Accounting & Tax Services for Construction & Subtrades in Canada

Construction accounting is a specialty

Construction businesses operate under accounting rules that don't apply to most other industries: holdback accounting (typically 10% of each progress billing held back until project completion), progress billings tied to certified stages of work, lien rights under provincial Construction Act / Builders Lien Act frameworks, mandatory T5018 information returns for subcontractor payments, provincial workers' compensation coverage on every employee and subcontractor on site, provincial PST or RST treatment on materials that varies by province, and complex GST/HST rules for residential vs commercial construction. A general accountant unfamiliar with construction often misses or mishandles these issues.

Who we serve

• General contractors (residential, commercial, industrial)
• Framers, drywallers, painters, flooring contractors
• Electricians, plumbers, HVAC contractors
• Concrete, foundation, and excavation contractors
• Roofing, siding, and exterior trade contractors
• Mechanical and process pipe contractors
• Insulation contractors
• Custom home builders and renovators
• Civil construction and road builders
• Heavy equipment operators and operators-with-equipment

T5018 — the construction-specific information return

Canadian contractors in the construction industry are required to file the T5018 Statement of Contract Payments annually, reporting all payments made to subcontractors above the reporting threshold. The reporting period can be either calendar year or the contractor's fiscal year. T5018s are due six months after the end of the reporting period. CRA cross-checks T5018 data against subcontractors' reported income, making T5018 compliance one of CRA's key tools to catch unreported subcontractor income. Failure to file T5018s exposes the GC to penalties and also exposes subcontractors to audits.

Holdback accounting

Provincial construction legislation (Ontario Construction Act, BC Builders Lien Act, Alberta Builders' Lien Act, etc.) requires that a portion of each progress billing — typically 10% — be held back by the owner from the contractor and by the contractor from each subcontractor as security for potential lien claims. The holdback is released only after the lien period expires, typically 45–60 days after substantial performance depending on the province. From an accounting perspective, this means revenue is not fully earned at the time of progress billing — the holdback portion is deferred. We set up holdback receivables and payables correctly so that revenue recognition matches the legal framework.

Provincial PST on materials

Construction materials are treated very differently across the four PST/RST/QST provinces:

• British Columbia. Contractors pay 7% BC PST on most materials at point of purchase. Generally, no PST is charged to the customer. Real property contracts have specific rules.
• Saskatchewan. Similar approach — contractor pays SK PST on materials.
• Manitoba. Contractor pays 7% RST on materials.
• Quebec. QST applies on materials with specific rules for residential vs commercial.
• Ontario, Atlantic Canada. HST applies uniformly through the value chain with full ITC recovery.
• Alberta, Yukon, NWT, Nunavut. Only GST applies, with full ITC recovery.

Contractors operating across provinces face particularly complex sales tax compliance.

GST/HST and residential vs commercial construction

New residential construction is generally GST/HST taxable, with the HST New Housing Rebate available for eligible owner-occupied purchases. Commercial construction is fully GST/HST taxable with full ITC recovery. Renovations to residential property follow specific rules: substantial renovations may be treated as new construction, while ordinary repairs are not subject to GST/HST when the property is the contractor's own residence. Real property leases and sales between commercial parties may use the section 167 election to defer GST/HST.

What we deliver for construction businesses

• T2 corporate return with full construction-specific schedules
• T5018 information returns for all subcontractor payments
• Monthly bookkeeping with progress billing, holdback receivable/payable, and job-cost tracking
• GST/HST quarterly returns with proper residential/commercial coding
• Provincial PST/RST/QST registration and remittance where applicable
• WCB Alberta, WorkSafeBC, WSIB Ontario, CNESST Quebec, etc. — registration and remittance
• Payroll with construction-specific union remittances where applicable
• CCA on heavy equipment and vehicles
• Owner-manager salary vs dividend optimization
• Lender package preparation for construction financing

What Canadian businesses commonly miss about this service

Across the hundreds of Canadian businesses we work with, the same handful of issues come up repeatedly. Many small business owners delay engaging professional accounting until a crisis: a CRA review letter, an unfiled GST/HST return demand, a denied bank loan because financial statements aren't ready, or a Notice of Reassessment that arrived weeks ago. By the time we are first contacted, the cost to fix the problem is often several times what proper ongoing accounting would have cost from the start. Proactive engagement is dramatically cheaper than reactive cleanup.

