T5018 slip – Statement of contract payments.

Are you involved in the construction industry? If so, you’ve likely come across the?T5018 slip, also known as the?Statement of Contract Payments. Let’s dive into what it is and why it matters:

T5018 slip – Statement of contract payments

What is T5018?

· A T5018?slip identifies the total contract payments made to a recipient by a contractor in a calendar year or fiscal period.

· The T5018?reporting requirement is part of the CRA's effort to promote compliance in the construction industry and to reduce activity in the underground economy.

When to issue

If you are an individual, partnership, trust, or corporation involved in construction activities, you?must?issue a T5018 slip?or?provide a?listing/printout?if?all?of the following apply:

• Your?primary source of business income?is?more than 50%?from construction activities AND
• Payments were made to Canadian resident subcontractors for?construction services performed inside or outside Canada? ?AND
• Total of all payments in the calendar year were?more than $500, not including GST/HST

If a subcontractor performs services as an employee?in addition to services as a subcontractor, the employment income should be reported on a?T4?and the subcontract work is reported on a?T5018.

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What is required if the?T5018 is not issued

If you are?not?filling out a?T5018, you must send the CRA a listing or printout of all payments you make to subcontractors. You must provide the information on a line-by-line basis, in column format with all the information required on the T5018?slip.

The listing or printout should include all of the following information:

• All the summary information, including the total payments to each of the subcontractors AND
• Total number of subcontractors who received these payments AND
• The signature of an authorized person

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? What to report and not report on a?T5018

?? ???Report

• Payments to?resident of Canada?subcontractors for construction services provided inside or outside Canada
• Amounts paid or credited, whether by cheque, cash, barter, or offset against an amount owing.

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? ???????Do not report.

• Payments to?non-resident of Canada?subcontractors for construction services provided inside or outside Canada, use:?T4A-NR?slip
• If the construction activity is?not?your primary source of business income , use:?T4A?slip
• Payments made for?goods only

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Contractors' cheques in the name of multiple subcontractors –

This is sometimes done to ensure that a subcontractor's sub-trades are paid in order to minimize the possibility of liens against the job.

Contractors report only on those subcontractors they deal with directly. In this situation, the contractor reports the amount as a payment to the subcontractor. The subcontractor is responsible for reporting the amount as payment to the subtrade.

Example

Xyz General Contractor Inc. has a contract with ABC Drywallers Ltd. to install drywall. ABC has part of the work done by MNOP Plasters Inc. ABC owes MNOP?$1,000?for the work. XYZ writes a cheque out to ABC Drywallers Ltd. and MNOP Plasters Inc. in the amount of?$1,000. These amounts are reported as follows:

• XYZ reports the?$1,000?payment to ABC Drywallers Ltd., since it contracted with ABC
• ABC reports the?$1,000?payment to MNOP Plasters Inc., since it contracted with MNOP.

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What are the guidelines for filling out slips?

Do

• If you have multiple payroll accounts, file a separate T5018?return for each payroll account based on the account that the payments were made from
• Amounts are reported on a T5018?slip for the?year in which it is paid
• Report, in dollars and cents, all amounts you paid during the year
• Report all amounts in Canadian dollars, even if they were paid in another currency. Learn more about the average exchange rates:?Exchange rates

Do not

• Do not show negative dollar amounts on slips, to make changes to previous years. Learn more:?Make corrections after filing
• If a box?does not have a value, do not enter "nil" or "N/A", leave the box?blank
• Do not change the headings of any of the boxes
• Do not enter hyphens or dashes between numbers
• Do not enter the dollar sign?($)

How to fill out

Box 20 – For the period ending

Enter the last day of the payer's reporting period in which the payment was made to the recipient.

Box 22 Construction subcontractor payments

Report the total amount of payments you made to the subcontractor during the period.

Include GST/HST and PST (where applicable) in the amount reported in box?22.

Under the CRA administrative policy, a slip or a printout must be issued if the total of all payments in the reporting period were?more than?$500?(do not include GST/HST) per subcontractor.

If a subcontractor was paid through the bartering of goods or services, the fair market value of the bartered goods or services would form part or the entire amount that has to be reported.

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Box 24 Recipient's program account number or Social insurance number?(SIN)

Payer name

Recipient's business name and address

Payer’s program account number

· Enter your?15-character?account number?(for example, 123456789RZ0001) on your copy and the copy you send to the CRA?only.

·?Do not?enter your account number on the copies you give to the contractors.

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Filing due date

T5018 Return - 6 months?after the end of the reporting period (calendar year or fiscal period) chosen by the payer.