T5 Guide - Return of Investment Income 2006

T4015(E) Rev. 06

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Table of contents

• Before you start
  • Electronic mailing lists
  • Confidentiality of information
  • Income Tax Act references
• What's new for 2006?
  • Eligible dividends
  • Information return
  • Expanded Electronic Filing Services
  • My Business Account
• Chapter 1 - General information
  • Who should use this guide?
  • Are you acting as a trustee?
  • Due date
  • Penalties and offences
  • Using the identification number
  • Interest on penalties
  • Cancelling or waiving penalties and interest
  • Notice of Assessment
  • Computer-printed (customized) forms
• Chapter 2 - The T5 information return
• Chapter 3 - Filing Methods
  • Filing on magnetic media
  • Filing by Internet file transfer
  • Filing on paper
• Chapter 4 - The T5 slip
  • When do you have to prepare a T5 slip?
  • When do you not have to prepare a T5 slip?
  • How to complete the T5 slip
  • Distributing the T5 slips
  • How to amend your T5 slips
• Chapter 5 - The T5 Summary
  • How to complete the T5 Summary
  • Filing the T5 Summary
• Chapter 6 - Payments to non-residents of Canada
• Chapter 7 - Accrued interest
  • Contracts acquired after 1989
  • Contracts acquired after November 12, 1981, and before 1990
  • Contracts acquired before November 13, 1981
  • Interest adjustments and penalties
  • Indexed debt obligations issued after October 16, 1991
• Chapter 8 - Blended payments and deemed dividends
  • Blended payments
  • Deemed dividends
• Chapter 9 - Unclaimed amounts: Dividends or interest
  • Remittances
  • Reporting requirements
• Appendix A - References
• Appendix B - Forms
  • T5 slip
  • T5 Summary
• Appendix C - Provincial and territorial codes
• Appendix D - Income Tax Act references
• Addresses of tax centres
• Your opinion counts!

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Before you start

To help us process your T5 returns quickly and accurately, we would prefer that you type or machine-print your information slips. For more information, see "Chapter 3 - Filing Methods".

Use the current versions of the T5 slip and T5 Summary when you file your T5 information return.

Do not file a blank or nil T5 information return that has no T5 slips. You do not have to file a T5 return for a year during which you did not pay or credit any amounts.

This guide does not deal with every tax situation. For a list of publications that explain certain situations in greater detail, see "Appendix A - References". If you need more help after reading this guide, call us at 1-800-959-5525.

If your problem cannot be resolved through normal channels, you should get in touch with the Problem Resolution Program co-ordinator at your tax services office. The address and telephone numbers are listed in the government section of your telephone book.

You can order the publications you need, as well as blank copies of T5 slips, on our Web site or by telephone. Complete the online order form, or call 1-800-959-2221.

Electronic mailing lists

We can notify you immediately about new information on payroll, electronic filing for businesses and more. To subscribe, free of charge, visit our electronic mailing lists page.

Confidentiality of information

Under the Privacy Act, the information you provide on the T5 information return and related forms can be used only for the purposes authorized by law.

Income Tax Act references

In this guide, all legislative references are to the Income Tax Act and Income Tax Regulations. You can find a list of these references in "Appendix D - Income Tax Act references".

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Chapter 1 - General information

This guide explains how to complete the T5 information return.

Who should use this guide?

If you make certain payments to a resident of Canada, or if you receive certain payments as a nominee or agent for a person resident in Canada, you have to prepare a T5 information return.

Note
In certain situations, the Income Tax Act treats payments in a specific way. For example, you have to report some interest payments as dividends and some dividend payments as interest. This guide explains these and other rules.

If you make certain payments to a non-resident of Canada, see "Chapter 6 - Payments to non-residents of Canada".

If you are only reporting interest or dividend payments on your T5 information return, you probably do not need all the details in this guide. We have published an easy-to-read, concise pamphlet called T4126, How to File the T5 Return of Investment Income, which contains all the information you need.

In this guide, the term "filer" refers to the person (that is, an individual or organization) that is responsible under the Income Tax Act for preparing and filing a T5 information return. The filer is different from a service bureau or anyone else who may be filing the return for the filer.

Do not use the T5 information return to report debt obligations in bearer form. For more information on reporting debt obligations in bearer form, see our Guide T4091, T5008 Guide - Return of Securities Transactions.

Note
If your corporation amalgamated with one or more corporations during the year, the new corporation can prepare the consolidated T5 information return for itself and the predecessor corporation(s).

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Are you acting as a trustee?

If you are acting as a trustee, and you own and control property for another person, you have to file T3 a Trust Income Tax and Information Return. If the beneficial owner keeps ownership and control of the property, you should report any income earned on a T5 information return.

If you are acting as a trustee and you are not sure if you should complete a T3 or a T5 information return, see our Guide T4013, T3 Trust Guide. The information in that publication and in this guide will help you decide which return to complete. If you still have questions, call us at 1-800-959-5525.

Due date

You have to file your T5 information return before March 1 after the calendar year for which you are preparing it. For example, if you are filing a T5 information return for 2006, it has to be filed before March 1, 2007.

If you end your business or activity, you have to file a return for the year or part-year no later than 30 days after the date the business or activity ended.

Send the recipients' copies of the T5 slips to their last known address or deliver them in person. You have to do this on or before the day you have to file the T5 information return.

Penalties and offences

Late-filing penalty

If you file your T5 information return late, or if you distribute slips to the recipients late, you are liable for each failure to a penalty of $25 per day, from a minimum of $100 to a maximum of $2,500.

Failure to file an information return

If you do not file an information return as required under the Income Tax Act and Income Tax Regulations, you may be guilty of an offence. In addition to any other penalty, if convicted, you are liable to:

• a fine from a minimum of $1,000 to a maximum of $25,000; or
• a fine and imprisonment for a maximum of 12 months.

Failure to file an information return in an electronic format

If you do not file an information return in an electronic format as required under the Income Tax Act and Income Tax Regulations, you may be guilty of an offence. In addition to any other penalty, you are liable to a maximum penalty of $2,500 per slip.

