If you have earned investment income as a resident in Canada, you will need to report this income to the Canada Revenue Agency (CRA) using the T5 tax slip.
Generally, you will receive a T5 tax slip from the financial institution where you have your investment account.
The T5 tax slip, also known as the statement of investment income, is used to declare all investment income earned above fifty dollars ($50) in a tax year.
The T5 slip shows investment income from sources such as:
- corporate debt,
- interests from bonds or debentures, investment or broker accounts, insurance policies, or compensation money for expropriated property,
- royalties earned, blended payments of income and capital, etc.
As a taxpayer, you need to use the T5 slip(s) to report all investment income you have earned when filing your Income Tax and Benefit Return for the year.
What is the Deadline for Filing my T5 Slip?
The deadline for filing a T5 slip is by the last day of February in the next calendar after the year which the investment return payment applies.
It is important to file the T5 slip and send it to the CRA before the deadline to avoid late filing penalties which may be up to $7,500.
The recipients of a T5 slip should have received the tax slip on or before the deadline for filing the investment income return.
How do I Know if I Need to Prepare a T5 Slip?
According to the Canada Revenue Agency, you need to prepare a T5 slip if you make certain investment returns payments to a resident of Canada.
You are also required to prepare a T5 slip if you act as a nominee or agent for a Canadian resident to receive certain types of investment returns.
You do not have to prepare a T5 slip for a recipient with investment returns below fifty dollars ($50).
Additionally, if the recipient of the investment income is not a resident of Canada, you do not need to prepare a T5 slip.
Other instances that do not require a T5 slip are when the payments involve:
- interest included in a blended payment made by an individual,
- interest that a person pays to another, for example, interest on a private mortgage,
- interest paid on loans from financial lenders, certain capital dividends, etc.
How Do I Submit My T5 Slip?
A T5 slip can be submitted electronically or submitted to the CRA through paper forms.
You are required to file T5 slips electronically if the total slips exceed fifty(50).
Recent income tax regulations have proposed to reduce this threshold from 50 to 5.
Electronic filing can be done using web forms or internet file transfer.
File on Paper:
If you need to prepare less than fifty (50) T5 slips, then you can file on paper.
You will need to send the three T5 slips to the CRA along with a T5 summary using the address provided by the Canada Revenue Agency.
It is recommended to file T5 slips electronically as this can result in the return being processed faster.
Most Important Boxes on a T5
The T5 slip has twenty boxes that require specific investment income amounts.
Some important boxes on a T5 slip include:
Boxes 10, 11, 12:
These boxes show dividend income earned.
It includes dividend payments paid in cash or in-kind, or deemed dividends paid by a Canadian corporation.
Box 10 shows the actual amount of dividend, while Box 11 and Box 12 show the taxable dividend amount and dividend tax credit respectively.
Boxes 24, 25, 26:
Box 24 shows the actual amounts of eligible dividends earned, while Box 25 shows the taxable amount of the eligible dividends.
The dividend tax credit for the eligible dividends is shown in Box 26.
Boxes 13, 14, 17:
Interest income from Canadian sources is recorded in Box 13, while royalties from Canadian sources are shown in Box 17.
Other income from Canadian sources, such as amounts reported by a life insurer, is shown in Box 14.
Boxes 15, 16, 27:
In Box 15, any gross foreign income that is received from sources outside Canada is shown in Canadian currency.
This amount is not reduced by any foreign income taxes withheld.
Box 16 shows the amount of foreign income tax withheld in Canadian currency.
If any foreign income cannot be shown in Canadian currency, the amount is shown in foreign currency in Box 27.
Frequently Asked Questions
- Why did I get a T5 tax form?
If you received a T5 tax form, it is because you have earned certain types of investment income in the tax year and you need to report this income to the CRA in your Income Tax and Benefit Return.
- Can I file my taxes without my T5?
If you have earned investment income less than fifty dollars, you will not be issued a T5 slip. However, you need to report all investment income earned when you file your taxes.
- Who should claim income on a jointly filed T5?
A joint investment account with more than one recipient entitled to the investment income will generally have one T5 slip. The investment income is usually shared between the joint owners who report their fair share of the income. This could be determined by a fair percentage or by the amount contributed by each recipient.