Trades clients are some of the most rewarding and most frustrating files a bookkeeper carries. The revenue is real and the work is steady, but the source records arrive as a mix of cash jobs, subcontractor cheques, progress draws, and tax charged at whatever rate the client half- remembers. Keeping a construction client clean for the CRA is less about more software and more about getting five recurring things right, every period, before they compound.

This is a working bookkeeper’s checklist for Canadian trades files: GST/HST, input tax credits, the T5018 nobody remembers, multi- province tax, and holdback. None of it is exotic. All of it is where construction files quietly go wrong.

GST/HST: registration line and filing frequency

A client must register for GST/HST once taxable sales reach $30,000 over four consecutive calendar quarters. Below that they are a small supplier and registration is optional, though many trades clients register voluntarily so they can claim input tax credits on tools and materials. Watch the rolling four-quarter total, not the calendar year, because a busy spring can trip the line mid-year and the obligation to charge tax starts then.

Filing frequency is assigned by annual taxable supplies, and it sets the whole compliance rhythm of the file:

  • $1.5 million or less: assigned annual, with the option to elect quarterly or monthly.
  • More than $1.5 million up to $6 million: assigned quarterly, with the option to elect monthly.
  • More than $6 million: monthly, no other option.

For most owner-operator trades clients that means an annual return, due three months after the fiscal year end, with instalments if net tax owed is high enough. The trap is the annual filer who never sets money aside: a year of collected HST is a large, predictable bill that still manages to surprise people.

Input tax credits: the documentation, not just the math

Construction clients generate a high volume of input tax credits, on materials, fuel, tools, subcontractors, and equipment. The CRA’s position is that you must hold sufficient documentary evidence to support an ITC before you claim it; a missing supplier GST/HST number or a receipt that never made it out of a glovebox is a disallowed credit on audit, not a deferred one.

Two practical notes. First, the documentary requirements scale with the amount, so the bar for a $30 receipt is lower than for a $3,000 invoice; larger purchases need the supplier’s registration number on the document. Second, clients with annual worldwide revenue of $1 million or less can use the CRA’s simplified ITC method, which can save real time on a file with hundreds of small receipts. The win on a trades file is almost always capture discipline rather than calculation: get the receipt photographed and coded at the job, and the period close stops being an archaeology dig.

The T5018 your client forgot to mention

If construction is more than half the client’s business income and they paid any subcontractor more than $500 (pre-tax) in the period, they owe a T5018 slip for that sub, due six months after the year end. It is the single most overlooked construction filing, because the payments are scattered and the obligation is easy to not know about.

Two details that catch bookkeepers specifically: the slip reports the gross amount including GST/HST in Box 22, even though the $500 test is on the pre-tax base; and the figure is per subcontractor across all jobs, so three small payments to the same trade can cross the line while no single invoice does. See the T5018 filing guide for the full rule, and the export walkthrough for getting the data out cleanly.

Multi-province tax: the right rate, the right base

A client who works across a provincial line is charging more than one rate, and the rate follows where the work is supplied, not where the business is based. An Ontario contractor doing a job in a participating HST province versus a GST-plus-PST province is two different invoices. The base matters too: Quebec’s QST sits on the pre-GST amount, and the provincial sales taxes in BC, Saskatchewan, and Manitoba are not recoverable as input tax credits the way GST/HST is.

For the current rate in every province and the recoverable-versus-not distinction, the GST/HST/PST by province guide is the reference, and the tax calculator will compute any amount for any province.

Holdback: a liability, not early revenue

On construction contracts in provinces with statutory holdback (Ontario and BC at 10%, among others), a portion of each draw is withheld and released later under the lien legislation. The bookkeeping error is treating the full contract value as collected revenue while 10% is still legally held back, which overstates cash position and can distort the client’s sense of what they can spend. Holdback is calculated on the pre-tax base and is best carried as its own line so the client and the CRA both see it clearly. The statutory holdback definition and the holdback calculator cover the mechanics by province.

Records, and where Markup fits

The CRA expects business records kept for six years. On a trades file that means invoices, expense receipts with supplier tax numbers, subcontractor payment detail with business numbers, and the holdback ledger. The point of friction is rarely the year-end work; it is getting the source records out of the client’s phone and trucks and into something you can reconcile.

Markup is not a general ledger and it does not replace QuickBooks, Xero, or your tax software, and it does not file returns. What it does is keep the construction-specific records in a structured, exportable form: a client on Plus can invite you to a read-only seat where you see their invoices, expenses, and subcontractor payments, and pull a period-scoped T5018 worksheet and CSV, all without an email thread. Everything exports to CSV for import into the books you already keep.

The recurring trades-file checklist

Each periodReconcile GST/HST collected against ITCs, and confirm every ITC has documentary support with the supplier tax number.
Each periodCheck the rolling four-quarter sales total if the client is not yet registered, so you catch the $30,000 line as it is crossed.
Each periodConfirm the right tax rate and base for any work done outside the home province.
Each periodCarry holdback as its own liability line; do not book held-back amounts as collected revenue.
Year endRun the per-subcontractor totals for the period and file any T5018 slips for subs over $500, six months after year end.
AlwaysKeep invoices, receipts, subcontractor detail, and the holdback ledger for six years.

This article is for general information only and does not constitute tax, accounting, or legal advice. GST/HST, ITC, and T5018 rules are set by the Canada Revenue Agency and holdback rules by provincial legislation. For advice specific to a client, rely on your professional judgment and the current statutes.