Failure to provide information on a return

Anyone who prepares an information return has to make a reasonable effort to get the necessary information, including identification numbers, from the individuals, corporations, or partnerships that will receive the slips. If you do not do this, you may be liable to a $100 penalty for each failure to comply with this requirement.

Failure to provide an identification number

Individuals (other than trusts), corporations, or partnerships have to give their social insurance number (SIN) or Business Number (BN) on request to anyone who has to prepare an information slip for them. A person or partnership that does not do so is liable to a $100 penalty for each failure to comply with this requirement. This penalty does not apply if the person or partnership had applied for, but not yet received, a SIN or BN at the time the return was filed.

A person who does not have an identification number must apply for one within 15 days of the date of an information request. After receiving the identification number, the person has 15 days to provide it to the person who is preparing an information return.

A person who does not have a SIN can apply for one at any Human Resources and Social Development Canada (HRSDC) office.

For more information, see Information Circular IC82-2, Social Insurance Number Legislation That Relates to the Preparation of Information Slips.

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Using the identification number

If you have to prepare an information return, or if you are an officer, employee, or agent of someone who does, you cannot knowingly use or communicate an identification number, or allow it to be communicated, without the written consent of the individual, taxpayer, or partnership, other than as required or authorized by law or for the purpose for which the number was provided.

If you use an identification number for unauthorized purposes, you may be guilty of an offence. If convicted, you are liable to a maximum fine of $5,000 or imprisonment of up to 12 months, or both.

Interest on penalties

We charge interest, compounded daily at the prescribed rate, on the total amount of penalties and interest outstanding. Interest and penalties are payable to the Receiver General for Canada.

Cancelling or waiving penalties and interest

We may cancel, reduce, or waive penalties and any interest charges if you file a T5 information return late or distribute T5 slips to recipients late because of circumstances beyond your control. If this happens, include a letter with the return explaining why you were late. For more information, see Information Circular IC92-2, Guidelines for the Cancellation and Waiver of Interest and Penalties.

Notice of Assessment

We will issue a Notice of Assessment for the T5 information return only if we apply a penalty.

Computer-printed (customized) forms

You may want to use your own customized T5 slips to provide tax information to your clients. To get our written approval, send samples of your proposed computer-printed slips to:

Electronic and Print Media Directorate
Operations Division
Albion Tower
25 Nicholas Street, 17th floor
Ottawa ON  K1A 0L5

For more information, get Information Circular IC97-2, Customized Forms, from our Web site.

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Chapter 2 - The T5 information return

A T5 information return consists of T5 slips and the related T5 Summary.

T5 slip - The T5 slip identifies the various types of investment income that residents of Canada have to report on their income tax and benefit returns. Do not report on a T5 slip investment income paid to non-residents of Canada. For information about payments to non-residents, see Chapter 6 - Payments to non-residents of Canada.

The T5 slip has three individual slips printed on each page or sheet. These are intended to be used for laser or ink jet printers, for typing, or to be filled out by hand.

For information on how to complete the T5 slip, see "How to complete the T5 slip".

T5 Summary - The T5 Summary records the total of the amounts you reported on all the related T5 slips.

For information on how to complete the T5 Summary, see "How to complete the T5 Summary".

Chapter 3 - Filing Methods

Filing on magnetic media

You have to file your information return on diskette, CD, or DVD using eXtensible Markup Language (XML) format if you (or a representative) file more than 500 information slips for the calendar year (the total number of T3, T4, T4A, T4A-NR, T4RSP, T4RIF, T5, T5007, T5008, NR4, T1204, T5018, and and other information slips for which we provide computer specifications for magnetic media filing). For more information, visit our Filing on Magnetic Media Web page.

If you are filing 500 slips or less, see "Filing by Internet file transfer" below.

If you file your information return on magnetic media, do not send us the paper copy of the forms that make up the return.

For more information about this method of filing, call us at 1-800-665-5164 or visit our Filing on Magnetic Media Web page.

If you prefer, you can write to:

Electronic Media Processing Unit
Ottawa Technology Centre
Canada Revenue Agency
875 Heron Road
Ottawa ON  K1A 1A2

Filing on paper

You can file on paper if you file, for the calendar year, 1 to 500 of the information slips identified above under "Filing by Internet file transfer".

If you are filing your T5 information return on paper, keep the following in mind when you complete the forms that make up the return:

• Use the current versions of the T5 slip and T5 Summary. You can order all the forms you need by completing our Online order form or by calling 1-800-959-2221.
• Do not tape, tear, or stamp any of the T5 forms.
• For all dollar amounts, use a comma to separate thousands and a period to separate dollars from cents. Do not use dollar signs ($).

• When no entry is required, leave boxes and areas blank. Do not enter nil, N/A, dashes (-), or zeros in these empty boxes.
• Do not change the title of any box or area on the forms.
• Enter an "X" in those boxes that need one. Do not use any other mark (for example, "" or "-").

Report information only in the appropriate box or area provided. If you are not sure where to enter the information, call us at 1-800-959-5525.

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Chapter 4 - The T5 slip

When do you have to prepare a T5 slip?

If you make certain payments to a resident of Canada, or if you receive certain payments as a nominee or agent for a person resident in Canada, you have to prepare a T5 slip.

These payments include:

• eligible dividends and dividends other than eligible dividends (including most deemed dividends);
• interest from:
  • a fully registered bond or debenture;
  • money loaned to or on deposit with, or property of any kind placed with, a corporation, association, organization, or institution;
  • an account with an investment dealer or broker;
  • an insurance policy or annuity contract (when the interest is paid by an insurer); or
  • an amount owing as compensation for expropriated property;
• certain amounts distributed from an eligible funeral arrangement (see "Box 14 - Other income from Canadian sources");
• amounts that have to be included in a policyholder's income under section 12.2;
• royalties from the use of a work, an invention, or a right to take natural resources; or
• blended payments of income and capital made by a corporation, association, organization, or institution. For more information, see "Blended payments".

