Understanding Canadian tax statements: T3, T4 and T5
Need some help understanding Canadian tax statements from an experienced accountant? Here’s a quick guide to the T3, T4 and T5.
When filing taxes for the CRA, or sending on your paperwork to your accountant, sometimes it feels like we only understand a small portion of what’s going on. As experienced accountants, we love to explain all the nuts and bolts that goes into your tax return.
To this end, here’s a quick guide to your Canadian tax statements: the T3, T4 and T5.
T3 statement, is actually the statement of trust income allocations and designations. Its purpose is to tell both you, and the Canadian Revenue Agency (CRA) how much you received from mutual funds investments in non-registered accounts. To see a T3 slip image and learn more about it click here.
T4 statements explains all income earned. By the way, the taxable base for 2019 is $12,069 gross, before taxes deductions. This includes tips, vacation pay, bonuses, commissions, and any other type of income. You will receive a T4 statement, from each employer you had during the year. Since this is the form that deals with earned income it has a couple addendum:
A T4 statement is a form that will include a person’s salary, and wages above $500, including tips, gratuities, bonuses, commissions, vacation pay and all other remuneration paid to that employee for the year. The deadline for employers to provide this information is February 28. If a person has more than one employer, they will have multiple T4s. Other statements that fall under the T4 banner include:
- T4A is a statement of pension, retirement, annuity and other income, comprehensive information can be found here.
- T4A (OAS) is the statement of old age security.
- T4A (P) is the statement of Canada pension plans benefits.
- T4E is the statement of employment insurance and other benefits.
- T4RIF is the statement of income from registered retirement income fund.
- T4RSP is the statement of registered retirement saving plan.
T5 is the statement of investment income. This includes any interest, dividends, and royalties you earned in the tax year.
A couple of clarifications
- A person can claim a tax deduction for the amount of contribution they make to their RRSP. There are limits and a few other things you need to know and understand.
- Also, you don’t have to have earned income to contribute to a TFSA, but those contributions cannot be deducted either.