How to Prepare a T5 Slip

Français

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

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

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.

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.

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.

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.

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.