For investment contracts acquired before 1990, you have to report accrued interest every three years, unless the recipient has elected to report annually. This calculation is based on the calendar year. For more information, see "Contracts acquired after November 12, 1981, and before 1990".

For investment contracts acquired after 1989, you have to report accrued interest every year. Base this calculation on the date the investment contract was issued. We will consider an investment contract acquired before 1990 to be a new contract acquired after 1989 if certain material changes were made after 1989. For details, see Interpretation Bulletin IT-448, Dispositions - Changes in Terms of Securities, and its Special Release.

We explain special accrual rules for indexed debt obligations in "Indexed debt obligations issued after October 16, 1991".

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When do you not have to prepare a T5 slip?

You do not have to prepare a T5 slip to report:

• the interest part of a blended payment made by an individual;
• interest one individual pays to another, such as interest paid on a private mortgage (this does not include investment dealers or brokers making payments for client accounts);
• interest paid on loans from banks, financial houses, or other institutions whose usual business includes lending money;
• capital dividends, as described in Interpretation Bulletin IT-66, Capital Dividends;
• amounts paid or credited to non-residents of Canada (see Chapter 6 - Payments to non-residents of Canada);
• interest on an investment contract accrued or payable during the year to a corporation, partnership, unit trust, or any trust of which a corporation or partnership is a beneficiary;
• an amount distributed from an eligible funeral arrangement, if the amount is a return of contributions only;
• interest paid to farmers under the net income stabilization account program, Fund 2 (these amounts are reported on an AGR-1 slip); or
• amounts paid to one recipient when the total amount for the year is less than $50.

How to complete the T5 slip

Before you complete the T5 slips, see the information under "Chapter 3 - Filing methods". We can process your return more efficiently if you follow these instructions.

Recipient's name and address

Enter the information in the white area provided.

If more than one recipient is entitled to the investment income (for example, interest credited to a joint account), you only need to complete one T5 slip. If there are two recipients, enter both names. For a corporation, enter the name of the corporation.

If the payment is made to an association, organization, or institution, enter that name. Do not enter the name of the secretary-treasurer or any other individual who has signing authority. If the payment is made to the registered holder of an investment (for example, broker or trustee of an RRSP), enter the name of the registered holder, not the name of the individual. If the payment is made to a trust, enter the name of the trust and not the name of the individual beneficiaries of this trust.

First line - Enter the individual's last name first, followed by the usual first names and initials, or enter the name of the recipient corporation, association, organization, institution, or trust. For "Estate of" or "in Trust for", enter the usual last name, followed by the names and initials followed by "Estate of" or "in Trust for".

Second line - Enter the second recipient's last name, first name, and initials. If there is only one recipient, leave this line blank.

In all cases, enter the recipient's full mailing address as follows:

Third, fourth, and fifth lines - Enter the recipient's full address, including city and province or territory. Enter the recipient's postal code. You can leave some lines blank. For the province or territory, use the two-letter abbreviations from the list in Appendix C - Provincial and territorial codes.

Payer's name and address

Complete this area on each T5 slip. Enter the payer's full name and address.

Year

Enter the four digits of the calendar year during which the recipient earned the investment income.

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Boxes 10, 11, 12, 24, 25 and 26 - Dividends from Canadian corporations

Dividends include all payments in cash or kind (including stock dividends) and all amounts deemed to be dividends. For details on deemed dividends, see "Deemed dividends". For information on unclaimed dividends, see Chapter 9 - Unclaimed amounts: Dividends or interest.

Dividends from taxable Canadian corporations paid to an individual (other than a trust that is a registered charity) are eligible for a federal dividend tax credit.

If the dividends paid are dividends other than eligible dividends, read the following instructions for boxes 10, 11 and 12.

If the dividends paid are eligible dividends, read the instructions for boxes 24, 25 and 26. You can find more information about eligible dividends in the news release of Department of Finance Canada at www.fin.gc.ca/drleg/ITAdtc06_e.html.

Box 10 - Actual amount of dividends other than eligible dividends

For dividends paid after 2005, enter the actual amount of dividends other than eligible dividends, or the amount we deem to be dividends other than eligible dividends, paid by a Canadian corporation.

For dividends paid before 2006, enter the actual amount of dividends, or the amount we deem to be dividends, paid by a Canadian corporation. For recipients who are individuals resident in Canada (other than a trust that is a registered charity), the dividends must be paid by a taxable Canadian corporation.

Do not include:

• dividends paid or payable by a credit union to a member who has a share in the credit union, if the share is not listed on a prescribed stock exchange (we treat these amounts as interest);
• capital gains dividends (to report capital gains dividends, follow the instructions for box 18);
• dividends paid to individuals who are not eligible for the federal dividend tax credit;
• eligible dividends; and
• taxable dividends, other than capital gains dividends, paid by a mortgage investment corporation to any of its shareholders (we treat these amounts as interest).

Box 11 - Taxable amount of dividends other than eligible dividends

Complete box 11 only for individuals resident in Canada (other than a trust that is a registered charity). Enter 25% more than the amount you reported in box 10. Do not enter an amount in box 11 if the dividends entered in box 10 are paid to a corporation.

Box 12 - Dividend tax credit for dividends other than eligible dividends

Complete box 12 only for individuals resident in Canada (other than a trust that is a registered charity). The amount you enter in box 12 is 13.3333% of the taxable amount you entered in box 11. Do not enter an amount in box 12 if the dividends entered in box 10 are paid to a corporation.

Box 13 - Interest from Canadian sources

Enter the following amounts, as long as you did not previously report them:

• interest on a fully registered bond or debenture;
• interest on money loaned to or on deposit with, or interest on any kind of property placed with, a corporation, association, organization, or institution;
• interest on an account with an investment dealer or broker;
• interest an insurer paid in connection with an insurance policy or annuity contract;
• interest on an amount owing as compensation for property that has been expropriated;
• the interest part of blended payments (see Chapter 8 - Blended payments and deemed dividends);
• dividends paid or payable by a credit union to a member who has a share in the credit union, if the share is not listed on a prescribed stock exchange;
• taxable dividends, other than capital gains dividends, that a mortgage investment corporation paid to any of its shareholders; and
• amounts reported by life insurers, to be included in a policyholder's income under paragraph 56(1)(j), except if they arise from a policy loan (see the instructions for Box 14).

