Guide to Preparing a T5 Slip 

A T5 slip is a document that details the dividends a Canadian corporation has paid to its shareholders. If you’re looking to create a T5 slip, follow these straightforward eight steps: 

Understanding the T5 Slip The T5 slip is used to record dividends distributed by a Canadian corporation to its shareholders. 

Steps to Create a T5 Slip: 

• Recipient Details: Begin by entering the first and last name, along with the address of the recipient. This is the person who receives the dividend. 

• Payer Information: Input the name and address of the payer, which in this context is your corporation. 

• Dividend Year: Note down the year the dividend was received. For instance, if it was received in 2016, write “2016.” 

• Dividend Type: It’s essential to identify whether the dividend is an eligible or non-eligible dividend. Eligible dividends are those paid from corporate profits exceeding $500,000 and are taxed at a lower rate. Conversely, non-eligible dividends come from profits below $500,000. Typically, smaller Canadian businesses distribute non-eligible dividends. 

• Dividend Amount: In the designated boxes, record the dividend amount received during the year. Use box 24 for eligible dividends and box 10 for non-eligible ones. For instance, if you got $50,000 of non-eligible dividends in 2016, that’s the amount you’d enter. 

• Taxable Dividend Amount: In box 11, input the taxable dividend amount. This is derived from a formula: Dividend Amount (e.g., $50,000) x 1.17 = Taxable Amount (e.g., $58,500). This taxable amount will be included in your personal tax return. 

• Dividend Tax Credit: The amount for this is entered in Box 12. It’s calculated as: Dividend Amount (e.g., $50,000) x 0.1231 = Dividend Tax Credit (e.g., $6,155). This credit can be claimed on your personal tax return to decrease your annual taxes. 

• T5 Summary: This is a consolidation of all figures from each T5 slip. If a corporation has several shareholders, it might issue multiple T5 slips. Ensure you note down the year (like 2016) and your company’s business number on the T5 summary form.