What is the T5 in Canada, and how does it work?
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The T5 statement of income is a tax form used to calculate your investment income and the amount of taxes you owe. Residents of Quebec receive Relevé 3 with the amount included in the provincial TP1 form and the T5 slip. The T5 tax form is provided to you by the financial institution where you hold your investment accounts. CRA does not require T5 for amounts less than $50.
The T5 statement is similar to your employer’s T4 statement of income in Canada. Like T4, the T5 slip can be transmitted to the CRA through EFILE, NETFILE, or offline via mail. For those who prepare many slips, the CRA is open to accepting specific slips outside of the T5 format. However, there are customized form requirements to be met.
The Government of Canada introduced the T5 Statement of Investment Income for individuals with a pension or other investment incomes not necessarily earned through employment. It helps retirees, people with RRSPs, those with spousal RRSPs, and those with self-employment income to file their taxes easily.
Items included in your T5 slip
The T5 slip has several information boxes on it. Each box has a specific purpose, as we discuss below:
Box 10: Actual amount of dividends received from Canadian corporations, other than eligible dividends
Box 11: Amount of dividends that are taxable, other than eligible dividends
Box 12: Dividend tax credits applied by CRA to your total owed tax amount
Box 13: Interest earned from all Canadian sources
Box 14: Other income earned from Canadian sources
Box 15: Only include your foreign income
Box 16: Only include taxes you paid on foreign income
Box 17: Royalties received from Canadian sources – from work or invention, etc.
Box 18: Capital gains dividends
Box 19: Accrued income, like equity linked notes interest, annuities, income earned due to death of a spouse or legal partner
Boxes 24 to 26 include dividends from Canadian sources that were not included in Boxes 10, 11, and 13.
Box 24: Actual amount of dividend earned
Box 25: Taxable amount of received eligible dividend
Box 26: Dividend tax credits you could claim on line 40425
Box 30: Equity-linked notes interest – interest earned through the transfer of linked notes
Who should file a claim for T5 income?
Financial institutions that hold your investment accounts will issue T5 slips for you. Even as you hold the account jointly with your common-law partner or spouse, you still get T5 slips. You would have agreed to a proportionate investment, hence you receive an equated percentage of the income.
Typically, the T5 slips contain details of your investments in shares, interest earned in your savings accounts, annuities, bonds, royalties, etc.
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How to access your copy of T5?
There are two ways of getting your T5 slips from your financial institution. If you have an online account, follow the steps below:
- Go to your financial institution’s website
- Log in to your account with a username (or card number) and password
- Under the ‘My Accounts’ section, select the option that says ‘View e-Documents’
- Once you locate your T5, download the file
- View, print, or save your T5 slip as required
What if you have T5 slips from multiple sources?
As a savvy investor, you may choose to diversify your investment horizons. This will lead to receiving T5 slips from multiple financial institutions. Also, each institution is expected to provide T5 slips for all your eligible accounts. Such a situation calls for reporting income from multiple sources in the T1 general.
Can you get your T5 online?
T5 is a digital form easily available online, even if your financial institution’s mail does not reach you. You need to log on to your CRA MyAccount to check your T5 slips. All financial institutions report T5 slips to CRA for incomes more than $50. You might want to sign up for your CRA My Account if you don’t have one already. Or perhaps your tax accountant can check it for you.
Timeline for filing your T5 statement of investment income
As per the laid out norms by CRA, all financial institutions should send out T5 slips to taxpayers. You should expect to receive your T5 slip on or before the last day of February. You should submit the T5 statement of investment income as part of your tax return for the previous calendar year by the end of April. CRA may penalize those who do not include T5 slips in their income for the second time in four years. Penal interest is also levied on the balance due. Also, if you receive your T5 slips late or see amendments in the same, you are required to file it as a T1-ADJ (adjustment request) at the earliest. Such reporting of income discrepancies keeps you safe from penalties, which may be up to $7,500.
Filing for a large number of T5 slips
In case you have more than 50 T5 information slips for a particular calendar year, you have to file them over the internet file transfer or Web Forms. CRA has a penalty of $250 if you fail to file returns slips between 51 and 250. The penalty goes up to $2,500 for a higher number of slips.
Benefits of using a professional T5 reporting service
A professional T5 reporting service like Expat Tax Online can prepare your taxes and save time. They provide a personalized approach for clients to manage their finances and get a clearer picture of their tax situation. A professional service can also help you prepare for the future by generating personalized financial projections. Other benefits include:
– Helps you better understand your tax situation and plan for the future
– It saves you time by outsourcing the process to qualified professionals
– Possibility of getting customized financial advice based on your preferences
– Smart and easy-to-understand approach to filing your taxes in Canada