Do not include:

• interest from a source outside Canada (see the instructions for Box 15); or
• the accrued income from an annuity described under former paragraph 56(1)(d.1), or accrued income of certain life insurance policies (see the instructions for Box 19).

For more information on accrued interest on investment contracts, see Chapter 7 - Accrued interest. For information on unclaimed interest, see Chapter 9 - Unclaimed amounts: Dividends or interest.

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Other information

The "Other information" area in the middle of the T5 slip has blank boxes for you to enter codes and amounts that relate to other income from Canadian sources, foreign income, foreign tax paid, royalties from Canadian sources, accrued income: annuities, and amounts eligible for resource allowance deduction. You can also use this area for any other entries that apply.

The boxes are not prenumbered as in the top part of the slip. Enter the codes that apply to the recipient.

Note
If more than three codes apply to the same recipient, use an additional T5 slip.

Box 14 - Other income from Canadian sources

Other income includes:

• taxable dividends and deemed dividends (see "Deemed dividends") paid to an individual by a corporation resident in Canada that is not a taxable Canadian corporation;
• amounts to be included in a policyholder's income under a life insurance policy, if these amounts arise from a policy loan; and
• amounts distributed from an eligible funeral arrangement (EFA) after 1995 to a taxpayer as a return of funds.

An EFA is an arrangement a qualifying person establishes and maintains solely to fund funeral or cemetery services for one or more individuals. The custodian then reports the amounts distributed from the arrangement after 1995 that are not payments for providing funeral or cemetery services and that do not reflect contributions previously made. The custodian can be the trustee of any trust governed by an EFA. If a trust is not involved, the custodian can be any person who receives a deposit under the EFA for providing funeral services. This person has to be licensed or authorized under the laws of a province or territory to provide funeral or cemetery services for individuals.

The EFA's custodian has to enter the code "14" in a generic box in the "Other information" area. The amount you have to report in the Amount box next to box 14 is the lesser of:

• the amount distributed from the EFA to a taxpayer (other than as payment for providing funeral or cemetery services for the individual from whose account the amount was distributed); and
• the amount on line 5 of the following chart:

Box 15 - Foreign income

Identify a box in the "Other information" area as box 15. In the amount box, enter in Canadian currency the gross foreign income received from sources outside Canada. Do not reduce the amount by any foreign income tax that was withheld. Enter any amounts for foreign spin-off shares received from sources outside Canada. If you cannot report the amount in Canadian currency, see the instructions for Box 27.

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Box 16 - Foreign tax paid

Identify a box in the "Other information" area as box 16. In the amount box, enter the foreign income tax, if any, that was withheld from the gross foreign income you reported in box 15. Report the amount of the foreign income tax withheld in Canadian currency. The recipient of the T5 slip will need to know this amount to calculate the federal, provincial, or territorial foreign tax credits.

Box 17 - Royalties from Canadian sources

Identify a box in the "Other information" area as box 17. In the amount box, enter the royalties paid during the year. Royalties include payments for the use of a work or invention, or a right to take natural resources.

Box 18 - Capital gains dividends

Enter the amount of capital gains dividends that we consider to be a capital gain and that were paid by:

• an investment corporation;
• a mortgage investment corporation; or
• a mutual fund corporation.

Box 19 - Accrued income: Annuities

Identify a box in the "Other information" area as box 19, and in the amount box, enter:

• the accrued earnings on a life insurance policy to be included in a policyholder's income under section 12.2; and
• the annuity payments to be included in income under former paragraph 56(1)(d.1) for annuity contracts issued before 1990.

Box 20 - Amount eligible for resource allowance deduction

Identify a box in the "Other information" area as box 20. In the amount box, enter all amounts included in box 17 that qualify as production royalties for the purposes of the resource allowance deduction.

Box 21 - Report code

When using code "A," or "C," enter a description at the top of the T5 slip (for example, "AMENDED" or "CANCELLED") and include a letter of explanation when you file a copy of the slip with us. For more information, see "How to amend your T5 slips".

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Box 22 - Recipient identification number

If the recipient is an individual (other than a trust), enter the individual's social insurance number (SIN). For interest credited to a joint account, enter the SIN of only one of the individuals.

You have to make a reasonable effort to get the recipient's SIN. If you do not, you may be liable to a $100 penalty for each time you do not provide the SIN on a slip. However, when a person tells you that he or she does not have a SIN but is applying for one, make sure you complete and file the return before the filing deadline. If you have not received the recipient's SIN by the time you prepare the T5 slip, leave box 22 blank.

Note
If you are reporting a payment made in trust to an institution for an individual (for example, a payment of interest made to the trustee of a self-directed RRSP), do not enter the individual's SIN in box 22.

If the recipient is not an individual, enter the recipient's Business Number, if available.

Box 23 - Recipient type

Enter one of the following codes to identify the recipient to whom the investment income was paid:

Box 27 - Foreign currency

Leave this area blank if you are reporting amounts in Canadian dollars.

If you cannot report amounts in Canadian dollars, identify the foreign currency according to the International Standard (ISO) 4217 called Codes for the Representation of Currencies and Funds. Enter the appropriate three-character alphabetic or numeric codes. If possible, use the alphabetic codes. For example:

When you report amounts in foreign currency, keep the following rules in mind:

• do not combine different foreign currency types on a T5 slip. Report only one type of foreign currency on each slip;
• print the name of the foreign currency on the slip (for example, U.S. DOLLARS) under generic boxes 15 and 16, for the recipient's benefit;
• if you file a paper T5 information return and leave box 27 blank, we will process the amounts on the T5 slips as Canadian dollars; and
• when completing your T5 Summary, you only have to enter one total income amount, whether or not the T5 slips are made up of different currency types.

