--- title: "Construction and Trades Accounting: Holdbacks and T5018" url: https://www.everstonecpa.com/construction-trades-accounting description: "Accounting for Canadian construction firms — holdback receivable and payable, T5018 subcontractor reporting, progress billing. See the year-end after." type: service-or-info updated: 2026-10-08 summary: "Construction and trades accounting differs from ordinary small business accounting because revenue is earned across jobs rather than within a single month, statutory holdbacks delay the cash, payments to subcontractors trigger their own information return, and equipment rather than inventory dominates the balance sheet. A worked example for one city: T5018, holdbacks and WorkSafeBC clearance in a Surrey year end ." faq_count: 6 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Resources](https://www.everstonecpa.com/resources) Construction & trades Industry hub # Accounting for *construction and trades* businesses Updated 8 October 2026 Why a construction corporation’s books behave differently from a normal small business, and every guide, calculator, city page and service page on this site that covers it. [Get My Fixed Quote](https://www.everstonecpa.com/book-online)[Ask a Free Question](https://www.everstonecpa.com/quick-question) **Quick answer:** Construction and trades accounting differs from ordinary small business accounting because revenue is earned across jobs rather than within a single month, statutory holdbacks delay the cash, payments to subcontractors trigger their own information return, and equipment rather than inventory dominates the balance sheet. A worked example for one city: [T5018, holdbacks and WorkSafeBC clearance in a Surrey year end](https://www.everstonecpa.com/blog/surrey-construction-t5018-holdbacks-worksafebc-year-end). Six ways a construction ledger stops behaving like a normal one. Guidance written for “small business” assumes a company that sells something in a month and collects for it in the same month. Construction does not work that way. A job can start in one fiscal year, be invoiced progressively through the next, and have part of its money legally withheld until well after the work is finished. That reshapes revenue, cash flow, sales tax timing and year-end reporting at once. Below is what differs, and every page on this site that covers it. ## What is different about construction accounting Construction breaks three assumptions ordinary bookkeeping makes: that revenue belongs to the month it was invoiced, that money invoiced is money collectible, and that everyone paid is either an employee or an expense. Holdbacks, work in progress and subcontractor reporting all follow from that. ### Revenue is earned across a job, not in a month When a contract spans a year end, the profit has to be split between two fiscal periods: carrying work in progress that has not yet been billed, and deferring revenue billed ahead of the work. Get it wrong and a profitable year looks like a loss, or a loss year attracts tax. It is the most common reason construction books disagree with the owner’s sense of the year. ### Holdbacks are earned money you cannot collect Provincial builders lien legislation requires a percentage of each progress payment to be held back for a defined period after substantial completion. The work is done and the revenue usually reported, but the cash sits with the payer. A growing company can be profitable on paper and short of cash purely because holdbacks accumulate faster than they release. Tracking them by job, with release dates, is the cash forecast. ### Paying subcontractors triggers its own information return A business whose primary activity is construction and which pays subcontractors for construction services generally has to file a T5018 information return reporting those payments. It is separate from payroll, separate from the T2, and has its own due date tied to the [reporting period](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022.html) chosen. Trades that grow from a one-person operation into a crew-based one usually discover it a year late. Related: [Accountant for landscaping and lawn care companies](https://www.everstonecpa.com/accountant-for-landscapers-bc). ### Worker classification is a live risk on both sides A construction business is usually both a payer and a payee. On the paying side, treating a worker as a subcontractor when CRA would call them an employee creates retroactive [source deductions](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/remitting-source-deductions.html) and penalties. On the receiving side, a corporation working substantially for one general can be assessed as a [personal services business](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4012.html), which removes the small business deduction. Workers’ compensation adds a parallel test: a clearance letter before releasing payment protects against a sub’s unpaid premiums. ### Equipment, not inventory, dominates the balance sheet Excavators, trailers, scaffolding, tools and vehicles land in different [capital cost allowance](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance.html) classes at different rates, and the purchase year determines when the deduction starts. Leasing rather than financing changes both the deduction pattern and the debt shown on statements, which matters when a surety or a bank reads them. ### Sales tax timing rarely matches cash timing GST/HST is generally remittable by reference to the invoice, not the payment. Holdbacks are the exception: the tax on a holdback becomes payable on the earlier of the day it is paid and the day the holdback period expires. Combined with lumpy project cash, this is why construction businesses so often fall behind on remittances despite being profitable. ## The guides, tools and pages for this vertical These are grouped by the part of the job they belong to: the mechanics that are specific to construction, the services a contractor buys, and the cities the work happens in. ### Construction-specific mechanics - [Construction accounting in