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The CRA requires financial institutions to file T5 slips by the end of February each year. These slips detail investment income paid to individuals during the previous calendar year. The CRA uses these filings to verify the amounts reported on individual taxpayer returns.
Mistakes in these forms can lead to increased CRA scrutiny and reputational damage. Here’s a detailed guide on how to prepare a T5 slip in Canada for 2024.

But first, let’s understand what T5 slips are and why they are important.

  • T5 slips are issued to report various types of investment income earned by Canadian taxpayers.
  • These slips are crucial for individuals to accurately report their income on their tax returns.
  • Common types of income reported on T5 slips include dividends, interest, and certain foreign income.

Gathering Necessary Information

Before you begin preparing T5 slips, ensure you have all the required information readily available.

  1. Collect recipient information such as names, addresses, and social insurance numbers (SINs).
  2. Gather details about investment income earned by each recipient throughout the tax year.
  3. Ensure you have accurate information about the types and amounts of income earned.

What Payments are Included in the T5 Slip?

1. Dividends
Dividends are one of the primary types of income reported on the T5 slip. Dividends can be classified as either eligible or non-eligible, depending on specific criteria outlined by the Canada Revenue Agency (CRA). Eligible dividends are subject to preferential tax treatment, while non-eligible dividends are taxed at a higher rate.
2. Interest Income
Likewise, interest income earned on various investments. Such as bonds, GICs (Guaranteed Investment Certificates), and savings accounts, are also included in the T5 slip. This type of income is generated from the interest payments received by the investor and is taxable at the recipient’s marginal tax rate.
3. Foreign Income
Income earned from foreign investments, such as foreign dividends or interest, is reported on the T5 slip. Taxpayers are required to disclose all foreign income earned during the tax year to ensure compliance with Canadian tax laws. Foreign income may be subject to special reporting requirements and tax treatments.
4. Capital Gains
While capital gains themselves are not reported on the T5 slip, any dividends or interest income earned from investments in mutual funds or exchange-traded funds (ETFs) that realize capital gains are included. These amounts are reported as part of the overall investment income on the T5 slip.
5. Other Income
Certain other types of income may also be included in the T5 slip, such as income from trust units or income from partnerships. These amounts are typically reported separately and may have specific tax implications for the recipient.
Several exemptions are available under the new luxury goods tax. The taxes apply to subject vehicles, aircraft, and boats sold or imported into Canada.
6. Return of Capital
In some cases, investors may receive a return of capital from their investments, which represents a portion of their original investment being returned to them. While a return of capital does not constitute taxable income, it may impact the adjusted cost base of the investment and future capital gains or losses.
7. Royalties

Royalties earned by individuals, such as royalties from patents, copyrights, or mineral rights, are also reported on the T5 slip. These payments represent compensation for the use of intellectual property or natural resources and are subject to taxation.

8. Annuity Payments
Additionally, annuity payments received by taxpayers are typically included in the T5 slip. Annuities provide a stream of income over a specified period, and the portion of the payment that represents interest income is reported on the T5 slip.
9. Patronage Dividends
Patronage dividends received by members of cooperative organizations are reported on the T5 slip. These dividends represent a share of the cooperative’s profits allocated to its members based on their patronage of the organization.
10. Other Distributions
Other distributions, such as certain payments from retirement savings plans or income from certain insurance policies, may also be included in the T5 slip. These payments are typically categorized based on their nature and reported accordingly.

Step-by-Step Preparation Process

Follow these eight steps to successfully prepare a T5 slip, ensuring accuracy and compliance with Canadian tax regulations.
1) Fill in Recipient Information
Begin by filling in the recipient’s full name and address on the T5 slip. The recipient is the individual receiving the dividend or payment. And it’s essential to ensure the information is accurate for proper identification and tax reporting.
2) Indicate Payer Information
Next, indicate the payer’s name and address on the T5 slip. The payer refers to your corporation, the entity issuing the dividend or payment. Additionally, double-check this information for accuracy to avoid any discrepancies in reporting.
3) Specify Tax Year
Specify the tax year in which the dividend or payment was received. This ensures proper alignment with the recipient’s tax reporting and helps streamline the process for both the payer and recipient.
4) Determine Dividend Eligibility
Furthermore, establish whether the dividend paid is eligible or non-eligible. Eligible dividends are paid from company profits exceeding $500,000, while non-eligible dividends are paid for profits below this threshold. However, accurate classification is crucial for tax reporting purposes.
5) Report Dividend Amount
Next, specify the value of the dividend(s) acquired within the calendar year (from January 1st to December 31st). This information is entered in box 24 for eligible dividends and box 10 for non-eligible dividends, ensuring transparency and clarity in reporting.
6) Calculate Taxable Dividends
For non-eligible dividends indicate the number of taxable dividends in box 11, calculated by multiplying the actual amount of dividends by a factor of 1.15. For eligible dividends indicate the number of taxable dividends in box 25, calculated by multiplying the actual amount of dividends by a factor of 1.38. This adjusted amount reflects the taxable portion of the dividends. In addition, it is crucial for accurate tax reporting on personal tax returns.
7) Enter Dividends Tax Credit
Record the non-eligible dividend tax credit and the eligible dividend tax credit amount in boxes 12 and 26 respectively. This credit helps offset taxes payable on dividends and is an essential component of tax planning and compliance for recipients.
8) Complete the T5 Summary
Finally, complete the T5 summary, which consolidates all the amounts reported in the T5 slips issued by the corporation. The summary facilitates efficient record-keeping and filing, particularly for corporations issuing multiple T5 slips to various shareholders. Ensure to include the tax year and your corporation’s business number on the T5 summary form for proper identification and filing.
Hence, by following these steps diligently, corporations can prepare T5 slips accurately and efficiently. In addition, fulfilling their tax reporting obligations and maintaining compliance with Canadian tax laws. Effective preparation of T5 slips contributes to smooth tax processes for both corporations and recipients, fostering transparency and accountability in financial transactions.