In Canada, a T5 is a tax information slip used to report various types of investment income and distributions. It is issued by financial institutions and other entities and corporations to provide individuals with the information needed to report investment income on their income tax returns. The T5 form is submitted to both the taxpayer and the Canada Revenue Agency (CRA).
You can find a fillable T5 slip here (CRA link).
Box 10, 11, and 12) Dividend Income – Non Eligible Dividend
Box 10) Actual amount of dividends other than eligible dividends
This box on the T5 form displays the “Actual amount of dividends other than eligible dividends.” In simpler terms, it represents the actual dividend paid by private corporations to their resident shareholders. This information is primarily applicable to private corporations, and the amount reported is the factual dividend value.
Box 11) Taxable amount of dividends other than eligible dividends
This box indicates the “Taxable amount of dividends other than eligible dividends.” It reflects a 15% increase compared to Box 10. For instance, if Box 10 shows $10,000, then Box 11 should be 15% higher, totaling $11,500. This 15% adjustment is effective for the tax year 2019 and onwards. Consequently, even if you received an actual dividend of $10,000 from your corporation, taxes are calculated based on a taxable income of $11,500. The rationale behind this adjustment is explained in the following paragraph (Box 12).
Box 12) Dividend tax credit for dividends other than eligible dividends
This box highlights the “Dividend tax credit for dividends other than eligible dividends.” Box 12 represents the credit you receive for receiving your income. In response to the increase from the actual amount of dividends to taxable dividends, the Canada Revenue Agency (CRA) provides a credit that can be deducted from your tax owing.
Box 13) Interest Income
This box reports interest income earned on various financial instruments, such as savings accounts, certificates of deposit, and other interest-bearing investments. Interest income is taxable, and individuals need to report it on their tax returns.
Box 24, 25, and 26) Dividend Income – Eligible Dividend
Box 24) Dividend Income – Eligible dividend
Dividend income represents the payments made by corporations to their shareholders. The T5 form distinguishes between eligible dividends (taxed at a lower rate) and non-eligible dividends (taxed at a higher rate). This information is crucial for determining the appropriate tax treatment. In box 24, you will see the actual dividend that you received from a public corporation or a Canadian corporation other than those reported in boxes 10, 11, and 12.
Box 25) Taxable Amount of Eligible Dividends
This box indicates the “Taxable amount of eligible dividends.” It reflects a 38% increase compared to Box 24. For instance, if Box 24 shows $10,000, then Box 25 should be 38% higher, totaling $13,800. This 38% adjustment is effective for the tax year 2019 and onwards. Consequently, even if you received an actual dividend of $10,000 from your corporation, taxes are calculated based on a taxable income of $13,800. The rationale behind this adjustment is explained in the following paragraph (Box 26).
Box 26) Dividend tax credit for eligible dividends
This box highlights the “Dividend tax credit for eligible dividends.” Box 26 represents the credit you receive for receiving your income. In response to the increase from the actual amount of dividends to taxable dividends, the Canada Revenue Agency (CRA) provides a credit that can be deducted from your tax owing.
Box 15) Foreign Income
Box 15 may include foreign income earned by the individual, such as interest or dividends from investments held outside of Canada. Reporting foreign income is important for tax purposes, and individuals may need to consider any applicable tax treaties.
It’s important to note that the amounts reported on the T5 form represent income earned within the calendar year. Individuals use this information to accurately complete their income tax returns, ensuring that they report all relevant income and pay the appropriate amount of tax. The T5 form is provided by financial institutions and other entities that handle investments, and it is typically issued to account holders by the end of February each year.
If you want to know more about the T4 slip, please check here.