BC](https://www.everstonecpa.com/construction-accounting-bc) — the service-page view of holdbacks, progress billing and job costing. Read it when you want to know what an engagement actually covers. - [How holdbacks are accounted for](https://www.everstonecpa.com/blog/construction-holdbacks-accounting-canada) — where the receivable sits, when revenue is recognized, and how release dates drive the cash forecast. Read it before your first large contract. - [T5018 subcontractor reporting](https://www.everstonecpa.com/blog/t5018-subcontractor-reporting-construction) — who has to file, what counts as a construction payment, and the deadline. Read it the first year you pay another crew. - [WorkSafeBC registration and clearances](https://www.everstonecpa.com/blog/workers-compensation-registration-bc) — when registration is required and why a clearance letter is checked before a sub is paid. Read it before hiring anyone on site. ### Who you pay, and how - [Subcontractor or employee](https://www.everstonecpa.com/blog/subcontractor-vs-employee-cra) — the classification test applied from the hiring side, with crew-based examples. Read it before your first hire. - [How CRA classifies a worker](https://www.everstonecpa.com/blog/employee-vs-contractor-cra-worker-classification) — the same factors seen from the worker’s side of the relationship. Read it if you are the one being engaged. - [Personal services business risk](https://www.everstonecpa.com/blog/personal-services-business-psb-risk-canada) — what happens if CRA decides your corporation is really an employee. Read it if one general contractor provides most of your revenue. - [Employee or contractor, for the hiring business](https://www.everstonecpa.com/employee-vs-contractor-hiring-canada) — the commitments each model creates. Read it while you are still deciding. - [Payroll services](https://www.everstonecpa.com/payroll-services-canada) — what running payroll properly involves once someone belongs on it. Read it the month before the first pay run. ### Equipment and vehicles - [Equipment and CCA classes](https://www.everstonecpa.com/blog/equipment-cca-classes-bc), which class machinery, trailers and tools land in and how fast each is written off. Read it before a major purchase, while timing is still a choice. - [Capital cost allowance, in general](https://www.everstonecpa.com/blog/capital-cost-allowance-cca-classes-canada) — the underlying depreciation rules, including what happens when an asset is sold. The companion to the guide above. - [Vehicle and mileage deductions](https://www.everstonecpa.com/blog/vehicle-mileage-deductions-canada-business) — the log that supports the claim. The most commonly reduced deduction on a trades return. - [Company vehicle benefit calculator](https://www.everstonecpa.com/vehicle-benefit-calculator) — estimates the taxable benefit when the corporation owns the truck you also drive personally. Run it before transferring a vehicle in. - [Equipment-heavy businesses in Mission](https://www.everstonecpa.com/equipment-accountant-mission), a local page for operations where machinery is the largest asset on the books. ### City and regional pages - [Accounting for contractors](https://www.everstonecpa.com/contractor-accountant) — the core service page for incorporated trades and contracting corporations. - [Contractor accountant, Surrey](https://www.everstonecpa.com/contractor-accountant-surrey) — the same work framed for Surrey trades. - [Contractor accountant, Langley](https://www.everstonecpa.com/contractor-accountant-langley) — for Langley-based trades and small builders. - [Contractor accountant, Chilliwack](https://www.everstonecpa.com/contractor-accountant-chilliwack) — for the eastern Fraser Valley. - [Contractor accountant, Edmonton](https://www.everstonecpa.com/contractor-accountant-edmonton) — for Alberta trades, where provincial rules and rates differ. - [Contractor accountant, Winnipeg](https://www.everstonecpa.com/contractor-accountant-winnipeg) — for Manitoba trades. ### Wider reading - [Contractor accounting topic hub](https://www.everstonecpa.com/contractor-accounting-hub) — the companion hub organized by tax topic rather than by industry — classification, subcontractors, equipment and owner pay in one place. - [Bring the books current](https://www.everstonecpa.com/behind-on-bookkeeping) — for when several seasons of receipts are in a box and the filings are behind. - [Corporate tax hub](https://www.everstonecpa.com/corporate-tax-hub) — the T2, its deadlines and instalments. - [Everything on GST and HST](https://www.everstonecpa.com/gst-hst-hub) — the sales tax on every progress claim you issue. ## Who this fits This hub is written for incorporated general contractors, subtrades, small builders and specialty trades — framing, electrical, mechanical, roofing, excavation, landscaping — that bill by project or progress claim rather than by product, whether you run a crew of two or a roster of subs. If you invoice for services without holdbacks, job costing or site labour, the [contractor topic hub](https://www.everstonecpa.com/contractor-accounting-hub) is the closer fit. ## How this runs remotely EverStone CPA is a fully virtual, one-CPA firm. That suits construction: job records, progress claims, supplier invoices and holdback schedules already live in software, a project tool or a phone camera. Meetings are by video, documents move electronically, and filings go straight to CRA. A contractor in Chilliwack and one in Winnipeg get the same process, and a mid-job year-end question is answered the week it arises. About this page **EverStone CPA** Prepared and reviewed by a Chartered Professional Accountant at EverStone CPA, a CPA firm working fully online with small and midsized businesses in BC, Alberta, Ontario and Manitoba. [About the firm](https://www.everstonecpa.com/about) · [Send an enquiry](https://www.everstonecpa.com/book-online) Ways we help contractors ## Four ways to work with us Contractors usually need one of these. Pick the closest and the quote form opens with it selected. ### Annual year-end Your books are kept, by you or a bookkeeper. You need the year-end, the T2 and the T5018 slips filed properly. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=corporate-tax#enquiry-form) ### Monthly accounting Books, GST and payroll handled every month, with job income and costs kept where you can see them. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=monthly-tax#enquiry-form) ### Catch-up records A year or more behind, receipts missing or GST unfiled. Brought current oldest year first, quoted before we start. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=catch-up#enquiry-form) ### Reporting and oversight Job margins, holdbacks and a cash forecast for contractors growing past what the bank balance can tell them. [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=cfo#enquiry-form) Common questions ## Construction and trades accounting — common questions **Why do my books show a profit when I have no cash?** Usually holdbacks and work in progress. Revenue on a progress claim is generally recognized when the work is done, but the holdback is withheld until the lien period expires, and unbilled work in progress is recorded before any invoice exists. Both add income without adding cash. [Ask about your case →](https://www.everstonecpa.com/quick-question) **Do I have to file T5018 slips for my subcontractors?** If construction is your primary business activity and you pay subcontractors for construction services, an information return is generally required for those payments. It is separate from payroll and separate from your T2. Missing it is one of the most common first-year oversights for a trade that has just started using other crews. **How should a contract that crosses my year end be reported?** The profit has to be allocated between the two fiscal periods rather than falling entirely into the year the final invoice is issued. That means recording costs incurred and work completed but unbilled at the year-end date, and deferring anything billed ahead of the work. Doing this consistently is also what makes year-over-year statements comparable. **Do I still owe GST/HST on the holdback I have not been paid?** Not yet. The GST/HST on a holdback becomes payable on the earlier of the day the holdback is paid and the day the holdback period expires, even if your invoice already showed the tax. The rest of a progress claim follows the invoice, which is why construction remittances often run ahead of cash. **Can my corporation be treated as a personal services business if I work for one general?** It is possible, and it is the largest tax risk an incorporated trade carries. The analysis looks at control over how the work is done, who supplies the tools and equipment, whether you can subcontract, and whether you carry financial risk. A trade supplying its own crew, tools and insurance is in a very different position from one that simply shows up when told. **Should the company buy equipment before or after year end?** Capital cost allowance generally begins in the year an asset becomes available for use, so the purchase date determines which year the deduction starts in. Whether accelerating it helps depends on the corporation’s income in each year and its cash position — worth modelling before signing. For the trade-and-location detail — sales tax on materials, subcontractor slips, workplace coverage and holdbacks. See the pages for [trades accountant in Abbotsford](https://www.everstonecpa.com/trades-accountant-abbotsford), [Mission](https://www.everstonecpa.com/trades-accountant-mission), [Aldergrove](https://www.everstonecpa.com/trades-accountant-aldergrove), [Vancouver](https://www.everstonecpa.com/trades-accountant-vancouver). ## A CPA who reads a job cost report Holdbacks sitting on the balance sheet, a T5018 that has never been filed, or a year end landing mid-project — describe how the work is structured and you will get a straight answer. [Get My Fixed Quote](https://www.everstonecpa.com/book-online)[Ask a Free Question](https://www.everstonecpa.com/quick-question) ★★★★★ “…He is very knowledgeable and has saved me tons in taxes by restructuring my group of companies — the best accountant I've worked with in the last 10 years, after switching from three different firms.” Matt Hildebrandt · Google review ## Local pages for this sector The same specialism, written for a specific city. [Accounting for realtors, PRECs and brokers](https://www.everstonecpa.com/real-estate-professionals-accounting) [Accounting for agencies and consultancies](https://www.everstonecpa.com/agency-consulting-accounting) [Accounting for restaurants and hospitality](https://www.everstonecpa.com/restaurant-hospitality-accounting) [Chart of accounts that survives growth and makes the T2 easier](https://www.everstonecpa.com/blog/chart-of-accounts-small-business-canada) [Accounting for farms and agricultural operations](https://www.everstonecpa.com/agriculture-accounting-canada) [Fractional CFO support for Surrey construction and logistics companies](https://www.everstonecpa.com/cfo-services-surrey) [Manufacturing accounting in Maple Ridge](https://www.everstonecpa.com/manufacturer-accountant-maple-ridge) [T5018: Contract Payments in Construction](https://www.everstonecpa.com/forms/t5018) [Your Year-End Sets Your T2 Deadline: All 12 Months](https://www.everstonecpa.com/year-end-filing-months) ### Starting fees Every fee is fixed in writing before any work begins. - **Monthly bookkeeping, sales tax filing included** from $325 a month - **Payroll, remittances, T4s and ROEs** included in monthly bookkeeping - **Books, payroll and the year-end T2 together** $500–$700 a month - **Corporate year-end and T2 return** fixed fee, quoted in writing - **Personal tax return (T1)** from $125; self-employed or rental $275–$500 - **Catch-up bookkeeping** from $2,200 per year of records - **Controller or CFO support** controller from $1,650, CFO from $2,750 a month - **One-off advice call with a CPA** $225 plus GST [Get My Fixed Quote](https://www.everstonecpa.com/book-online) --- Source: https://www.everstonecpa.com/construction-trades-accounting Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online