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Box 28 - Transit

If you are reporting for a financial institution or any similar business, enter the recipient's transit code or branch identification code (up to eight characters) in this area.

Box 29 - Recipient account

If you can identify the recipient by an account number or policy number, enter the appropriate characters (up to 12) in this area.

Distributing the T5 slips

Send us each T5 slip (three slips printed per sheet), along with the T5 Summary, before March 1 of the year after the calendar year for which the information return is required. Send these forms to:

Ottawa Technology Centre
P.O. Box 9633, Station T
Ottawa ON  K1G 6H3

Send two copies of the T5 slip to the recipient before March 1 of the year after the calendar year for which the T5 information return is required.

You can send recipients an electronic copy of their T5 slips. The recipient must have consented in writing or by email to receive the slips electronically.

You do not have to keep a copy of the T5 slips. However, you have to keep the information from which you prepared the slips in an accessible and readable format.

Note
When a business or activity ends, you have to send the appropriate copies of the T5 slips to the recipients and us no later than 30 days after the date the business or activity ended.

How to amend your T5 slips

If you discover an error in your information return after filing it, you can make the corrections on paper or electronically, as described below.

Paper submissions - If you have to change some of the data on a slip, change only the required entries and leave the same amounts in the other boxes. You only have to file the amended slip. Print the word "AMENDED" at the top of the revised slip. Send two copies of the amended slip to the recipient. Send a copy of the slip to your tax centre with a letter explaining the reason for the amendment. Provide your filer identification number on your letter.

Note
You do not have to file an amended summary when you send in amended slips.

Cancelled slips - If you issued a slip by mistake and you want to cancel it, send us another slip with the same data as on the original slip. Print the word "CANCELLED" at the top of the slip. Send two copies of the cancelled slip to the recipient.

Duplicate slips - If you issue a slip to replace one that a client lost or destroyed, print the word "DUPLICATE" at the top of the replacement slip you are sending to the recipient. Do not send us a copy of the duplicate slip.

Note
If you are a subsidiary office and the original slip was filed by your head office, include the filer identification number used when the original slips were filed.

Electronic submissions - Filers who discover errors in information they have already filed can send revisions to us in electronic format (diskette, CD, or DVD). This means that you can file amendments and cancelled slips electronically. The format used is eXtensible Markup Language (XML). For up-to-date information, visit our Filing on magnetic media Web page. Amendments in electronic format should be sent to:

Electronic Media Processing Unit
Ottawa Technology Centre
Canada Revenue Agency
875 Heron Road
Ottawa ON  K1A 1A2

You can now send amended slips using Internet file transfer. For more information, see our Information Returns Electronic Filing Web page.

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Chapter 5 - The T5 Summary

You have to complete a T5 Summary if you prepare one or more T5 slips.

How to complete the T5 Summary

Before you complete the T5 Summary, see the information in "Chapter 3 - Filing Methods".

Do not include amounts on the T5 Summary for which you have not prepared a T5 slip.

If you filed a T5 information return for 2005, we mailed you a T5 Summary in December 2006 with your filer identification number, the name of your organization or business, and your mailing address preprinted on the form. If an independent service bureau or transmitter files your information return, give them this preprinted T5 Summary.

Return for the year ended

Enter the four digits of the calendar year to which the information return relates.

Filer identification number

The filer identification number is a unique number that applies to information returns (including the T5 information return). It has two alphabetic and seven numeric characters (for example, HA1234567). Do not enter your Business Number in this area.

If you did not receive a preprinted T5 Summary, enter your filer identification number in the space provided. If you have not filed a T5 information return in recent years or are unsure of your number, call 1-800-959-5525.

It is important that you make every effort to get a filer identification number before filing your T5 return. However, do not delay filing your return, even if you have not received your filer identification number before the due date. File your return on time and attach a note to it explaining why you have not entered the number.

Note
If you are filing for the first time and do not yet have a filer identification number, we will send you a confirmation letter once we receive your first information return. This letter will contain your new filer identification number.

Amended T5 Summary

If you are filing an amended T5 Summary, enter an "X" in this box.

Do not send an amended T5 information return if you are issuing replacement T5 slips only. We consider these slips to be duplicates.

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Additional T5 Summary

Use this box if you are preparing more than one T5 information return and the returns are:

• for the same filer with the same filer identification number; and
• for the same year.

Enter an "X" in this box on the T5 Summary for the second return and on each following T5 Summary as described above.

Name and address of filer or nominee (four lines)

Enter the name of the filer or nominee, and the full address of the branch or office filing the T5 Summary. Use the two-letter code for the province or territory. The codes are listed in Appendix C.

Business Number

It is important that you make every effort to provide us with your Business Number (BN) when filing your T5 return.

Enter the 15 digits of your BN in this area.

Have you filed a T5 information return before?

If you have sent us a T5 information return in a previous year, enter an "X" in the "Yes" box.

If this is the first year you are sending us a T5 information return, enter an "X" in the "No" box.

Language

Enter an "X" in the box for English or French. Any future correspondence and information we send you will be in the language you choose.

Is this form preprinted with an incorrect address?

If we mailed you a preprinted T5 Summary and the address is incorrect, enter the correct full address in the space provided.

Line 10 - Actual amount of dividends other than eligible dividends

Enter the total actual amount of dividends other than eligible dividends you reported in box 10 of all related T5 slips.

Line 11 - Taxable amount of dividends other than eligible dividends

Enter the total amount of the taxable dividends other than eligible dividends you reported in box 11 of all related T5 slips.

Line 12 - Dividend tax credit for dividends other than eligible dividends

Enter the total amount of dividend tax credits for dividends other than eligible dividends you reported in box 12 of all related T5 slips.

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Line 13 - Interest from Canadian sources

Enter the total amount of interest you reported in box 13 of all related T5 slips.

Line 14 - Other income from Canadian sources

Enter the total amount of other income you reported in box 14 of all related T5 slips.

Line 15 - Foreign income

Enter the total amount of gross foreign income you reported in box 15 of all related T5 slips.

