Note: This assumes that you are paying income taxes at the small business tax rate i.e. your net profits for tax purposes are less than $500,000. These are referred to as "dividends other than eligible dividends".
You have to fill out both a T5 slip and complete the following boxes
- the actual amount of dividends on Box 10 of the slip
- the grossed up amount of dividends on Box 11 = amount of Box 20 X 1.25
- the dividend tax credit on Box 12 = 13.33% X Box 11
For example if you pay yourself a dividend of $20,000 you would:
Enter $20,000 on Box 10
Enter $25,000 on Box 11
Enter $3,332.50 on Box 12.
You will also need to enter the
- payer's name and address
- recipient's name and address
- Report code – The code in this box indicates that this slip is the original ("O"), an amended ("A"), or a cancelled slip ("C").
- Recipient type – The code in this box indicates if the amount was paid to an individual ("1"), a joint account ("2"), a corporation ("3"), an association, trust, club, or partnership ("4"), or a government ("5")
- Recipient identification number – If you are an individual (other than a trust),the number in this box is your social insurance number. In all other cases, the number is your 9 characters Business Number.
The summary is fairly straightforward and is basically an aggregation of all the dividend slips. After entering the name, business number, address etc of the corporation you need to indicate:
- how many slips were filed
- add up the amounts per the boxes and indicate them on the appropriate line
- Payment of dividends should be recorded in the corporation minutes
- The CRA has fillable dividend forms i.e. the appropriate fields can be entered online and then printed out.
- Once completed the T5 slips and T5 summary should be mailed to the address indicated on Page 2 of the summary.
- Another copy should be kept for your records.
- A third copy should be given to the recipient(s) of the dividends to maintain with their tax return.
- The deadline for completion is February 28th of the calendar year in which the dividend was paid.
As always it is good to get the advice of an accountant before filling out and filing the slips and forms.