Most Canadian trades contractors have heard of the T5018. Far fewer actually file one. The CRA knows this, which is exactly why the form exists: construction subcontractor income has historically been under-reported, and the T5018 is the agency’s way of cross-referencing what you paid against what your subs declared.
If construction is more than half your business income and you paid anyone as a subcontractor this year, you probably have a filing obligation. Miss it and the penalty starts at $100 with no upper limit per contractor if you have multiple slips outstanding. This guide gives you the rule in plain English so you can fix it before the deadline. See also the T5018 glossary entry for a quick-reference definition.
Do you have to file a T5018?
The T5018 applies to any business(sole proprietor, partnership, corporation, or trust) where more than 50% of business income comes from construction activities. The CRA calls this the “primary source” test.
If you’re an electrician, plumber, drywaller, roofer, HVAC tech, painter, or general contractor and construction is your main business, you pass the test. You must file a T5018 slip for every subcontractor you paid more than $500 (excluding GST/HST) during your reporting period.
The flip side: a business that uses a lot of construction but whose principal businessis something else does not have to file. A natural gas utility that builds pipelines is in gas transmission, not construction. The pipelines are incidental. If you’re reading this article, that almost certainly does not describe your situation.
A few scenarios that come up often:
- You hire a helper for one job. If you paid them as a subcontractor (not an employee) and the total crossed $500 for the year, you need a T5018 slip for them.
- You use a numbered company. The 50% test applies to the corporation, not the owner personally. Most trades corps are construction-primary.
- You only do residential work. Makes no difference. The T5018 obligation covers all construction: residential, ICI (industrial, commercial, institutional), and civil.
- You pay subs in cash. Still reportable. The method of payment does not affect the obligation.
The $500 YTD threshold per subcontractor
You issue one T5018 slip per subcontractor per reporting period. The slip is only required if total payments to that subcontractor during the reporting period exceed $500, not counting GST/HST or PST.
That threshold is per person or company, not per job. If you hired the same drywaller on three separate jobs in one year and paid them $200 each time, the total is $600 and you need to file. The fact that no single job crossed $500 is irrelevant.
What counts as a “payment” for T5018 purposes? The CRA says you report amounts in the year they are paid, not the year the work was done. If you did a job in November and paid the sub in January, the slip goes in the January year, not the November year.
The reported amount on the slip includes GST/HSTeven though the $500 threshold is measured without it. Box 22 on the T5018 slip captures the full payment including GST/HST and provincial sales tax (per CRA’s T5018 slip instructions). This trips up a lot of contractors using accounting software set to report net amounts.
| Scenario | T5018 required? |
|---|---|
| Paid a sub $300 for one job all year | No: under $500 threshold |
| Paid a sub $200 on three separate jobs ($600 total) | Yes: total exceeds $500 |
| Paid a sub $800 in December, HST on top | Yes: $800 base exceeds $500; report full $904 on slip |
| Paid a sub $600, but they are an employee on your payroll too | Yes for subcontract portion (use T4 for employment income) |
| Paid a non-resident sub $1,000 | Use T4A-NR, not T5018 |
T5018 vs T4A: which form for which contractor
Both forms report payments to non-employees. The rule on which one to use comes down to the nature of the work, not the nature of your business.
Use the T5018 when: your primary business is construction and the sub was paid for construction services. That covers excavation, framing, electrical, plumbing, HVAC, drywall, painting, roofing, flooring, and virtually any other trade work done on a building or structure.
Use the T4A (Box 048)when: the sub provided non-construction services, even if you’re in the construction industry. A bookkeeper you hired to clean up your accounts, a photographer who shot your jobsites for a portfolio, a marketing consultant: these go on a T4A, not a T5018.
Use T4A-NR when: the sub is a non-resident of Canada. The T5018 is only for Canadian residents. If you paid a US-based contractor for work done in Canada, the T4A-NR applies and withholding tax rules may kick in.
The easy test: if it’s someone swinging a tool, running pipe, or building something on a job site, it’s a T5018. Everything else is a T4A. When in doubt, ask your accountant before you file, because issuing the wrong slip still leaves you exposed to the failure-to-file penalty on the correct slip. For a deeper comparison, see our T5018 vs T4A breakdown.
Filing deadline: 6 months after your fiscal year end
The T5018 deadline is 6 months after the end of your reporting period. You choose whether to report on a calendar year (January 1 to December 31) or your fiscal year. Most sole proprietors use the calendar year because their personal income tax return does too. That means the deadline is June 30 each year.
