Do Subcontractors Charge GST in BC?

Short answer: Yes, if they're registered for GST. A registered subcontractor adds 5% GST to the whole invoice, labour and materials, even when the work is for another contractor, and the general contractor claims that GST back as an input tax credit. A sub who is a small supplier (under $30,000 in taxable sales) and hasn't registered doesn't charge GST at all.

Why the sub charges GST even though the GC charges the customer

A lot of trades assume only the contractor at the top of the job charges GST. That's not how it works. Every registered business in the chain charges GST on what it bills, and every registered business claims back the GST it paid. The general contractor pays the sub's GST, claims it back on the GC's own GST return, and charges GST on the full price to the homeowner or developer. The tax ends up being paid once, by the customer at the end.

There's no special construction rule that lets a registered sub skip GST because the customer is another contractor.

When a sub doesn't charge GST

A sub who is a small supplier doesn't have to register. CRA's guide is plain about it: if you choose not to register, you do not charge the GST. You stay a small supplier as long as your taxable sales stay at or under $30,000 over four calendar quarters in a row.

You stop being a small supplier in one of two ways:

  • Over $30,000 in a single quarter: you start charging GST on the very job that pushed you over.

  • Over $30,000 across the last four quarters (but not in one quarter): your small supplier status ends at the end of the month after that quarter, and you charge GST from your next job after that.

Either way, you have 29 days from your effective date to register. Small suppliers can also register voluntarily, which lets them claim back the GST they pay on tools, fuel and materials.

What the general contractor should check

  • The GST number is on the invoice. To claim back GST on a bill of $100 or more, CRA expects the supplier's GST registration number on the invoice.

  • The number is real. CRA's free GST/HST Registry lets you check it. You need the first 9 digits of the number, the sub's business name and the invoice date.

  • No number, no GST. If a sub isn't registered, they shouldn't be charging GST. Paying GST on an invoice with no valid number means paying tax you may not be able to claim back. Ask before you pay.

Worked example (an example, not your numbers)

A drywall sub who is registered for GST does a basement for a Kelowna general contractor:

  • Labour $8,000 plus materials $2,000 = $10,000

  • GST 5%: $500

  • Invoice total: $10,500

The GC pays $10,500 and claims the $500 back on the GC's GST return, so the sub's work really costs the GC $10,000. The GC then bills the homeowner $14,000 plus $700 GST. On that job the GC sends CRA the $700 collected minus the $500 already paid to the sub: $200.

Now a second sub, a new finisher who isn't registered, bills $9,000 in January to March, $8,000 in April to June, $7,000 in July to September and $9,500 in October to December. No single quarter is over $30,000, but the four quarters add up to $33,500. Small supplier status ends at the end of the month after the quarter where the total went over, and GST starts on the next job after that, with 29 days to register.

FAQ

Does a subcontractor charge GST on labour only jobs?

Yes, if they're registered. GST applies to labour as well as materials, so a labour-only invoice from a registered sub still carries 5% GST.

My sub doesn't charge GST. Is that a problem?

Not if they're a small supplier who hasn't registered. You just have no GST to claim back on their bills. On its own, not charging GST doesn't make someone an employee either, but it can be one of the red flags in a worker status review. More on that: Employee or subcontractor? What CRA looks at

Can a sub charge GST without a GST number?

No. A business that isn't registered doesn't charge GST. If an invoice shows GST but no number, ask for the number and check it on CRA's GST/HST Registry before you pay the GST.

If I pay my sub GST and charge my customer GST, is the job taxed twice?

No. You claim back the GST you paid the sub as an input tax credit, so on your return you only send CRA the difference.

Is the T5018 $500 limit before or after GST?

Before GST. If construction is your main business, each sub you paid more than $500 before GST in the year needs a T5018 slip. The free T5018 Checker sorts it out: T5018 Checker

I'm on the Quick Method. Does paying subs with GST change anything?

It can. Under the Quick Method you don't claim back the GST on most costs, so a GC who pays a lot of subs with GST often does better on the regular method. More here: GST Quick Method for BC trades

Sources: CRA: when to register for and charge GST/HST; CRA: General Information for GST/HST Registrants (RC4022); CRA: GST/HST Registry. Checked October 26, 2026.

Free tools that help with this

  • GST Check: do you have to register (the $30,000 rule), when are your returns due, and would the Quick Method help you.

  • Contractor Invoice Template: a free GST-ready Excel invoice. Add your logo and save as PDF.

  • T5018 Checker: which subs need a slip and when it's due.

  • Contractor Books Workbook: paste in your bank download and your GST and subcontractor totals fill themselves in.

GST has edge cases (associated businesses, work outside BC, real property sales). If you're not sure how your situation works, talk to your accountant about your specifics, or we can look at it with you.

How Murtagh & Co. Can Help.

We work with trades and construction businesses across the Okanagan on bookkeeping, GST, T5018 slips and tax. We can check that your subs' GST numbers are on file, that you're claiming back the GST you've paid, and that the right method is set up for how you actually work.

Murtagh & Co. was founded by Devon Murtagh, CFA, FRM, a former trades business owner.

Prefer to talk it through? Book a free 30-minute call at a time that works for you, or reach out at info@murtaghco.ca.

More free tools for contractors: see the Contractor Toolkit