Construction payroll: T4 crews, T5018 subs, and clean WSIB clearances

The T4 or T5018 call decides everything downstream

If construction is more than half of your revenue, CRA expects a T5018 for every subcontractor paid $500 or more for construction services in your reporting period — amounts reported including GST/HST, due six months after the period ends. Employees get T4s with source deductions. The slip itself is simple; the boundary is where contractors get hurt. CRA matches T5018s against what subs report, and a review that finds a "sub" with no other customers, no tools of his own, and your site schedule turns into a payroll audit.

Reclassification means both shares of CPP and EI assessed retroactively with penalties, plus vacation pay claims under the ESA. The pattern to watch is the labour-only sub: someone who shows up where your foreman says, uses your equipment, and carries no chance of profit or risk of loss. That person is a crew member with an invoice book, and we move them onto T4 payroll before CRA does it for you.

WSIB: mandatory coverage, and a clearance before anyone starts

Since 2013, WSIB coverage in construction has been mandatory for independent operators, sole proprietors, partners and most executive officers — the old "I'm exempt, I'm the owner" answer is gone outside a narrow home-renovation exemption. Every legitimate sub on your site should therefore have a WSIB account, and you should hold proof.

That proof is the clearance. Pull one through WSIB's online clearance service before a sub starts and again before final payment: a valid clearance protects you, and without one the sub's unpaid premiums become your debt. We build the clearance check into the payables run itself, so it never depends on a site super remembering during a pour.

Who is on site, and what each one gets

A mid-size GC's Friday run usually covers all five of these:

Union remittances and vacation pay on hourly wages

Union payroll adds a second remittance calendar. Dues come off each cheque, and employer contributions accrue per hour worked to the health and welfare, pension and training funds, all reported and paid monthly to the trustees. Late fund remittances draw grievances quickly, and unpaid wages and vacation pay can reach directors personally — so we treat the fund deadline with the same weight as CRA's.

Vacation pay on hourly crews accrues at 4%, or 6% after five years. Paying it on every cheque is allowed if the employee agrees in writing and it shows as a separate line on the stub — the norm in this industry, and fine, as long as the rate is right. Construction has its own ESA quirks worth knowing: crews receiving at least 7.7% for vacation and holiday pay sit outside the public-holiday rules, and construction employees are also outside the ESA's termination-notice regime. ROEs come fast in this trade — weather layoffs, phase gaps, job-to-job moves — and each one has to be filed promptly so the crew's EI is not held up.

Payroll that feeds job costing, not just CRA

A wage rate is not a labour cost. The burdened rate — wage plus employer CPP and EI, WSIB premiums at construction rate classes, vacation accrual, and EHT once Ontario payroll clears the $1 million exemption — is what each crew hour actually costs a job, and it is the number your estimates should carry. We push payroll into the same job-cost structure as our construction bookkeeping, so labour overruns show up by project while there is still time to act. As payroll grows, CRA moves you from regular to accelerated remitting; we watch the thresholds so the schedule change never becomes a penalty. And when a job takes you across the border, US state registration and certified payroll are a different world — that is where our cross-border work for contractors picks up.

Source: CRA — T5018, Statement of Contract Payments.