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Contractor or Subcontractor


Are You a Contractor or Subcontractor? 

Here is what to do for taxation…

Who must report? 
Reporting is required by all businesses, whether carried on by an individual, partnership or corporation, whose principal activity is construction. For this purpose, construction is defined as erecting, installing, altering, modifying, repairing, improving, demolishing, dismantling or removing any structure or part thereof.

What payments must be reported? 
Payments to subcontractors for construction services must be reported if the amount paid for services is $500 or more. Subcontractors include businesses that are below the $30,000 limit for goods and services tax (HST/GST) purposes. Payments for goods are not to be included in determining if a payment satisfies this test. The payments can be reported on either a calendar-year or fiscal-year basis.

For example, assume your business's year-end is June 30, 2010. Your reporting return for 2010 can either report all payments from July 1, 2009 to June 30, 2010 or it can report all payments made from January 1, 2010 to December 31, 2010. 

What information must be reported? 
If you are involved in the construction business and pay a subcontractor for services rendered, you must report the name of the subcontractor, the business address, the subcontractor's Business Number (BN) or Social Insurance Number (if no BN is available), and the amount paid for the reporting period. 

The information can be reported on either a Contract Payment Reporting Information return (form T5018) or, alternatively, the information can be reported on a line-by-line basis in a column format with the appropriate summary information.

In general, the due date for filing the required information is six months from the end of the reporting period.

Although there is no requirement to provide any information slips to the subcontractors, it is reasonable to assume that they will want to know what information is being reported to the CCRA.