Line 16 - Foreign tax paid

Enter the total amount of foreign tax paid that you reported in box 16 of all related T5 slips. You have to report this amount in Canadian currency.

Line 17 - Royalties from Canadian sources

Enter the total amount of royalties you reported in box 17 of all related T5 slips.

Line 18 - Capital gains dividends

Enter the total amount of capital gains dividends you reported in box 18 of all related T5 slips.

Line 19 - Accrued income: Annuities

Enter the total amount of accrued income and annuity income you reported in box 19 of all related T5 slips.

Line 20 - Amount eligible for resource allowance deduction

Enter the total of the amounts eligible for a resource allowance deduction that you reported in box 20 of all related T5 slips.

Line 31 - Total number of T5 slips filed

Enter the total number of T5 slips (there are three slips per sheet) you are filing with the T5 Summary. Do not include in this total any slips you marked as being void or that you left blank.

Lines 32 and 33 - Unclaimed amounts later paid out

We require special reporting when you have been holding an unclaimed amount and you finally identified the rightful owner and paid out the amount. A separate information return is required to report these amounts. For information on how to complete the T5 Summary and T5 slips to report unclaimed amounts you later paid out, see "Chapter 9 - Unclaimed amounts: Dividends or interest".

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Line 32 - Unclaimed amounts: Dividends and interest

Enter the total of the amounts you identified as unclaimed dividends or unclaimed interest later paid out. These amounts are included in box 10, 13, or 24 of the T5 slips that you identified as "UNCLAIMED DIVIDEND ACCOUNT" or "UNCLAIMED INTEREST ACCOUNT." For more information, see "Chapter 9 - Unclaimed amounts: Dividends or interest".

Line 33 - Tax deducted from unclaimed amounts

Enter the total amount of tax deducted shown on the T5 slips you identified as "UNCLAIMED DIVIDEND ACCOUNT" or "UNCLAIMED INTEREST ACCOUNT." The amount of tax deducted is shown on the T5 slip, directly below the recipient's postal code. For more information, see "Chapter 9 - Unclaimed amounts: Dividends or interest".

Lines 41 and 42 - Person from whom we can get more information

Enter the name and telephone number of a person who can answer any questions we may have about the T5 information return.

Certification

Sign and date the information return in this area of the T5 Summary.

Filing the T5 Summary

Send the completed T5 Summary, along with the related T5 slips to:

Ottawa Technology Centre
P.O. Box 9633, Station T
Ottawa ON  K1G 6H3

You must send these before March 1 of the year after the calendar year to which the T5 information return relates.

When a business or activity ends, you have to send the T5 Summary and the related T5 slips no later than 30 days after the date the business or activity ended.

You may want to keep a working copy of the T5 Summary for your records.

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Chapter 6 - Payments to non-residents of Canada

You have to file an NR4 information return to report amounts paid or credited, or amounts we consider to be paid or credited, by residents of Canada to non-resident persons. You have to do this if the total annual amount you paid or credited is $50 or more, or if you withheld tax (regardless of the amount you paid or credited).

For more information on how to complete the NR4 return, see Guide T4061, Non-Resident Withholding Tax Guide.

You have to withhold income tax of 25% (or the percentage established under a tax convention or agreement) on amounts you paid or credited to non-residents. Complete the remittance part (Part 2) of Form NR76, Non-Resident Tax - Statement of Account, and send it with the tax to:

International Tax Services Office
Canada Revenue Agency
2204 Walkley Road
Ottawa ON  K1A 1A8

Alternatively, you can make the payment to your chartered bank by the 15th day following the month in which the tax was withheld.

For more information, see Information Circular IC76-12, Applicable Rate of Part XIII Tax on Amounts Paid or Credited to Persons in Countries With Which Canada Has a Tax Convention, and Information Circular IC77-16, Non-Resident Income Tax.

If, as a resident of Canada who pays or credits amounts to or for a non-resident of Canada, you do not withhold (or you withhold but do not remit) non-resident tax, you are liable for the amount of tax you should have withheld and remitted, plus a penalty of 10% of the tax. We charge interest, compounded daily at the prescribed rate, on the total of the tax, penalties, and outstanding interest.

For more information about how we determine an individual's residence for tax purposes, see Interpretation Bulletin IT-221-Consolid, Determination of an Individual's Residence Status.

Chapter 7 - Accrued interest

Contracts acquired after 1989

You have to prepare T5 slips each year for all investment contracts acquired after 1989. You have to prepare these slips annually even if you did not pay the interest.

What is an investment contract?

An investment contract is any debt obligation other than those excluded by the definition of investment contract in subsection 12(11). For example, a debt obligation that provides for the payment of interest at least annually is not an investment contract because it is excluded by paragraph (i) of the investment contract definition.

A common type of investment contract would be a written agreement with a financial institution where a sum of money is invested for more than one year and the accrued interest on the funds invested is only paid at maturity (when the term of the contract expires).

On the T5 slip, enter the total of all interest accrued to each anniversary day. Do not include any interest you previously reported.

The anniversary day is:

• the day that is one year minus a day after the day the contract was issued (and every successive one-year interval after that day); or
• the day the contract was disposed of.

We consider an investment contract to be disposed of when it is converted, cancelled, sold, or redeemed.

Contracts acquired after November 12, 1981, and before 1990

For investment contracts (other than Canada Savings Bonds and debt obligations in bearer form) acquired after November 12, 1981, and before 1990, you have to prepare a T5 slip to report the interest that accrues to every third anniversary of the investment contract. Do not include interest you previously reported.

The third anniversary is the third December 31 after the end of the year in which the contract was originally issued, and each third December 31 after that.

If a contract is disposed of before its third anniversary date, or between third anniversary dates, you have to prepare a T5 slip to report the interest earned from the date it was acquired, or its previous third anniversary, to the date of disposal.

The first three-year anniversary for investment contracts acquired before 1982 began on December 31, 1988.

Contracts acquired before November 13, 1981

Investment contracts acquired before November 13, 1981, are exempt from the three-year reporting requirement if they meet all the conditions in former subsection 12(10). However, contracts that the recipient can cancel subject to a penalty on payout are not exempt.

