Contractor accountant in Kelowna

T5018 slips and who counts as a subcontractor

A business whose main activity is construction has to report what it paid subcontractors for construction services on T5018 slips and a summary. The return is due six months after the end of the reporting period, which can be the calendar year or the fiscal year. The slips only work if subcontractor names, business numbers and addresses are collected when the sub is engaged. Chasing them in the spring, after the crew has moved on to another job in Vernon or Penticton, is where most late T5018s come from. The T5018 subcontractor tracker keeps the details in one place through the year.

The harder question is whether someone is a subcontractor at all. A framer who works only for you, on your schedule, with your tools, may be an employee in the CRA’s eyes whatever the invoice says. If the CRA reclassifies the relationship, the unremitted CPP and EI become your liability. Subcontractor or employee sets out the tests.

Progress billing, holdbacks and when GST is due

Most construction work is billed in stages. GST on a progress billing generally becomes payable when the invoice is issued or when payment is due under the contract, whichever is earlier, not when the customer eventually pays. A contractor who waits for the cheque before remitting is late on every draw. Holdbacks work the other way: the portion retained under the Builders Lien Act is generally not subject to GST until it is paid or becomes payable, so the invoice and the ledger have to show it separately.

The same staging drives income. Work finished but not yet billed, costs incurred on jobs still running, and holdbacks not yet released all sit across the year-end, and how they are measured decides how much profit falls in each year. Lenders and bonding companies read those numbers too. Construction holdbacks works through the entries.

PST on materials: the contractor usually pays it

BC PST treats a contractor who installs materials into a building differently from a store that sells them. When you supply and install lumber, fixtures, cabinets or roofing as part of improving real property, you are generally the consumer of those materials. You pay PST when you buy them and do not charge PST to the owner on the installed work. Materials bought from a supplier outside BC who did not charge PST usually have to be self-assessed on the PST return. A contractor who also sells goods without installing them, such as a supply-only order of flooring, generally has to charge PST on that sale.

Getting this wrong runs in both directions: charging PST to homeowners that should not be charged, or failing to pay it on materials that should have carried it. Tools and equipment bought for the business carry PST as well. The BC PST guide covers registration and self-assessment.

WorkSafeBC coverage and clearance letters

Construction employers register with WorkSafeBC, are classified by the kind of work they do, and report assessable payroll so premiums can be charged. For contractors the part that matters most is the clearance letter. A prime contractor can be held liable for WorkSafeBC premiums that a subcontractor failed to pay on the job, so each sub’s clearance should be checked before payment. An owner-operator working alone can also look at personal optional protection, which is a coverage decision rather than a tax one. WorkSafeBC registration covers the first steps, and the Kelowna payroll page covers the crew.

Trucks, trailers, excavators and tools are the other large line on a contractor’s return. They are written off over time through capital cost allowance by class, and the timing of a purchase against the year-end changes the first year’s deduction. A truck that also goes to the lake on weekends needs a log that shows how much of its use is business. Plan the big purchases with the year-end in view, not on the day the dealer has a deal.

GST on new housing

A builder who constructs a new home and sells it charges GST on the sale, and the purchaser may be able to claim a new housing rebate, sometimes by assigning it to the builder at closing. A builder who rents out a new home instead of selling it is generally treated as having sold it to itself, and has to account for GST on its fair market value under the self-supply rules. A contractor who substantially renovates a house can fall into the same rules. These amounts are large relative to a small builder’s margin, and they are decided by the contract and the sequence of events, so the time to plan them is before the foundation goes in. The first-time home buyers’ GST rebate covers the most recent change.

What EverStone handles for you

One CPA, one fixed fee agreed up front:

• T2 corporate return and year-end financial statements
• Holdbacks and work in progress reviewed at the cut-off
• T5018 subcontractor information returns
• GST on progress billings and PST on materials, filed on their own schedules
• WorkSafeBC reporting and subcontractor clearances
• Equipment and vehicle CCA schedules

Fixed fees, fully online

EverStone is an Abbotsford CPA firm in the same province and time zone as Kelowna. Everything runs by video, phone and secure upload link, which fits a business run from a truck. A typical trades-corporation bundle of bookkeeping, payroll and the year-end T2 with statements usually runs $450–$650 a month, and the fee is fixed and agreed before work starts. See what it costs.

Remote contractor accounting from Abbotsford

Contractor accounting for Kelowna clients is delivered remotely from Abbotsford. There is no Kelowna office and no local team. Meetings are virtual, documents are signed electronically, and you deal with the CPA directly rather than an intake desk. Subcontractor payments, equipment and vehicle costs are tracked as they happen rather than reconstructed at year end.