Tax Tips for Construction Contractors: From Tools to Truck Expenses — CPA Firm Near You, Montreal

Construction contractors in Quebec — whether general contractors, renovators, plumbers, electricians, roofers, or handymen — handle large expenses, multiple job sites, and complex billing structures. Because deductions in this industry are often high and documentation is inconsistent, CRA and Revenu Québec regularly audit construction businesses. This guide explains the key tax deductions available to contractors, how to track tools and vehicles properly, and how a CPA firm near you in Montreal can ensure full compliance while minimizing your tax bill.

Legal and Regulatory Framework

Under the Income Tax Act and the Taxation Act of Quebec, contractors must report all business income from labour, materials, subcontracting, consulting, and project management. GST and QST registration is required once revenue exceeds the small-supplier threshold, although most contractors exceed it immediately due to project size. Deductible expenses include tools, equipment, materials, subcontractor payments, vehicle expenses, safety gear, cellphones, home office space, advertising, insurance, and accounting fees. CRA and Revenu Québec require detailed invoices, contracts, mileage logs, and receipts for all business-related purchases.

Key Court Decisions

Courts have denied vehicle deductions when contractors failed to keep mileage logs or mixed personal and business travel without documentation. Judges have also rejected tool and equipment write-offs when there were no receipts or when items were used partly for personal purposes. In cases where subcontractor payments lacked invoices or proof of payment, courts upheld CRA’s denial of the expense. Several rulings confirm that labour-only contracts still require proper invoicing and GST/QST compliance.

Why CRA and Revenu Québec Target Construction Contractors

This industry is one of the most closely monitored due to:
• Cash-based transactions
• Missing receipts
• Undocumented subcontractor payments
• Large vehicle deductions
• Tool write-offs with no proof
• GST/QST charged incorrectly or not remitted
• Mixing personal renovation costs with business expenses

Auditors compare supplier invoices, credit card statements, RBQ registration, bank deposits, and contractor project logs to identify discrepancies.

Mackisen Strategy

At Mackisen CPA Montreal, we help construction contractors build complete bookkeeping and tax-compliance systems tailored to their workflow. We set up proper GST/QST invoicing, organize receipts, categorize tools and equipment, and track mileage correctly. We implement job-costing systems that separate labour, materials, and subcontractors to ensure accurate profit calculations. Our team prepares year-end filings, manages capital cost allowance schedules, and ensures compliance with both CRA and Revenu Québec. When audited, we defend your deductions, rebuild missing records, and negotiate reductions in reassessments.

Real Client Experience

A Montreal contractor deducted over $25,000 of vehicle expenses without mileage logs. CRA denied most of the claim. We reconstructed mileage using job-site calendars, supplier delivery logs, and phone GPS records, recovering a significant portion. Another contractor purchased tools using personal credit cards and lost receipts. We contacted suppliers, rebuilt proof of purchases, and salvaged most deductions.

Common Questions

Are tools fully deductible?

Small tools may be expensed immediately, while larger equipment must be depreciated over time through capital cost allowance.

Can contractors deduct vehicle expenses?

Yes, but only the business-use portion supported by detailed mileage logs.

Do contractors need to charge GST/QST?

Yes. Construction services are taxable, and contractors must charge and remit GST/QST correctly.

What records should contractors keep?

Invoices, receipts, contracts, mileage logs, subcontractor agreements, and supplier statements.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps construction contractors stay compliant, reduce taxes, and operate with confidence. Whether you’re a small tradesperson or a full general contractor, our expert team ensures precision, transparency, and full audit protection.