In Apex City Homes Limited Partnership v. The Queen, 2018 TCC 247, Apex was a partnership, in the business of developing and selling residential condominiums in Calgary. Apex hired a general contractor to handle all the construction. The general contractor hired all the subcontractors.
The CRA assessed Apex for not filing a T5018 reporting its payments to the general contractor. Apex appealed to the Tax Court of Canada.
The Court ruled that Apex derived its income from “construction activities” and was required to file the T5018. It was thus subject to a $2,500 penalty for not filing the form, for each of the three years for which it was assessed.
Businesses engaged in construction, even those that leave all the actual construction work to a contractor, need to be aware of this obligation!