The slips arrive whether you reconcile them or not
Any general contractor whose main business is construction must report its payments to you on T5018 slips, and CRA runs a matching program against those totals. The slips carry two quirks that make honest shops look short. The amounts usually include the 13% HST while your revenue sits in the books net of it, and slips follow the payer's own reporting period, so a December invoice paid in January can land in a different year than your ledger shows. We reconcile every slip to its invoices before the T2 goes out, so a matching letter meets a one-page answer instead of a scramble.
The obligation can also point the other way. Filing T5018s on your own field subcontractors is required only when construction activities produce more than half of your business income, a line most fab shops never cross because fabrication is manufacturing, not construction. A shop whose erection and site-install side keeps growing can cross it without noticing, so we test the split every year and set up the slip filing the year it flips.
13% follows the billing event, not the invoice template
Fabrication contracts bill in stages, and the Excise Tax Act attaches HST to each stage on its own clock. Getting the timing right keeps tax off money you cannot touch yet, and it holds your input credits to the same standard on the sub-trades you hold back in turn.
| Billing event | When the 13% becomes collectible |
|---|---|
| Counter repair, paid at pickup | Invoice or payment, whichever comes first, usually the same afternoon |
| Deposit on a fabrication contract | Not on receipt; a deposit is not consideration until it is applied against the price or forfeited |
| Progress billing on a staged job | The earlier of the day the billing is issued and the day the contract makes it due |
| Statutory holdback on site work | The earlier of the day the holdback is paid out and the day the holdback period expires |
An invoice can still show the holdback, and it should; the tax on that slice simply attaches later, so the books have to park it where the next HST return will find it. The rule cuts both ways too: HST on holdbacks you retain from your own subs becomes creditable on the same delayed clock, and claiming those credits off the sub's invoice date overstates a return that CRA can reprice later.
Shop fabrication can be manufacturing on the T2
Once profit runs past the $500,000 small business limit, Ontario taxes manufacturing and processing profits at 10% instead of the general 11.5%, and fabricating goods in the shop for sale generally qualifies. Construction is excluded from the definition, so erection and site-install revenue does not count toward the claim. The shop-versus-field revenue split the books already keep for T5018 purposes is the same evidence this rate stands on, one more reason the two lines never blend.
Below the limit the manufacturing rate changes nothing, which is why nobody mentions it until the year a big contract pushes profit through, and by then the claim is only as good as the year's records. We build the split all year so the T2 can take the rate without a reconstruction project.
The rig that never incorporated
Plenty of mobile rigs run unincorporated, and their tax file is a T1 with a T2125 statement of business income: call-out revenue against fuel, gas, consumables, insurance and the truck's capital cost. The threshold that arrives faster than owners expect is HST registration, because taxable sales past $30,000 over four rolling quarters end the small-supplier exemption, and at fabrication call-out rates that can happen within months. We register the account before CRA finds the gap, and our Personal Tax Filing work prices the incorporation question the year the rig starts clearing real profit, rather than burying it.
For a one-person rig that mostly needs answers between filings, CPA Quick Support at $99 a month covers the questions and reviews CRA letters before they turn into assessments.
Filed from one file
Our Corporate Tax Filing builds the T2 and the HST returns from the same job-costed books, with field revenue, holdback timing and slip reconciliations already in place, and CRA Audit & Review Support answers the matching and verification letters when they come. We file for welding and fabrication shops across Mississauga and the GTA, with fees quoted in writing after a free 15-minute discovery call.
Source: CRA — GST/HST for businesses.
