“If you contract to another business, how do you deal with that on your taxes?” Matt, self-employed landscaper

If you subcontract to another business, and you bill the client for the work the subcontractor does, this is still part of your gross income.

Make sure that subcontractor invoices you so you have the paperwork you need to claim their fees as an expense. If you are working in the trades, discuss who will pay the subcontractor’s WorksafeBC coverage. If they do not have a clearance letter showing that their account is up to date, you must pay for their WorksafeBC coverage.

If more than 50% of your business’s revenue is earned through construction services, you are obliged to file a T5018 form for any subcontractor you paid more than $500. Like T4s and T4A slips, If you are filing T5018s, you have to provide the subcontractor with a copy of the slip before February 28.

Here’s the CRA’s explanation of T5018s with links to  fillable T5018 forms. 

If you need help preparing T5018s or have any other questions regarding subcontractors, get in touch.

Photo by Rodolfo Quirós: https://www.pexels.com/photo/selective-focus-photography-cement-2219024/