Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: A company installs plumbing (including drains) and carries out related repair services. The issue is whether these activities are considered to be "construction" for the purposes of the definition of that term in section 238 of draft Income Tax Regulations.
Position: The activities fall within the definition of construction
Reasons: The definition of construction is very broad - it is defined to include, but is not limited to activities related to the erection, installation, alteration, modification, repair, improvement, demolition, dismantling, or removal of any part of a building, structure, surface or subsurface construction.
XXXXXXXXXX 2000-000575
M. Eisner
April 3, 2000
Dear XXXXXXXXX:
Re: Self-Employed Contract Workers
This is in reply to your letter of February 2, 2000 concerning the new Contract Payment Reporting System (the "Reporting System") for the construction industry.
You have indicated that your company provides full plumbing and drain services. In providing these services, your company engages self-employed contract workers.
Your concern is whether the activities set out above are subject to the Reporting System.
With respect to your situation, information on the Reporting System was faxed to you in the early part of February. The new rules on the Reporting System apply to a business whose primary activity is construction. A return (T5018 Information Return) has to be filed to report amounts paid or credited for construction services and/or a combination of goods and services supplied by subcontractors. Alternatively, the information may be filed on a line-by-line basis in a column format with the appropriate summary information.
The legislation for the Reporting System is found in section 238 of the draft Income Tax Regulations, which includes a definition of "construction". The term is defined to include, but is not limited to activities relating to the erection, installation, alteration, modification, repair, improvement, demolition, dismantling, or removal of any part of a building, structure, surface or subsurface construction.
The definition of construction is very broad and would include the activities set out above in respect of your company. Accordingly, the payments made to the self-employed contract workers need to be reported.
If you need further information, you should contact the Business Enquiries section of your tax services office.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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