What is a T5 tax slip?
A T5 tax slip, also known as a Statement of Investment Income, is a form used to report any interest and investment income you make from nonregistered investment accounts. If you earned more than $50 in income the previous year from these accounts, your financial institution will issue you a T5 tax slip. You must report this income on your income tax return. Note that if you earned less than $50, a T5 is not required to be issued to you by your financial institution. However, the income must still be reported to the Canada Revenue Agency (CRA).
To help avoid any slip confusion, it’s worth comparing the T5 and T4 forms:
T4 slip: Statement of Remuneration Paid: This is the most common tax slip issued to Canadians who are employed. It includes the following information:
- The amount of employment income you made for the year
- How much you paid in federal taxes
- What you contributed to the CPP (Canadian Pension Plan)
- What you contributed to EI (employment insurance)
T5 slip: Statement of Investment Income: You receive a T5 tax slip from your financial institution(s) when you have investment income of $50 or more from the following:
- Interest from Canadian and non-Canadian sources
- Capital gains dividends
- Dividends from Canadian corporations
Both tax slips show the income you have earned for the year, just in different ways. This distinction is an important one for your taxes and will be used to establish the basis of your return. Here, we delve into the details of how a T5 affects your tax return.
Who should report T5 income?
You should claim T5 income if you have income-earning investments, more specifically:
- Interest from savings and other bank accounts
- Term deposits, guaranteed investment certificates (GICs), and other similar investments
- Canada Savings Bonds (CSBs)
- Dividends
- Capital gains dividends
- Royalties
- Annuities
- Earnings on life insurance policies
- Certain foreign income
Also, if you are self-employed and own a corporation—and take money to pay yourself— the T5 slip is critical. Those payments are dividends, and the CRA requires the corporation to report the total amount of income from any dividends you receive on your T5 slip. Then, in turn, you are required to report those amounts on your personal tax return.
Take note: The amounts on your T5 slip may be shown in Canadian dollars or in a foreign currency. If it’s in a foreign currency, you’ll have to convert those amounts to Canadian dollars on your tax return.
For instance, if your T5 shows $820 in US stock dividends, that amount would need to be converted to Canadian dollars (for example, $1,104.01 CAD)—based on either the historic rate at the time of the transaction or the average rate for the year, depending on the type of transaction—on your income tax return.
How to get a T5 tax slip
There’s not much to concern yourself with here since your T5 tax slip will be issued to you. Your financial institution(s) will send a copy of the T5 slip to you and another copy to the CRA. In some cases, the bank will send you one T5 slip for the total income you earned in the year, but break down the income into multiple T5s to send to the CRA.
You can also get your T5 tax slip online from the financial institution(s) managing your accounts, or by logging in to your CRA My Account. Here you can find all the various taxpayer slips under the “tax information slips” section, including the T5 and T4.
It’s also good practice to call your financial institution(s) and verify their records, so you don’t miss any tax slips.
And no worries if you have more than one source of investment income on a T5 tax slip, or multiple T5 tax slips from various financial institution(s) (each must provide you with T5 tax slips for all eligible accounts), you can easily report multiple amounts on your T1 general income tax form.
How to report a T5 tax slip
Since your financial institution will have filled in your T5 tax slip with the information you need, your job is to enter this information on your tax return. If you’re filing your taxes using online tax software, it will guide you through the process and let you know which T5 boxes to add on to your income tax return.
If you’re doing it yourself, these are the boxes you need to pay attention to. If you see numbers in any of these, you can transfer the amounts over to your T1 general income tax form. Here’s a step-by-step on what should appear on each line:
Box 10: Actual amount of dividends (other than eligible dividends)
Box 11: Taxable amount of dividends (other than eligible dividends)
Box 12: Tax credit for dividends (excluding eligible dividends)
Box 13: Interest income from Canadian sources
Box 14: Other income from Canadian sources
Box 15: Foreign income
Box 16: Foreign tax paid
Box 17: Royalties from Canadian sources
Box 18: Capital gains dividends
Box 19: Accrued income: annuities
Box 24: Actual amount of eligible dividends
Box 25: Taxable amount of eligible dividends
Box 26: Dividend tax credit for eligible dividends
Box 27: Foreign currency
What if the T5 statement of investment income is in my name and my spouse’s name?
If you both contributed equal amounts to the investment and you share money, you can each claim 50% of the amount shown on the T5 tax slip. Otherwise, you can claim the appropriate portion depending on how much you contributed to the investment account:
Amount to report = personal amount contributed/total amount contributed
For example:
Amanda and Phillip opened an investment account together that pays interest. Amanda contributed $1,000 and Phillip contributed $3,000.
They received a T5 slip with both names on it and an amount of $100 in Box 13.
Each will have to report a portion of this income on their tax returns:
- Amanda will report: $100 x $1,000/$4,000 = $25
- Phillip will report : $100 x $3,000/$4,000 = $75
How does a T5 slip affect my tax return?
Reporting what’s on your T5 tax slip(s) can affect your tax return. Including all your income and investments on your T1 can impact the personal tax you may be required to pay as well as any available tax credits, deductions, or other benefits. Also, to stay in good standing with the CRA, you want to make sure your bookkeeping is aligned.
What about filing the T5 slip for Québec residents?
For residents of Quebec, the filing looks a little different. If you are a resident of Quebec, you will receive a Relevé 3 (RL-3), which is reported in your provincial TP1, along with the T5 slip that is reported in the federal section of your tax return.
