Reconcile construction contract payments for a Canadian T5018 review

Have the preparer confirm that the business falls within the Canadian construction-payment reporting rules. CRA's guidance identifies payers whose primary business income is more than 50% from construction activities and qualifying payments to Canadian-resident subcontractors. Document the business activity and recipient facts before treating the entire supplier list as a T5018 population.

Identify whether the payer uses a calendar year or fiscal period for this reporting. CRA states that the return is due six months after the chosen reporting period ends. Save the prior filing and confirm the period before extracting payments; a payroll calendar-year report may omit or repeat months when the construction return uses a different period.

Begin with payment records, then inspect subcontractor accounts for credits, offsets, cash transactions and barter. CRA includes amounts paid or credited through several forms of settlement. A bank-only query can therefore miss value that cleared a subcontractor balance without a conventional transfer.

Keep goods-only purchases distinguishable from construction-service arrangements. For mixed invoices, provide the contract and line detail to the reviewer. Tag employment payments and nonresident cases for their appropriate reporting review. Removing an item from this schedule should leave a reason and destination, rather than make it vanish from the year-end information-return process.

CRA's administrative threshold tests payments exceeding $500 per subcontractor without GST/HST. The reported box 22 amount, however, includes GST/HST and provincial sales tax where applicable. Maintain separate columns for the threshold basis and the reportable total. Reusing one net-fee column for both purposes can understate the slip after a recipient passes the test.

For example, assume the reviewed construction-service payments are $800 plus $104 HST, with no other adjustments. The $800 amount exceeds the threshold, while the illustrative box 22 total is $904. This example isolates the tax distinction; residency, payment type and the payer's reporting obligation still need to be established.

Match trading names to the subcontractor's legal record and check duplicate supplier accounts. Retain the contract party and payment references supporting any consolidation. Where a cheque names a subcontractor and its subtrade, give the reviewer the contractual chain and settlement details before allocating the same cash to two recipients.

For each unusual settlement, explain who the payer dealt with directly and whose balance was discharged. Add a reviewed Canadian-dollar conversion for foreign-currency amounts. Keep the original currency, rate basis and payment date in the working papers so the final reported total can be checked without reverse-engineering a converted bank description.

Compare the approved recipient totals with the underlying payment and credit population, then explain exclusions and timing differences. Investigate payments near the period boundary and suppliers with missing identity information. Retain the final slips, summary and reconciliation together. The following year's extract should begin from the agreed period boundary, with unresolved corrections clearly identified instead of absorbed into a new supplier total.