How to Prepare a T5 Slip

Allan Madan, CA
 Jan 31, 2017
Share
2 Comments
Share

A T5 slip reports dividends paid by a Canadian corporation to its shareholder(s). In order to prepare a T5 slip, you must follow these 8 easy steps below.

What is a T5 slip?

A T5 slip reports dividends paid by a Canadian corporation to its shareholder(s).

Preparing a T5 Slip

In order to prepare a T5 slip, you must follow these 8 easy steps.

Step 1: Fill in recipient’s first name, last name, and address. The recipient is the individual receiving the dividend.

Step 1
How to Prepare a T5 Slip Step 1

Step 2: Fill in the payer’s name and address. The payer is your corporation.

How to Prepare a T5 Slip step 2
How to Prepare a T5 Slip step 2

Step 3: Write the year in which the dividend was received, e.g. 2016.

How to Prepare a T5 Slip step 3
How to Prepare a T5 Slip step 3

Step 4: Determine if the dividend paid is an eligible dividend or a non-eligible dividend. An eligible dividend is paid from corporate profits in excess of $500,000. Eligible dividends have a preferential or lower tax rate. A non-eligible dividend is paid from corporate profits below $500,000. Most small businesses in Canada pay non-eligible dividends.

How to Prepare a T5 Slip step 4
How to Prepare a T5 Slip step 4

Step 5: Enter a number of dividends that you received in the calendar year (January 1 to December 31) in either box 24 for eligible dividends or box 10 for non-eligible dividends. For this example, assume that you received $50,000 of non-eligible dividends from your corporation in the 2016 calendar year.

How to Prepare a T5 Slip step 5
How to Prepare a T5 Slip step 5

Step 6: Enter a number of taxable dividends received in box 11. This is a formula and is calculated as follows: Actual Amount of Dividends (e.g. $50,000) multiplied by a factor of 1.17 is equal to the taxable amount (e.g. $58,500). On your personal tax return, you will include the taxable amount of dividends in your taxable income.

How to Prepare a T5 Slip step 6
How to Prepare a T5 Slip step 6

Step 7: Enter the amount of the dividend tax credit in Box 12. This is a formula and is calculated as follows: Actual Amount of Dividends (e.g. $50,000) multiplied by a factor of 0.1231 is equal to the dividend tax credit (e.g. $6,155). You can claim this credit on your personal tax return to reduce your taxes payable for the year.

How to Prepare a T5 Slip step 7
How to Prepare a T5 Slip step 7

Step 8: Complete the T5 summary. The T5 summary adds up all of the figures reported on each T5 slip. A corporation may issue multiple T5 slips if it has multiple shareholders. Remember to write the year (e.g. 2016) and your company’s business number on the T5 summary form.

How to Prepare a T5 Slip step 8
How to Prepare a T5 Slip step 8

Disclaimer

The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.

Related Resources

Leave Your Comment Here:
Required fields are marked.

Your email address will not be published. Required fields are marked *

one × one =

Comments 2

  1. should I be sending the CRA more Remittance money in months that I declare non-eligible dividends in?

    I currently have a salary of 40k for the year setup and CRA remittance based off of that. but I plan to pay myself a few dividends over the next few months about $12000.00 total in ineligible dividends. How do I pay the tax on that.

    Thanks Scott

    1. Hi, Scott. You can pay the personal tax owing with your personal tax return, which is due on or before April 30, 2018. However, for the 2018 tax year, you will likely be required to pay quarterly income tax installment payments.

Pin It on Pinterest

Share This