How to Prepare a T5 Slip Watch Video
Allan Madan, CPA, CA
A T5 slip reports dividends paid by a Canadian corporation to its shareholder(s). Read More…
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.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
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
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.
Mr. Madan – I must THANK YOU for what you have published on line with regard to bookkeeping and accounting ! I have a bookkeeping business in British Columbia and I find myself regularly visiting your site with various questions I have about
my clients businesses. I really appreciate your sharing your knowledge and expertise on-line – it saves me a lot of time and
my clients a lot of expense.
Hi Judith, thank you for your feedback. I really appreciate it.
thanks for this information. How do you then send this prepared T5 slip to the CRA if you are an individual and don’t have a software program?
Hi Sue, yes, send the T5 slip along with a T5 summary to the CRA for processing.
Hi Madan,
Thank you very much for the information. My business parter says to me that I or a personal accountant have to prepare T5 slip(not by corporation) for the investment income and I was stuck. So your post is a life saver! Thank you.
I would like to understand more and would appreciate your answer.
Is it common for individual to prepare for T5slip and T5 summary, not by corporation who issued dividends?
There is no obligation for corporation to report the amount of dividends issued?
Hi Yai, a corporation must prepare a T5 slip for each shareholder that it paid dividends to in the calendar year. All of the T5 slips issued should be attached to a T5 summary. The T5 slips and summary must be filed with the CRA by February 28.
Are the factor numbers you are using for your calculations the same for dividends paid out in 2017 or did they change? Does Revenue Canada ever change these or will they be good for 2018 dividends also?
Hi Jude, the factors for 2017 and 2018 are the same.
Hi Allan,
Thank you for the information, very well explained.
One question, when dividends should be declare if the owner of a CCPC is planning to withdraw 60,000.00 in the fiscal year of the corporation ( may 2017 to April 2018) $5,000.00 each moth (40k in 2017 & 20k in 2018)
Thanks again!
Hi Mirtha, the T5 slip reports dividends paid to a shareholder during the calendar year (January 1 to December 31), regardless of the company’s year end. In your example, the T5 slip should report dividends paid of $40,000 for the 2017 calendar year.
Hi Madan;
Why box 11 in the above example has two different amounts in different photo 58500 and 58000
I am assuming it is a typo
cheers
blentin
Hi Blentin, this is a typo. The amounts in box 11 should be the same.
Hi
I recently just opened my corporation as of August 2017 and corporation only made 46K and aftter expenses shows 21K, i did pay myself a total dividend of about 12K do you have any recommendation with regards to structure and if corporation will be paying substantial taxes where in profit of 21K
Hi Musatpha, the corporation will pay corporate income taxes of 15% of $21,000 in profits.
Hello
Can I use the same rate 1.17 and 0.1231 for the Box 11 and 12 for Year of 2017 Reporting?
Or is the rate different for 2017 Year. Thank you.
Hi Peter, yes, you can.
Hi, Mr. Madan: I have a question regarding how to calculate the dividends in the financial statements Say I issued myself the T5 of 50,000 in 2017. For the fiscal 2017, my company has 100,000 net income, and 50,000 retained earnings from previous year, in the balance sheet, the liability + shareholder’s equity becomes 150,000, that requires the total assets must equal to 150,000. but after paid 50,000 dividends, the cash deposit contains only 100,000 left. I don’t know how to make that total assets equal to the liability + shareholder’s equity.
Hi Lule, the company’s retained earnings should be reduced by the amount of dividends paid in the year, which is $50,000, in your case. Based on what you have told me, the retained earnings should be calculated as follows:
(a) Prior Year Retained Earnings – $50,000
(b) Net Income – $100,000
(c) Dividends Paid – ($50,000)
Total = $100,000
Therefore, your total assets = liabilities + equity.
Hi Madan. Your published article was very helpful in enhancing my understanding. Question – In order to calculate the yearly dividend withdrawal, are all dividend withdrawals made a) within the ‘calendar year’ OR b) within company’s fiscal year added to get the yearly amount? Example: Corp tax year is Apr to Mar – will withdrawals made during Apr to Mar period be added up to get the yearly dividend amount for personal tax purposes? or will withdrawals made during Jan to Dec period be used to get this amount for personal tax purposes?