Interest adjustments and penalties

Sometimes an individual may withdraw funds from an investment contract after receiving T5 slips for a number of years. Withdrawing funds can often mean an early redemption penalty, which lowers the interest rate you previously calculated on the investment contract. As a result, the actual interest you pay to the recipient is less than the total of the accrued interest reflected on the T5 slips you issued to the recipient in previous years.

In such cases, do not issue a negative T5 slip or amend the slips for previous years. Under subsection 20(21), the recipient is entitled to deduct, in the year in which the investment was disposed of, the excess interest previously included in income.

Indexed debt obligations issued after October 16, 1991

An indexed debt obligation is a debt obligation with terms or conditions that provide for an adjustment (determined by a change in the buying power of money) to the amount owing under the obligation for a period during which it was outstanding.

We treat as interest any increase or decrease in the amount owing under an indexed debt obligation relating to a change in the buying power of money.

If the buying power of money decreases, you have to treat as interest any additional amount the holder of the obligation received or was entitled to receive in the year.

If the buying power of money increases, treat the decrease in the amount owing under an indexed debt obligation as interest the debtor received or was entitled to receive in the year. In this situation, the holder of the obligation can deduct the amount paid to the debtor.

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Chapter 8 - Blended payments and deemed dividends

Blended payments

A blended payment is an amount made up partly of capital and partly of interest or some other type of income. You may not be able to easily identify the interest and capital parts. Treat as interest on a debt obligation the part that can be reasonably considered to be interest. Report this amount in the same way you would report any other interest.

We do not consider a payment to be a blended payment if:

• the interest or income element is definitely known;
• the amount is received either as an annuity payment or in satisfaction of the recipient's rights under an annuity contract; or
• the payment is from certain obligations issued at a discount.

For more information, see archived Interpretation Bulletin IT-265R3, Payments of Income and Capital Combined.

Deemed dividends

Section 84 - Deemed dividends

In some situations, we consider that an amount paid by a corporation resident in Canada and received by a shareholder is a dividend. In general terms, the situations include the following:

1. he paid-up capital of the corporation increases other than by means of a stock dividend without a corresponding increase in net assets or decrease in net liabilities;
2. property is distributed to shareholders when a corporation's business is wound-up, discontinued, or reorganized;
3. any of the company's own shares are redeemed, acquired, or cancelled, other than by an ordinary purchase in the open market; or
4. the paid-up capital for any class of shares of capital stock is reduced.

Generally, you calculate the deemed dividend for each of the situations described above as follows:

• For situation a), include the increase in paid-up capital of the shares in that class. However, subtract any increase in the value of net assets (or decrease in the value of net liabilities) or any decrease in the paid-up capital of the shares of any other class.
• For situation b), include the full amount or value of the funds or property distributed. However, subtract any reduction in the paid-up capital for the class of shares for which the distribution was made.
• For situation c), include the full amount paid. However, deduct the paid-up capital for the shares that were redeemed, acquired, or cancelled.
• For situation d), include the amount paid minus any decrease in paid-up capital.

For more information on deemed dividends, call us at 1-800-959-5525.

Subsection 15(3) - Deemed dividends

Under certain circumstances, we may consider the interest or dividends paid by a corporation resident in Canada on an income bond or income debenture to be dividends.

If they are eligible dividends, report these deemed dividends in boxes 24 and 25 of the T5 slip if the corporation pays them to an individual. Report them in box 24 only, if they are paid to a corporation.

If they are dividends other than eligible dividends, report these deemed dividends in boxes 10 and 11 of the T5 slip if the corporation pays them to an individual. Report them in box 10 only, if they are paid to a corporation.

Report amounts we do not consider to be dividends as interest income in box 13 or 14. For more information, see archived Interpretation Bulletin IT-52R4, Income Bonds and Income Debentures.

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Chapter 9 - Unclaimed amounts: Dividends or interest

Remittances

We use the term unclaimed dividends or unclaimed interest to refer to dividends or interest you receive in a year for another person (the beneficial owner) who remains unknown at the end of the next year.

If you received any of these unclaimed amounts, you have to deduct a specified percentage (see the following table) as tax payable by that beneficial owner. Send the tax you withhold, along with a statement showing the period covered, the gross income amount, and the amount of tax you deducted to your tax centre, no later than 60 days after the end of the next year (due date). Send the payment and statement separately from any T5 information returns you are filing.

We charge interest, compounded daily at the prescribed rate, on amounts you deduct but do not send us before the due date. We will charge interest from the date the remittance is due to the actual date you remit the amounts you deducted. Both the interest charges and the tax you deduct are payable to the Receiver General for Canada.

A penalty applies if you do not remit tax withheld. The penalty is 10% of the amount you withheld but did not remit. If we have assessed this penalty, and then for a second time in the same calendar year you do not remit tax knowingly or under circumstances amounting to gross negligence, you could be subject to a penalty of 20% of the amount you withheld but did not remit.

Note
You do not have to withhold and remit tax for unclaimed amounts you included in your income for the current or any previous year, or on which you withheld and remitted tax in a previous year.

Reporting requirements

You have to follow special procedures to report unclaimed amounts you held and later paid out to the rightful owner. An owner who is a resident of Canada must report the gross amount of dividends or interest for the year during which you originally received the amount.

You have to prepare a separate T5 slip and T5 Summary stating the amount you received for the recipient, the year in which you received the amount, and the amount of tax you remitted on it.

If you pay unclaimed amounts you received in different calendar years to the same claimant in the same year, make sure you prepare separate T5 slips and T5 Summary forms for each calendar year in which you actually received the amounts. The calendar year on each T5 slip you issue must be the calendar year in which you received the amount, not the year you paid it to its rightful owner.

Prepare a T5 slip for the previously unclaimed amount in all cases, regardless of the amount of income.

