Every February, Canadians with investment accounts start receiving slips in the mail — and the T5 Statement of Investment Income is one of the most common. Whether you hold a savings account at your bank, own shares that pay dividends, or have a GIC maturing, the T5 captures the investment income you earned outside a registered account. Understanding what each box means, how the dividend gross-up works, and where this income lands on your T1 return will help you file accurately and avoid unnecessary CRA correspondence.
The T5 is a Statement of Investment Income issued to Canadian residents who receive certain types of income from non-registered investments during a calendar year. It is not a tax you pay — it is a reporting document that tells both you and the CRA what investment income you received so it can be included on your personal tax return.
T5 slips are issued by banks, trust companies, credit unions, investment firms, brokerages, and corporations that pay dividends to shareholders. If you earned interest on a savings account, received dividends from a publicly traded company, or collected income from a bond or GIC, the institution paying that income is responsible for preparing and filing your T5 with the CRA by the last day of February following the tax year.
One important threshold to know: a payer is not required to issue a T5 slip if the total payments to you during the year are under $50. However, that exemption applies to the payer's reporting obligation only — you are still required to report every dollar of investment income on your T1 return, even without a slip in hand.
If you hold investments in a non-registered account — a regular brokerage account, a high-interest savings account, a GIC outside an RRSP or TFSA — and you earned income from those investments, you will likely receive a T5. Registered accounts like RRSPs, RRIFs, and TFSAs are exempt because income inside those accounts is either tax-sheltered or tax-free.
Corporate shareholders who receive dividends from a Canadian corporation, individual bondholders earning interest, and anyone receiving royalties or foreign investment income routed through a Canadian payer may all find a T5 in their tax package.
The T5 has several numbered boxes, and knowing what each one means makes it far easier to enter your information correctly.
Box 10 — Actual amount of eligible dividends. This is the cash dividend you actually received from eligible sources, typically publicly traded Canadian corporations or Canadian-controlled private corporations (CCPCs) that have elected to pay eligible dividends out of income taxed at the general corporate rate.
Box 11 — Taxable amount of eligible dividends. You do not report Box 10 on your return — you report Box 11. The CRA requires you to gross up the actual dividend by 38%, so Box 11 equals Box 10 multiplied by 1.38. A $1,000 eligible dividend becomes $1,380 in taxable income.
Box 12 — Dividend tax credit (DTC) for eligible dividends. The gross-up exists because corporate tax has already been paid on the income before it reached you. The dividend tax credit partially compensates for that double taxation. The federal DTC for eligible dividends is 15.0198% of the taxable amount in Box 11. On that same $1,000 dividend, Box 11 is $1,380 and Box 12 would show $207.27 as a credit against your federal tax. Provincial DTCs apply separately.
Box 24 — Actual amount of dividends other than eligible. These are non-eligible dividends, most commonly paid by CCPCs out of income that was taxed at the small business deduction (SBD) rate rather than the general corporate rate.
Box 25 — Taxable amount of non-eligible dividends. The gross-up rate here is 15%, so Box 25 equals Box 24 multiplied by 1.15. A $1,000 non-eligible dividend becomes $1,150 of taxable income. The lower gross-up reflects the lower corporate tax rate those earnings faced.
Box 26 — DTC for non-eligible dividends. The federal dividend tax credit for non-eligible dividends is 9.0301% of Box 25. On $1,150 taxable income, that credit is $103.85 federally.
Box 13 — Interest from Canadian sources. This catches interest earned on savings accounts, GICs, term deposits, bonds, and stripped bonds. Unlike dividends, interest income receives no gross-up and no dividend tax credit — every dollar in Box 13 is included in income at your full marginal rate. This is why interest-bearing investments are often better held inside a registered account when possible.
Box 14 — Other income from Canadian sources. A catch-all for Canadian investment income that does not fit the other categories.
Box 15 — Foreign income. Investment income received from foreign sources — dividends from a US stock, for example — is reported here in Canadian dollars. Foreign income does not qualify for the dividend gross-up or DTC; it is included in income at face value.
Box 16 — Foreign tax paid. If withholding tax was deducted by a foreign country before you received the income, Box 16 shows that amount. You may be able to claim a foreign tax credit on Schedule T2209 to avoid double taxation.
Box 17 — Royalties from Canadian sources. Payments for the use of intellectual property, natural resources, or similar rights appear here.
