Tax Guide for Construction Trades (Canada 2025)

Trade-specific deductible expenses

• Heavy equipment — Class 8 (20% DB) for compressors, generators, scaffolding
• Small tools < $500 — Class 12 (100%, no half-year rule)
• Work boots, hard hats, hi-vis, harnesses — fully deductible safety gear
• Subcontractor labour — deductible; T4A required if > $500 to an individual, T5018 mandatory if construction is your primary business (6-month filing window)
• Materials — fully deductible as COGS in year purchased (or carried as inventory if material at year-end)
• Apprenticeship Job Creation Tax Credit — 10% of wages paid to first-2-year Red Seal apprentices, max $2,000/apprentice/year (ITA s. 127(9))
• Trade school + ticket renewal fees — deductible
• Dump & landfill fees, permits, site security — all deductible per job

Vehicle expenses

Work trucks with permanent racks or bed-mounted boxes typically qualify as Class 10 (30% DB). If GVWR exceeds 3,629 kg or seating is limited to 1–3, the $30k cost cap doesn't apply. Logbook required. Travel between home and a regular job site is personal; travel between job sites is business. Site-to-site stops should be logged with addresses.

GST/HST

Construction services are taxable supplies. Register once your trailing 4 quarters cross $30,000. New housing rebate (GST/HST New Housing Rebate, ETA s. 254) often applies to builds you complete for owner-occupants — knowing this helps you price quotes correctly and answer client questions, even though the rebate is claimed by the homeowner. Renovation work on residential resale homes is fully taxable with no rebate.

WSIB / WCB coverage

Mandatory in every province for construction.

• Ontario: WSIB mandatory for construction since 1 Jan 2013, including independent operators with no employees
• British Columbia: WorkSafeBC registration mandatory; personal optional protection (POP) for owners
• Québec: CNESST coverage mandatory; sole proprietors can buy personal protection
• Alberta, Saskatchewan, Manitoba: WCB mandatory for construction trades with employees; optional personal coverage for owners

CRA audit focus for this trade

Worked example

Gross revenue                         $120,000
Materials (COGS)                      ($35,000)
Subcontractor labour (T5018 issued)   ($20,000)
Work truck (60% business of $7,500)   ($4,500)
Tools, PPE, permits, WSIB             ($6,500)
Phone, software, accounting           ($2,800)
Home office (15% of $14k)             ($2,100)
                                      ────────
Net self-employment income            ≈ $49,100

CPP (12.0% on $45,400 above $3,500)   ≈ $5,450
Federal tax (after BPA)               ≈ $5,800
Ontario tax + OHP                     ≈ $2,700
                                      ────────
Take-home                             ≈ $35,150
GST/HST collected on $120k @ 13%      $15,600  (separate remittance)