One contract, one supply, 13% on every dollar
Splitting a flooring invoice into a material line and a labour line changes nothing on the HST return. Sell the floor and install it under one contract and you have made a single supply of installed flooring, taxable at 13% in Ontario from the first square foot to the last transition strip. The split is fine as customer communication; as a tax position it does nothing, and it invites a worse problem, because discounts, credit notes and applied deposits now have to be reconciled line by line against a return that only ever saw one supply.
What genuinely does differ is the showroom till. A cash-and-carry sale, the customer walking out with boxes of click plank in the trunk, is ordinary retail: tax collected at the counter, reported in the period of the sale. Supply-and-install revenue follows the contract billing instead. Same rate, different clock, and the return needs both streams readable, because the mix between them also decides a slip obligation further down this page.
Deposits and holdbacks run on their own HST clocks
Timing is where flooring HST files actually go wrong. A deposit on a signed contract is not taxable the day it lands in the account; HST becomes payable when the deposit is applied against an invoice, or when the customer walks away and forfeits it. Progress billings trigger tax when invoiced. And the 10% holdback a builder retains under the Construction Act is deferred: tax on the held portion is not due until the holdback is paid or becomes payable.
| Event | When HST lands on the return |
|---|---|
| Deposit received on a signed install contract | Not yet; when it is applied against an invoice |
| Customer cancels and forfeits the deposit | The forfeited amount is treated as tax-included, so 13/113 of it is remitted |
| Progress invoice on a commercial job | The period the invoice is issued |
| 10% Construction Act holdback | Deferred until the holdback is paid or becomes payable |
| Cash-and-carry showroom sale | The period of the sale, at the till |
Cash also moves the other way early. Distributors often want special-order material paid before the truck rolls, so input tax credits arrive ahead of the output tax on the same job. We set the GST/HST filing frequency around that rhythm, and we keep the distributor invoices, with valid registration numbers on them, attached to the periods that claim the credits.
The crew question: T4, T5018, and the trap between
Flooring installers are usually paid by the square foot, and a piece rate feels like subcontracting. The CRA does not test the pay format; it tests control, ownership of tools, chance of profit and risk of loss. A crew that lays only your jobs, on your schedule, with material you supplied, looks like employees no matter what their invoices say, and a reclassification bills the company both shares of CPP and EI for the back years, with penalties on top.
Where the subs are genuine, two filings follow. T5018 slips report payments to construction subcontractors and are due six months after the fiscal year-end, but only when construction is your primary activity, a test an install-led flooring company usually meets and a mostly-retail store may not. The showroom-to-install revenue split therefore decides the obligation, which is a question we answer from your own numbers each year rather than by reflex. And because independent operators in Ontario construction have needed compulsory WSIB coverage since 2013, we keep clearance certificates on file for every crew you pay before anyone asks for them.
The T2, the owners, and the letters
The corporate return rewards preparation more than cleverness. Closing inventory sets cost of goods sold, so a defensible year-end valuation of discontinued lines moves taxable income. The warranty reserve carried in the management accounts gets added back, because the CRA only deducts claim costs once incurred. Filed cleanly and on time, all of it protects the small-business deduction, which is the quiet core of our Corporate Tax Filing work for flooring companies across Mississauga and the GTA.
We fold the owners into the same calendar, preparing personal returns so draws, dividends and instalments tie to the T2 instead of surprising it in April. And when the CRA writes, typically a T5018 matching query or a question about a refund-position HST period after a heavy stock buy, CRA Audit & Review Support answers from the working papers we built at filing time, which is why most of those letters end at the first reply.
Source: CRA — GST/HST for businesses.