When completing the T5 slip, enter the year you made the payment and the amount of tax you deducted in the space directly above the dividends from Canadian corporations and the federal credit (above boxes 25 and 26). Identify the T5 slip with the words "UNCLAIMED DIVIDEND ACCOUNT" or "UNCLAIMED INTEREST ACCOUNT" directly below the area for your name and address. In addition, enter the name of the person paying the amount, if different from that of the filer, directly below this description.

A separate T5 Summary has to accompany these T5 slips. Identify the T5 Summary by entering either "UNCLAIMED DIVIDEND ACCOUNT" or "UNCLAIMED INTEREST ACCOUNT" on the second line provided for the name and address of the filer or nominee.

Note
Submissions for unclaimed dividends and unclaimed interest must be filed on paper.

To calculate the federal dividend tax credit on unclaimed dividends later paid out, use the rate in effect for the calendar year in which you received the dividends.

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Note
For 2006 and later-year eligible dividends, the taxable amount of dividends is 45% more than the amount paid. The dividend tax credit that applies to these dividends is 18.9655% of the taxable amount.

For dividends received from 1988 to 2005 and for 2006 and later-year dividends other than eligible dividends, the taxable amount of dividends is 25% more than the amount paid. The federal dividend tax credit that applies to these dividends is 13.3333% of the taxable amount.

For more information, see Information Circular IC71-9, Unclaimed Dividends.

If unclaimed interest or dividends received in 1987 or previous years are eligible for the interest and dividend income deduction, indicate this on the T5 slip.

Unclaimed dividends later paid out - Complete the T5 slip for the 2004 dividends as follows:

[View a larger version of this image]

Unclaimed dividends later paid out - Complete the T5 slip for the 2005 dividends as follows:

[View a larger version of this image]

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Appendix A - References

The following publications relate to topics in this guide. You can view and print them by selecting their links, or you can get a printed copy by calling  1-800-959-2221.

Guides

T4013 T3 Trust Guide

T4061 Non-Resident Withholding Tax Guide

T4091 T5008 Guide - Return of Securities Transactions

Information circulars

IC71-9 Unclaimed Dividends

IC77-16 Non-Resident Income Tax

IC92-2 Guidelines for the Cancellation and Waiver of Interest and Penalties

IC97-2 Customized Forms (available in electronic format only)

Interpretation bulletins

IT-66 Capital Dividends

IT-67 Taxable Dividends From Corporations Resident in Canada

IT-88 Stock Dividends

IT-149 Winding-up Dividend

IT-221 Determination of an Individual's Residence Status

IT-396 Interest Income

IT-531 Eligible Funeral Arrangements

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Archived Interpretation bulletins

The following interpretation bulletins are archived and kept for historical purposes. They are no longer available in print but can be accessed by selecting their links. These bulletins may contain law not currently in force.

IT-52 Income Bonds and Income Debentures

IT-265 Payments of Income and Capital Combined

IT-507 Small Business Development Bonds and Small Business Bonds

Appendix B - Forms

T5 slip

T5 Summary

Appendix C - Provincial and territorial codes

Use the following abbreviations when you enter the province or territory on the T5 slip and T5 Summary.

Appendix D - Income Tax Act references

You may find these references for the following topics helpful when using this guide.

References are to the Income Tax Act, except where preceded by the letters "Reg.", in which case the reference is to the Income Tax Regulations.

Topic

A - B - C - D - E - F - I - L - P - R - U

A

• Accrued interest
  • Chapter 7 - Accrued interest
    12(4), (9), (11), 20(14), (21), Reg. 201(4) 13

B

• Blended payments
  • Chapter 8 - Blended payments and deemed dividends
    16(1), (2), (3), (4), (5) 14

C

• Capital gains dividends
  • Box 18 - Capital gains dividends
    130(2), 130.1(4), 131(1) 9

D

• Deemed dividends
  • Deemed dividends
    84, 15(3) 14
• Dividends from Canadian corporations
  • Boxes 10, 11, and 12 - Dividends from Canadian corporations
    82(1), 130.1(2), 137(4.1) 7
• Due date
  • Due date
    Reg. 205(1), (2) 4

E

• Electronic filing
  • Filing on magnetic media
    Reg. 205.1 5
• Eligible funeral arrangements (EFA)
  • Box 14 - Other income from Canadian sources
    148.1(1), (2), (3), 12(1)(z.4), Reg. 201(1) 8

F

• Failure to make or file an information return
  • Failure to file an information return
    238(1) 4
• Failure to provide a social insurance number
  • Failure to provide an identification number
    162(5), (6) 4
• Failure to remit amount withheld
  • Remittances
    227(9) 14
• Federal dividend tax credit
  • Box 12 - Federal dividend tax credit
    121 7
• Foreign spin-offs
  • Box 15 - Foreign income
    86.1 9

I

• Indexed debt obligations
  • Indexed debt obligations issued after October 16, 1991
    248(1) 13
• Interest from Canadian sources
  • Line 13 - Interest from Canadian sources
    130.1(2), 137(4.1), Reg. 201(1) 11
• Investment contracts
  • When do you have to prepare a T5 slip?
  • What is an investment contract?
    12(4), (11), Reg. 201(4) 6, 13

L

• Late-filing penalty
  • Late-filing penalty
    162(7) 4

P

• Payments to non-residents
  • Chapter 6 - Payments to non-residents of Canada
    Reg. 202(1) 12

R

• Requirements for preparing an information return
  • Chapter 3 - Guidelines for T5 information returns filed on paper
    221(1), Reg. 201 6
• Royalties from Canadian sources
  • Box 17 - Royalties from Canadian sources
    Reg. 201(1)(c) 9

U

• Unclaimed interest and dividends
  • Chapter 9 - Unclaimed amounts: Dividends or interest
    153(4) 14

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Addresses of tax centres

Filers served by a tax services office on the left side of the following list should deal with the corresponding tax centre or office on the right.

Your opinion counts!

We review our publications every year. If you have any comments or suggestions to help us improve them, we would like to hear from you.

Please send your comments to:

Taxpayer Services Directorate
Canada Revenue Agency
750 Heron Road
Ottawa ON K1A 0L5