Painting is the classification file the CRA knows by heart
The economics of a painting crew invite the problem. Tools are cheap, so a painter who shows up with brushes and whites can be called a subcontractor without anyone noticing that the sprayer, the ladders, the drop sheets and the schedule all belong to you. Pay per square foot feels like a contract price; it usually is not. The CRA tests the relationship on control, ownership of tools, chance of profit and risk of loss, and whose business the customer believes it hired. A painter on your sites, on your rate card, fixing holidays, the missed spots, on your time, fails those tests as an employee no matter what the invoice says.
The cost of getting it wrong arrives all at once: CPP and EI assessed retroactively with the employer share on top, EI at 1.4 times the employee premium, plus penalties and interest, and the same painters landing on your WSIB premium base. So before we file anything we walk the crew list. Genuine subs get papered like subs: their own equipment, their own HST number where registration is required, a fixed price they quoted, defects fixed at their cost. Everyone else goes on payroll, where piece-rate pay is simply a wage method with vacation pay accruing on top.
| Looks like an employee | Looks like a genuine sub |
|---|---|
| You set the sites, the hours and the sequence | They quote a scope and schedule it themselves |
| Your sprayer, ladders, planks and drop sheets | Their own rig and gear on a truck they own |
| Paid by the hour or per square foot on your rates | Paid a fixed price they bid; profit or loss is theirs |
| Deficiencies corrected on your clock | Callbacks fixed at their own cost |
| Paints for you all season, every season | Carries other companies, builders and homeowners |
Deposits are not HST events. The invoice is.
Painting runs on booked-ahead work, and a March deposit on a June exterior sits in a spot most owners misread: for GST/HST purposes a deposit is not consideration until you apply it against the invoice or the customer forfeits it. No HST is collectible the day the deposit lands. The 13% becomes payable when the job bills and the deposit is applied, which is also when the revenue belongs in the income. A company remitting HST on every deposit the month it arrives is financing the CRA out of its own spring cash for no reason.
The registration side moves fast in this trade. A solo painter passes the $30,000 small-supplier threshold within a season of steady work, and registering earlier can still make sense once there is a sprayer and a van to buy, because the input tax credits come back at 13% too. From there we set a filing frequency that fits the season, so a summer of heavy collections is tracked as it happens rather than discovered by an annual return.
T5018s travel in both directions
Paint new-build interiors for a builder and the builder reports every dollar it paid you on a T5018, usually gross of HST, which is why the CRA's number for your revenue is often 13% bigger than yours. We tie the slips to your invoice register before the T2 goes out, so the difference is documented instead of discovered by a matching letter.
Sub work out, a wallpaper hanger, a spray specialist for a warehouse ceiling, an extra crew for a condo corridor push, and the duty flips: construction is your primary activity, so anyone you paid $500 or more belongs on your own T5018 return, due six months after the reporting period you choose. We collect every sub's business number before the first payment, because chasing numbers in filing week is how returns go out late.
Two returns that tell one story
An incorporated painting company files a T2 with the first $500,000 of active income taxed at roughly 12.2% combined in Ontario, T4s for the crew by the last day of February, and HST returns on the cycle we set. We prepare the owner's personal return in the same engagement, so salary, dividends and instalments line up across both filings instead of contradicting each other. How much to take and in what mix is a decision for the year, not the deadline; that sits with Tax Planning & Advisory.
Our Corporate Tax Filing engagements are quoted in writing after a free 15-minute call, and we act for painting companies across Mississauga and the GTA. When a CRA letter does arrive, a classification questionnaire, a T5018 matching query, an HST desk review, CRA Audit & Review Support answers it from the same working papers the return was filed from, which is why most letters end at the first reply.