The Canadian tax landscape also changes constantly. Recent changes that affect most Canadian taxpayers include the 2023 anti-flipping rule (residential real estate sold within 365 days is automatically business income, not capital gain); the Underused Housing Tax (UHT-2900 annual filing requirement for many corporations, partnerships, and trusts holding residential property even when no tax is owing — with $5,000 to $10,000 per-property failure-to-file penalties); the Quebec QST joint registration changes since 2021; the post-2018 Tax on Split Income (TOSI) rules that effectively eliminated casual income splitting through family dividends; the post-2021 $200,000 stock option vesting limit on the 50% deduction for options granted by non-CCPCs; the CSRS 4200 Compilation Engagement standard replacing the older Notice to Reader engagement; and ongoing CRA increased scrutiny on pre-construction assignments, short-term rental businesses, and cash businesses.

How BOMCAS Canada delivers this service

Every engagement begins with a written, fixed-fee engagement letter signed before any work is performed. The engagement letter describes exactly what is in scope, what deliverables you will receive, when those deliverables are due, what your monthly or project fee is, and what (if anything) is outside scope. This eliminates the hourly-billing surprise that most accounting clients fear. The only time we use hourly billing is for genuinely unpredictable items such as CRA audit response or complex one-off projects — and even then we agree to a maximum cap before starting.

Once the engagement letter is signed, you e-sign the CRA authorization (RC59 for businesses or AUT-01 for individuals), and we onboard you to the encrypted client portal with multi-factor authentication. All document exchange flows through the portal — no emailing of sensitive financial documents. Meetings happen by video conference or phone at times that work for you, including outside normal business hours when needed.

Our Canadian tax compliance philosophy

BOMCAS Canada is structured around four operating principles:

1. Tell the truth. If a tax position is aggressive, we say so. If a deduction will not survive a CRA review, we say so. If the engagement is going to cost more than originally quoted because the scope changed, we say so before doing the work.
2. Bill what we said we would bill. No surprise invoices. No scope-creep billing. If something legitimately changes scope, we discuss it and re-quote before doing the additional work.
3. Answer the phone. One-business-day response standard on client communications during normal business hours. No voicemail backlogs.
4. Specialize. Canadian tax and accounting is too complex to be a generalist. We do not do US-only tax, UK tax, or any other foreign jurisdiction in isolation. We are Canadian. Our cross-border work is always anchored by deep Canadian compliance.

What ongoing engagement with BOMCAS Canada looks like

For most clients, the ongoing relationship is structured around predictable monthly deliverables. For an incorporated small business client, that typically includes: monthly cloud bookkeeping with full bank and credit card reconciliation; quarterly or annual GST/HST returns prepared and filed; monthly payroll for owner-managers and any employees, with CRA source deduction remittances; year-end Compilation Engagement (CSRS 4200) financial statements; T2 corporate income tax return; owner-manager T1 personal tax return (and spouse where applicable); annual salary-vs-dividend optimization with written recommendation; unlimited email and phone support during business hours; one quarterly check-in call to review numbers and discuss the business; and CRA correspondence handling for routine review letters.

For a personal tax client, the ongoing engagement includes: annual T1 preparation; any required Quebec TP-1 (for Quebec residents); CRA pre-assessment and post-assessment review response when CRA requests additional documentation; Notice of Assessment reconciliation; and proactive tax planning conversations during the year about RRSP, TFSA, and FHSA contributions, major life events (marriage, kids, retirement, real estate), and any planned business or investment changes.

Frequently asked questions about engaging BOMCAS Canada

Why Canadian businesses choose specialized accounting over generalist accounting

The Canadian tax and accounting landscape has become significantly more complex over the past decade. The 2018 TOSI rules, the 2021 changes to stock option taxation, the 2022 mandatory reporting changes for trusts, the 2023 anti-flipping rule, the Underused Housing Tax, the changes to the small business deduction phase-out for passive investment income, the new CSRS 4200 Compilation Engagement standard, the continued expansion of digital sales tax rules, and the ongoing post-COVID CRA focus on cash businesses and unreported income have all required accountants to specialize more deeply. A generalist firm trying to cover personal tax, corporate tax, US tax, real estate, trusts, cross-border, and every industry vertical inevitably falls behind on the depth of expertise that any one client needs.

BOMCAS Canada is structured deliberately to maintain depth: we are Canadian-only by design; we work in industries where we have genuine specialized experience; we maintain ongoing professional education in Canadian tax law; we use Canadian-experienced staff at every level; and we coordinate with specialized partners (US-licensed cross-border, legal counsel for corporate restructuring, audit-engagement licensed practitioners) where required rather than trying to handle everything in-house.

Talk to a Canadian accountant who knows your industry

Call 780-667-5250 or submit the contact form. We respond within one business day.

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