The T5018 is an annual information return that is used by the Canada Revenue Agency (CRA) to stop or mitigate underground economic activities within the construction industry in Canada.
Who Files a T5018 Slip?
The T5018 information return is to be filed by any corporation, partnership, trust or individual, that has construction as its source of primary business income. If your business generates more than 50% of its business income through construction activities, then you are required to file a T5018 information return.
Additionally, in a year, if you have made payments for construction services above $500 to subcontractors (or received credits from them), then you are also mandated to fill the T5018 slip.
Process for Filing an Information Return Slip
Residency status determines the specific information slip that’s to be completed.
Subcontractors who are residents of Canada are required to report contract payments on a Contract Payment Information Return. This information return consists of a T5018 slip and summary, and it covers construction services executed within and outside of Canada.
Subcontractors who are not Canadian residents are to complete the T4A-NR information return, which includes a T4A-NR summary and slip.
Regardless of the information slip you are to file, it can be done either by yourself or your accountant on the CRA website. It can be done via the My Business Account portal or Represent a Client portal respectively. You can file as many slips as needed via these portals on the CRA site.
When Are You to File the T5018 Return Information?
You can file the T5018 on a fiscal-year basis, or calendar-year basis. Regardless of the reporting cycle you choose, the return is due six months post the reporting period.
If you want to make changes to your current reporting period, you will need approval from the CRA.
Should your business stop operating, you are required to file the information return within 30 days post-closure of the business.
What Are the Penalties for Not Filing Your T5018 Return Information?
There are strict penalties for late submission or failure to submit your return information after the expiration of the reporting period.
Each slip is counted as separate information return, and the CRA will penalize you based on the number of slips submitted late - or not submitted at all. The number of late days is used to calculate the penalty fee.
Interest will continue to accrue on the penalty sum until it is paid in full.
Additionally, any contractor that cooperate with a subcontractor to conceal financials, to avoid taxes, could face criminal charges. They could also be penalized with fines up to 200% of the taxes they tried to evade.
Conclusion
The T5018 is the primary means the Canada Revenue Agency (CRA) uses to track financial activity between employers and subcontractors to ensure that all earnings and taxes are paid correctly and on time.
If you need help with filing T5018 forms, feel free to contact us at 778.801.5789 or email to jluk@bloomaccounting.ca