Box 34 — Capital gains dividends. Mutual funds and certain investment vehicles sometimes designate a portion of their distributions as capital gains dividends. These flow through to your Schedule 3 and receive the preferential capital gains inclusion treatment rather than being taxed as ordinary income.
Box 35 — Return of capital. This is not income. Return of capital represents a portion of your original investment being paid back to you. It is not taxable in the year received, but it reduces the adjusted cost base (ACB) of your investment. Tracking ACB carefully matters because a lower ACB increases the capital gain — or reduces the capital loss — when you eventually sell.
The dividend gross-up and tax credit system exists to integrate corporate and personal tax. When a Canadian corporation earns $100 of profit, it pays corporate tax first — at the general rate for eligible dividends, at the small business rate for non-eligible dividends. The remaining after-tax amount is paid out to shareholders as a dividend. Without any adjustment, shareholders would pay full personal tax on that dividend as though the corporation had never paid tax on the underlying income — effectively taxing the same dollars twice.
The gross-up restores the dividend to an approximation of the pre-tax corporate income, so your personal tax is calculated on the full amount. The DTC then reduces your personal tax by an amount intended to reflect what the corporation already paid. The system is not perfect integration, but it significantly reduces the double-taxation effect compared to interest income, which has already been fully taxed at the corporate level once.
One rule that catches many investors off guard: you must report interest on compound GICs and similar investments annually, even if no cash has actually been paid to you yet. The CRA's accrual rule requires you to include interest in income on each anniversary date of the investment. If you hold a three-year compound GIC, you will report interest at the end of year one, year two, and year three — not only when the GIC matures. Your financial institution should issue a T5 each year reflecting the accrued amount.
T5 income flows through Schedule 4 — Statement of Investment Income before landing on your T1 summary. The key lines to know are:
The dividend tax credits from Boxes 12 and 26 flow to the federal tax credit section of your return, reducing the tax you owe rather than reducing your income.
If you hold investments jointly, the T5 should be split between the account holders according to each person's contribution to the investment. The CRA expects consistent reporting year over year.
At Swift Accounting Calgary, we regularly work with clients who receive multiple T5 slips from different institutions and need help reconciling them, tracking ACB for return-of-capital distributions, or claiming foreign tax credits correctly. Getting this right from the start avoids reassessments and interest charges down the road.
If you have not received a T5 by mid-March and you know you earned investment income, contact your financial institution. You can also check your CRA My Account — many issuers now file slips electronically and they appear there before the paper copy arrives. If a T5 contains an error, the issuer must file an amended slip; do not simply change the number on your return without supporting documentation.
If the payer was not required to issue a slip (payments under $50), you still need to report the income. Check your year-end account statements and calculate the amount yourself.
For complex situations — multiple foreign income sources, significant return-of-capital tracking, or dividends from a private corporation you own — working with a qualified accountant ensures the income is reported accurately and that every available credit is claimed. Swift Accounting helps Calgary investors navigate the full picture of their investment income each tax season.
If you have questions about your T5 slips or want help filing your return accurately, contact Swift Accounting today.
Yes. The $50 threshold only determines whether the payer must issue a T5 slip — it does not exempt you from reporting the income. Any investment income you earned, regardless of the amount or whether a slip was issued, must be included on your T1 return. Check your year-end account statements to find the correct figures.
Because of the dividend gross-up. For eligible dividends, you must multiply the actual dividend (Box 10) by 1.38 and report the result (Box 11) as income. This grossed-up amount approximates the pre-tax corporate income that generated your dividend. You then claim the dividend tax credit (Box 12) to offset the extra tax the gross-up creates. The net effect is typically a lower tax rate on eligible dividends than on interest income at most income levels.
No — not in the year you receive it. Box 35 (return of capital) represents a portion of your original investment being returned to you, so it is not income. However, it reduces the adjusted cost base of your investment. When you eventually sell, a lower ACB means a larger capital gain (or smaller capital loss), so you will eventually pay tax on those amounts. Keeping accurate ACB records is essential if you receive regular return-of-capital distributions from funds or REITs.
The dividend from the US stock appears in Box 15 (foreign income) converted to Canadian dollars, and the 15% withholding tax appears in Box 16 (foreign tax paid). You include Box 15 in income at your full marginal rate — the dividend gross-up and DTC do not apply to foreign dividends. To avoid double taxation, you can claim a federal foreign tax credit on Form T2209, which reduces your Canadian tax by the lesser of the foreign tax paid or the Canadian tax otherwise payable on that income. Most tax software handles this automatically when you enter Box 16.
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