’t file T5018?

Failing to file means CRA may apply per-slip and per-return late-filing penalties, and separate penalties apply if you file on paper when electronic filing is required for your slip volume. Subcontractor income may also go unreported on their own returns, drawing further CRA attention to your filings.

What is the penalty for not filing T5018 slips?

Penalties scale with the number of slips involved and apply both for late filing and for filing in the wrong format when electronic submission is required, under the schedule CRA introduced effective January 1, 2024, described in its filing guidance. The exact amount depends on how many slips were affected and how late the filing was.

How to fill out a T5018 form?

Enter the subcontractor’s SIN or 15-character BN15, then report the total amount paid during the period in box 22, including GST/HST and applicable PST, in Canadian dollars and cents. Base the figure on the payment date rather than the invoice date, and reconcile every slip against your T5018 Summary before submitting.

Recommended

• T4A Guidelines for Contractors: Who Receives a T4A Slip and at What Time?
• CPA Triage: Avoid the 5% + 1% CRA Penalty for Canadian Small Businesses
• T4 Filing Deadline for Canadian Employers: 2026 Guide

This article is intended to inform readers in general terms. It is not intended to provide any tax or business advice. Please consult your T-Ledgers advisor if you have any questions about your unique situation. While we have tried to ensure the accuracy of the information in this article, we accept no liability for errors or omissions.