If your corporation has a March 31 fiscal year end, your T5018 is due September 30. If it ends June 30, your deadline is December 31. The formula never changes: fiscal year end plus six months.
One exception worth knowing: if your business permanently stops operating, you must file the T5018 within 30 days of the date the business ends. The CRA does not give you the usual six-month window in that situation.
The T5018 deadline is often confused with the T4/T4A deadline, which is the last day of February. That date does not apply to T5018 filers. You have six months, not two.
How to file: paper, web forms, or accounting software
You file a T5018 Summary (one per reporting period, covering all slips) plus an individual T5018 slip for each subcontractor. You give the sub a copy of their slip and send the summary plus all slips to the CRA.
Paper filing
Order the T5018SUM and blank T5018 slips from the CRA by calling 1-800-959-5525 or downloading the PDFs from canada.ca. Fill them out manually, keep a copy, and mail to your tax centre. Paper works if you have fewer than 5–10 slips and don’t mind the mail delays.
CRA Web Forms
The CRA’s web forms application lets you key in slips online and submit electronically without commercial software. It’s free, works in a browser, and is the fastest DIY option for most small contractors with fewer than 50 slips.
Accounting or payroll software
QuickBooks, Wave, Sage, and most Canadian payroll platforms can generate T5018 slips if you’ve coded your subcontractor payments correctly. Check that your software is set to include GST/HST in the reported amount (Box 22 must be the gross payment, not the net). Export the XML file and upload via the CRA’s Internet File Transfer service.
Electronic filing is mandatory if you have 6 or more slips. Paper is only acceptable for 5 or fewer.
Penalties: $25 per day per slip, minimum $100
The CRA charges a late-filing penalty of $25 per day for each information return not filed on time. The minimum penalty is $100 per unfiled slip (whether you’re late by 4 days or 4 days). The maximum is $2,500 per slip.
That cap sounds reassuring until you count the slips. If you paid six subcontractors this year and missed the deadline for all of them, your maximum exposure is $15,000 (6 x $2,500). Filing late is not a minor inconvenience.
The CRA also has authority under the Income Tax Act to assess gross negligence penalties when it can show a contractor deliberately did not file in order to help a sub hide income. The exact amount is case-specific (often calculated as a percentage of the unreported income). It is separate from and on top of the late-filing penalty. If the CRA contacts you about deliberate non-filing, get a CPA involved before responding.
There is no “first-time forgiveness” program specific to T5018 slips, but the CRA’s Voluntary Disclosures Program (VDP) can reduce or eliminate penalties if you come forward before the CRA contacts you. If you know you’ve missed prior years, talking to a CPA about a VDP application is worth it. Penalties compound quickly on multiple missed years.
Late payments of amounts you owe also attract interest. See our guide on CRA late-payment penalties and interest for contractors for the current rates.
A worked example
Mike is an Ontario electrician running a sole proprietorship. His fiscal year is the calendar year (January 1 to December 31). In 2025 he paid the following subcontractors:
- Dave’s Drywall Inc. (corporation): $12,800 + HST
- Ramona (solo electrician helper, two jobs): $400 + HST
- Ahmed’s Insulation (corporation): $3,200 + HST
- A bookkeeper (non-construction services): $900 + HST
What Mike must file by June 30, 2026:
- T5018 slip for Dave’s Drywall:Box 22 = $14,464 (gross including HST at 13%). Name and SIN/BN of the corporation required.
- No T5018 for Ramona: total base payments were $400, under the $500 threshold. No slip required.
- T5018 slip for Ahmed’s Insulation:Box 22 = $3,616 (gross including HST).
- T4A (Box 048) for the bookkeeper: not a construction service, so not a T5018.
- T5018SUM summary: one summary covering both T5018 slips, reporting total payments of $18,080.
Because Mike has 2 T5018 slips (under the 6-slip threshold), he can file on paper or use CRA Web Forms. He’ll also give Dave’s Drywall and Ahmed’s Insulation each a copy of their slip by the same June 30 deadline.
Year-end T5018 checklist
Run through this list before your filing deadline. If you’re on a calendar year, add it to your December 31 year-end routine.
This article is for general information only and does not constitute tax or legal advice. T5018 rules are set by the Canada Revenue Agency. For advice specific to your situation, consult a CPA or tax professional licensed in your province.