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Flooring installer taxes: HST on supply-and-install, holdbacks and year-end timing
Flooring tax questions are mostly timing questions. HST is due when a deposit is applied, not when it is received; tax on a builder holdback waits for the holdback; a job finished on December 28 but invoiced in January belongs in the old year. We file returns that follow the job calendar, and we make sure the T5018 slips, the HST account and the corporate return all describe the same business.
By the AnalytIQ Accounting team · Last reviewed: September 12, 2026
At a glance · flooring and tile installers
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HST on supply-and-install: taxable, and mostly a timing exercise
Flooring supply and installation is a taxable supply at 13 percent in Ontario whether the customer is a homeowner, a builder or a retailer that hires you for labour only. There is no new-housing exemption at your level; the builder claims input tax credits on your invoice and deals with the new-housing rebate on its own sale. What trips flooring companies up is not the rate but when the tax falls due:
- Deposits on special-order product are not consideration until they are applied to the invoice or forfeited, so the HST is reported in the period you apply them, not the period the cheque clears.
- Holdbacks retained by a builder carry HST that becomes payable on the earlier of the day the holdback is paid and the day the holdback period expires.
- Progress billings trigger HST when the invoice is issued or the payment falls due under the contract, whichever comes first, even if the builder pays late.
Input tax credits are where a supply-and-install business recovers real money: product, setting materials, the van, saws, showroom rent and sub-crew invoices all carry HST you can claim, provided the invoice shows a valid registration number. We verify sub-crew HST numbers against the CRA registry before claiming, because a credit on an invalid number is denied on audit. Our answer on how input tax credits work covers the documentation thresholds.
Why the quick method usually loses for a material-heavy business
The quick method lets a small business remit a flat percentage of taxable sales instead of tracking ITCs. For a labour-only installer with few purchases it can be a genuine simplification. For a supply-and-install company buying product at a large share of revenue, giving up the ITCs on all that material almost always costs more than the flat rate saves. We run the comparison on your actual numbers before anyone elects, and we revisit it if your mix shifts from retail supply-and-install toward labour-only builder work. The mechanics are on our answer page about the quick method for GST/HST.
| Situation | HST treatment | What we watch |
|---|---|---|
| Supply-and-install for a homeowner | 13 percent on the full invoice, material and labour | Deposit application date; change-order paperwork |
| Labour-only sub to a builder or GC | 13 percent on your invoice; the builder claims the ITC | Holdback HST timing; back-charge credit notes |
| Labour-only for a flooring retailer | 13 percent; the retailer's customer never sees your invoice | Invoice dates against your filing period |
| Showroom cash-and-carry sale | 13 percent at the till | Inventory relief and returns |
| Product imported from a US distributor | 5 percent GST at the border, recoverable as an ITC | Broker statements captured every month |
Income timing: holdbacks, unfinished jobs and the inventory count
Your fiscal year-end lands in the middle of jobs, and the return has to decide which side each dollar falls on. Completed jobs invoiced after year-end still belong to the year the work was done. Builder holdbacks that are not yet legally receivable can generally be left out of income until the holdback period runs, which is a genuine deferral for a company with a lot of builder work, and we apply it consistently rather than year by year. Product sitting in the showroom or the warehouse is inventory and has to be counted and valued at year-end; special-order product already on site for a job in progress is work in progress, not stock.
Deposits held on jobs not yet started are liabilities, not income. A flooring company that reports on a pure cash basis overstates income in busy Decembers and understates it in slow Januarys, and CRA expects accrual accounting from an incorporated business in any case.
The deductions that carry weight in flooring
The van is usually the largest single deduction and the most scrutinized: a cargo van used for hauling product and tools is generally a motor vehicle rather than a passenger vehicle, so the full cost goes into Class 10 without the passenger-vehicle cap. A crew-cab pickup that also does personal driving is a different conversation, and a mileage log settles it. Small tools costing less than $500, such as trowels, spacers, knee pads and hand tools, are written off in full through Class 12; wet saws, floor nailers, self-levelling pumps and moisture meters above that line are Class 8 assets depreciated over time.
Showroom rent, sample boards, displays and room-visualizer subscriptions are ordinary expenses. Meals on site are limited to 50 percent. Warranty work you do for free on a past job is simply cost in the year you do it; there is no deductible warranty reserve for tax purposes.
T5018s, T4s and the T2: one story, three filings
CRA compares the T5018 slips you file against the income your sub crews report, and it compares your total contract payments against the labour costs on your T2. When those numbers disagree the questions come to you. We prepare T5018s from the tagged ledger, reconcile the total to the direct labour line on the financial statements, and file within six months of the end of the reporting period you have chosen. Your corporate return is due six months after year-end, with any balance owing due two months after year-end, or three months where the small business deduction applies and the other conditions are met, and instalments start once tax passes $3,000.
Whether you should be filing a T2 at all is covered on our flooring incorporation page; the full annual filing rhythm is described on our tax services page.
Source: CRA — RC4052 GST/HST Information for the Home Construction Industry.
What we take off your plate
Tax services for flooring and tile installers, handled.
- HST timing that follows deposits, holdbacks and job completion
- T5018s, T4s and the T2 reconciled to the same job list
- T2 and owner T1s filed together, deadlines tracked
- GST/HST returns and instalments handled
- CRA letters and reviews answered for you
- Salary-versus-dividend plan reviewed every year
Mistakes we fix
Three things that go wrong for flooring and tile installers.
- Invoicing material and labour as one lump sum, so the markup and the install margin both disappear
- Booking a builder’s 10% holdback as an ordinary receivable instead of its own line
- Paying sub-crews all year without collecting what a T5018 slip requires at year-end
Recognise one? Book a call and we will tell you what it is costing you.
Services for flooring and tile installers
Six services, one team that knows how flooring and tile installers run.
Start with one. Add the rest when it makes sense; the books, payroll and tax already talk to each other.
Free proposal
A fixed fee for your tax work, in writing.
- Tell us about your business. The form takes about a minute.
- A short discovery call. Fifteen minutes to confirm what you need.
- A fixed fee in writing. We reply within one business day. No hourly surprises.
- Canadian and US filings under one roof
- Cloud-first: QuickBooks Online, Dext, Wagepoint
- Brampton, Ontario, with clients across Canada and the US
Related answers
Browse all 200 answers.
Common questions.
Do I charge HST on flooring for a new house?
Yes. Your supply to the builder is taxable at 13 percent; the builder recovers it as an input tax credit and handles any new-housing rebate on its own sale to the buyer.
When is HST due on a customer deposit?
When the deposit is applied to the invoice or forfeited, not when you receive it. Report it in the period the job is invoiced.
Is my cargo van subject to the passenger-vehicle CCA limit?
Usually not. A van with seating for the driver and no more than two passengers, used mainly to carry product and tools, is a motor vehicle in Class 10, so the full cost is depreciable. A crew cab that does personal driving is judged on your mileage log.
Related reading
Tax filings that follow the job calendar.
Book a consultation and get a plain answer on exactly what applies to you.