A T5018 slip is the information return the Contract Payment Reporting System requires from a construction business, reporting amounts paid to subcontractors for construction activities during the reporting period.
The trigger is set out in Income Tax Regulations s.238(2): “Every person or partnership that pays or credits, in a reporting period, an amount in respect of goods or services rendered on their behalf in the course of construction activities shall make an information return… if the person’s or partnership’s business income for that reporting period is derived primarily from those activities.” “Construction activities” is defined broadly in s.238(1) to cover “erection, excavation, installation, alteration, modification, repair, improvement, demolition, destruction, dismantling or removal” of a building, structure or similar property.
Timing is fixed, not flexible: s.238(3)–(4) lets a filer choose a calendar-year or fiscal-period basis, but once chosen “it cannot be changed for subsequent years, unless the Minister authorizes it,” and “the return shall be filed within six months after the end of the reporting period.” S.238(5) carves out amounts that are wholly for goods for sale or lease, certain s.212 non-resident amounts, and services rendered outside Canada by a non-resident — a pure materials-only invoice with no labour component can fall outside the T5018 requirement even from a firm that reports on everything else.
A general contracting firm derives roughly 90% of its business income from construction activities, so the “primarily” test in s.238(2) is met for the whole business, not just individual jobs. Over its fiscal year it pays a framer, an electrician and a plumber for labour and installed materials — all three trigger T5018 reporting. It separately pays a supplier who only delivers lumber to site with no installation labour; that invoice is wholly for goods, so it can sit outside the T5018 requirement under s.238(5) even though it hit the same “materials and subs” ledger account as the trade payments. Its fiscal year runs the calendar year, ending December 31, so its information return for that period is due within six months — by June 30 the following year.
See also: How does HST work on construction contracts? · Dependent contractor: the middle category · What records does CRA expect from a contractor?.
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