Skip links
Canadian investor looking at a T5 slip.

What is a T5 slip? Statement of Investment Income Explained

Whether you are a budding investor or a seasoned one, knowing what a T5 slip means is essential for accurate recordkeeping for your investments, especially during tax season. What does a T5 slip do, and how do you report it on your T1 general tax form?

This guide will walk you through everything you need about the T5 slip. Plus, learn how different investment income is taxed, how to report a T5 properly, and how Mortgage Investment Corporations (MICs) can fit in tax-advantaged accounts to maximize tax-free investment returns.

Amur Capital offers a simple way to grow your money and receive a stable and consistent return. Contact us now, and we’ll help you start in a few minutes.

Key Takeaways:

  1. The T5 slip is a crucial document that financial institutions provide for the accurate recordkeeping of investment income earned throughout the year.
  2. Investment income, including dividends, interest, capital gains, and royalties, is taxed differently in Canada, which is why it is reflected in different sections in the T5 form.
  3. Mortgage Investment Corporations (MICs) are eligible for tax-advantaged accounts such as the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP), which can help lessen your tax burden.

What is a T5 tax slip?  

The T5, otherwise known as the Statement of Investment Income, is used to report investment income paid by investment companies to their investors throughout the year. This includes income from:

  • interest from savings accounts, GICs, and bonds (Canadian and non-Canadian sources)
  • dividends from corporations
  • capital gains

If you have investments that earn you more than $50 of dividend or interest income, then your financial institution (banks and investment companies) may have given you a T5. Anything less than $50 of investment income will not get taxed. However, the income must still be reported to the Canada Revenue Agency (CRA).

Who needs to file a T5

Every Canadian, including foreign workers residing in Canada, who is either employed by a company, self-employed or earning taxable income from investments must file a T1 every year. Business owners must fill out the T1 Business form (T2125 Statement of Business), while corporations must complete the T2 (Corporate Income Tax Return).

Where to get your T5

To get your T5, you may have to contact the financial institution holding your investments. In addition, you can log in to your CRA MyAccount to get all the relevant taxpayer slips, including the T5 slip.

How to report the T5 tax form

The T5 slip is used in tandem with the T1 general tax form. However, the CRA doesn’t require sending your T5 when you file your tax return. You only need to use the information on the T5 when you file your income tax return.

Personal information

Start by filling in your full name, address, and social insurance number (SIN). This will help CRA match the T5 slip to your tax return.

Investment income sources

Most of the T5 consists of reporting your actual investment income in the appropriate boxes, depending on its type.

 

Section

 

Description
Non-eligible dividendsNon-eligible dividends are paid by corporations earning under $500,000 and are taxed at lower rates. As a result, shareholders can get a minor dividend tax credit.

What to do: Use Boxes 10, 11, and 12. Box 10 shows the amount of dividend earned, Box 11 shows the taxable amount, and Box 12 shows the dividend tax credits the CRA applies to the total amount of taxes owed.

Interest from Canadian sources

 

Interest income may come from savings accounts, guaranteed investment certificates (GICs), bonds, and notes.

What to do: Use Box 13 to enter interest earned from Canadian sources.

Capital gains dividends

 

Capital gains happen when your investment is sold at a profit and are only taxed when realized. If the planned sale is postponed to the next calendar year and the income is accrued, the tax would be deferred for an additional year.

What to do: Use Boxes 18 and 19. Box 18 is used for capital gains and is also entered into line 17400 of Schedule 3. Box 19 is for accrued income and annuities.

Eligible dividends from Canadian corporations

 

Eligible dividends do not receive preferential treatment at the corporate level, so shareholders receive a more considerable dividend tax credit than those with non-eligible dividends.

What to do: Use Boxes 24, 25, and 26. Box 24 is for the actual amount, Box 25 is for the taxable income, and Box 26 is for the dividend tax credits.

Additional income

 

Section

 

Description
Foreign income and tax paidInterest and dividend income you receive from foreign companies are also taxed but do not benefit from the dividend tax credit.

What to do: Use Box 15 and 16. Box 15 shows the total amount of foreign income, while Box 16 shows the foreign tax paid.

Royalties from Canadian sources

 

Royalties refer to a sum of money paid for using a work, invention, or right to take natural resources.

What to do: Use Box 17. Report the income in line 10400 for all royalties received. The expenses tied to the royalties are reported on line 13500. Otherwise, enter your royalties in line 12100 of the income return statement.

Annuities

 

Annuities are used to provide a guaranteed regular income during retirement.

What to do: Use Box 19 to enter the accrued income.

Equity-linked notes interest

 

An equity-linked note (ELN) is a hybrid investment product that combines a fixed-income investment with additional returns tied to the performance of equities.

What to do: Use Box 30 to enter the calculated interest from ELNs.

When and how to file your T5 tax form

While the CRA doesn’t require you to send your T5, it is still important to abide by the April 30 deadline for filing the personal income tax return.

3 considerations when filing your T5

  1. Distribution/ submission deadlines from financial institutions: All institutions must distribute the T5 slip to their investors by the last day of February for the previous tax year.
  2. How investment income is taxed in Canada: Investment income in Canada is taxed differently depending on the type of investment. Interest income is fully taxable at your marginal tax rate. Dividend income qualifies for dividend tax credit, with eligible dividends being taxed at a lower rate than ineligible dividends. Capital gains are taxed only at 50% when realized.
  3. T5 information for Quebec residents: Filing is slightly different for Quebec residents. They will receive a Relevé 3 (RL-3), reported in their provincial TP1, along with the T5 slip reported in the federal section of their tax return.

How Amur Capital MICs can help

Amur Capital‘s MICs are eligible for both registered and non-registered accounts. When used with registered accounts such as the Tax-Free Savings Plan (TFSA) and Registered Retirement Savings Plan (RRSP), investors can utilize either tax-free or tax-deferred growth on the invested amount. On the other hand, Amur Capital MICs are also eligible for non-registered accounts, which means investors have uncapped contribution and withdrawal limits. Whatever your account choice is, Amur Capital provides investment options that cater to a wide range of financial goals.

Interested in learning more about our MIC funds? Contact our Investor Relations team today.

FAQs

The T5 form is used to identify the investment income earned throughout the year on non-registered accounts.

Various types of income need to be reported on a T5. These include dividends from Canadian corporations, interest from bonds and GICs, royalty payments, annuities, and mutual fund distributions.

Investment income is taxed differently in Canada. Interest income is fully taxable at your marginal tax rate. Dividend income qualifies for dividend tax credit, with eligible dividends being taxed at a lower rate than ineligible dividends. Capital gains are taxed only at 50% when realized.

Leave a comment