Quick answer: A Surrey construction corporation’s year end is decided by three filings that a service business never touches. T5018 slips report what was paid to subcontractors, and the CRA matches them. Lien holdbacks — the portion of each progress payment withheld under the Builders Lien Act — sit on the balance sheet as receivables and payables and have to line up with revenue recognized. And every subcontractor paid needs a WorkSafeBC clearance letter on file, or the company can become liable for the sub’s premiums. Get those three right and the T2 follows.
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T5018: the slip contractors meet by letter
Any business whose main activity is construction and that pays subcontractors for construction services has to report those payments on T5018 slips, filed with a summary within six months of the fiscal year end. The CRA uses them to match the subcontractor’s reported income, so late or missing slips are found. The slip requires the sub’s business number or SIN, which is easier to collect at the first invoice than at year end. Our holdbacks guide and the Surrey contractor page go into the mechanics.
Holdbacks on the balance sheet
Under BC’s Builders Lien Act a portion of each progress payment is held back until the lien period runs. For the contractor that is money earned but not yet collectible — a holdback receivable — and for the payments it makes to its own subs, a holdback payable. Both belong on the year-end balance sheet, consistent with the revenue recognized to date, and the GST on a held-back amount has its own timing. Bonding companies read the holdback and work-in-progress lines before anything else; financial statement preparation in Surrey covers how EverStone presents them.
WorkSafeBC clearance
A prime contractor that pays a subcontractor without a valid clearance letter can be assessed for the sub’s unpaid WorkSafeBC premiums. The letter is free and takes minutes to check online; the failure is not checking, or checking once and not again for a sub used all year. Clearance status at each payment date is the standard, and the file should show it.
Employee or subcontractor, decided before the first cheque
Surrey’s construction base runs on subs, and the CRA’s view of whether a given worker is really an employee does not depend on the label. Control, tools, chance of profit and integration decide it. The decision changes which slip is issued (T4 or T5018), whether source deductions are owed and who carries WorkSafeBC. See subcontractor vs employee for trades.
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Contractor accountants in Surrey · Small business accountant in Surrey BC · Financial statements in Surrey · Contractors across Canada
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Sources: CRA — T5018 Statement of Contract Payments · WorkSafeBC — manage your account and clearances · Builders Lien Act (BC). General information, not advice.
Frequently asked questions about construction accounting in Surrey
Do I have to file T5018s if I only used two subs?+
Are holdbacks income when I invoice them or when I collect them?+
What happens if a sub I paid had no WorkSafeBC coverage?+
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