Hi Rav, regardless of the company’s fiscal year end, all withdrawals (dividends) made from January 1 to December 31 are reported on a T5 slip for the year, and taxable to the recipient.
When I do the payment.
DO I have to pay the shareholder individuals using bank cheques or Can I doing direct deposit into his bank account multiple times in different days(because there are daily transfer limit on some bank’s account) ?
Thank you.
Hi, direct deposit is fine.
Hi
First of all thank you for posting videos they all are very helpful. I am learning a lot from them.
Regarding T5 i have the T5 guidine from canada.ca
it look like the rate are different for 2018 the rate for box 11 is 16% for 2017 is 17%
same for box 12 2018-10.03% of BOX 11
Hi Roy,
Thanks for reaching out to me. The dividend gross-up factor for 2018 is 16% and the dividend tax credit rate is 10.0313% for 2018.
Hello,
I am declaring dividends in my corporation to a connected corporation. Which boxes do I complete on the T-5 since this dividend would not attract any tax for the receiving corporation
Hi Sylvia,
When preparing a T5 slip, you cannot specify if a corporation is connected. When preparing Schedule 3 of the recipient corporation’s T2 Corporate Return, specify that the payer corporation is connected to the recipient corporation so that Part 4 tax is not triggered.
If the operating company issue dividend to it’s holding company. Do we still prepare T5 to holding company and send to CRA
Thanks
Hi Stella,
Yes, the operating company still has to prepare a T5 slip and summary form to report the dividends paid to its parent company.
Dear Allan,
My CCPC received some eligible dividends from equity investment in Canadian publicly listed companies. For these dividends to be distributed to shareholder (myself), should it be included in Box 24 instead of Box 10? If so, can I distribute eligible dividends received in 2018 to myself in the same year or I should only distribute such eligible dividends received previous year? Thanks so very much for your insightful blog and comments
Eligible dividends paid from a CCPC to you should be recorded on box 24 of your T5 Slip. Eligible dividends can be paid to you without penalty, so long as the amount paid does not exceed the balance in the corporation’s GRIP balance. The corporation’s GRIP balance can be founded on Schedule 53 of the T2 Corporate Tax Return.
Dear Allan,
Is non-eligible dividend tax-free (for a limited amount) if someone doesn’t have ANY other income at all? Or can someone have a part-time job and also receive non-eligible dividend with no tax (up to a certain limit)? Can you please give an example?
Thanks,
Hi Suzan,
Here are two examples (for 2018 tax year, Ontario resident taxpayer):
1. Taxpayer received $35,000 of non-eligible dividends in the year and has no other source of income. Total tax payable in this case is equal to $957.
2. Taxpayer receives $25,000 of non-eligible dividends and a salary of $10,000 in the year. Total tax payable in this case is equal to $2,372 (including CPP and EI)
Hi,
I’ve done the T5 for the dividend but how do I enter it on the Corporate T2?
Thanks
Darlene
Hi Darlene,
Enter the actual amount of dividends paid on Schedule 3 of the T2 Corporate Tax Return.
Hi,
The factor 1.17 to gross up actual amounts to eligible amounts is same for all years?
Also, the DTC factor remains same for all years?
Hi Bilal,
My answers are as follows:
Eligible Dividends
The eligible dividend gross-up rate is 38% for 2017, 2018 and 2019. The dividend tax credit rate for each year is 15.02% of the grossed-up amount of the dividend OR 20.73% of the actual dividend received.
Other Than Eligible Dividends
With respect to, ‘Other than eligible dividends’ the gross-up rate for 2017 is 17%; 2018 is 16%; and 2019 is 15%.
The dividend tax credit rates are as follows:
2019: 9.0301% of the grossed-up amount of dividends
2018: 10.0313% of the grossed-up amount of dividends
2017: 10.5217% of the grossed-up amount of dividends
Thank you, Allan for your great help with taxes.
My incorp is winding down with retained earnings.
Question:
On T5, does the corp need payroll account to payout dividends to sole s/h?
Thank you very kindly,
Richard
Dear Allan,
I want to wind down my incorp. What are the options and best?
Thanks again Allan
Richard
Hi Richard,
No, a payroll account is not required to file a T5 slip.
thanks for this as its is very helpful. Would be most helpful would be how to submit to CRA
Hi Don,
Please use the CRA’s My Business Account, which is a free online service to file a T5 slip(s) and T5 Summary. See this link https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html