T4 and T5 Slips: Who Files What in Canada, and by When

If you paid anybody anything through a corporation last year, some slip probably has to be filed. Which one depends entirely on why the money moved.

The one-line test

The distinction that matters most to an owner-manager: salary is a T4, dividends are a T5. If you took both, you file both. The trade-offs behind that choice are in salary vs dividends.

The deadline is the same for both

The last day of February, for the preceding calendar year. Two obligations, not one:

1. File the return with the CRA (T4 Summary and slips, or T5 Summary and slips)
2. Give each recipient their copy

Both by the same date. Giving an employee their T4 in March while filing on time is still a failure on the second obligation.

Note the year that governs. T4s and T5s follow the calendar year, regardless of your corporation’s fiscal year end. A December 31 year end aligns them; a June 30 year end does not, and the slips still run January to December.

What goes on a T4

Employment income, and everything that counts as employment income:

• Salary, wages, commissions, bonuses
• Vacation pay
• Taxable benefits. Personal use of a company vehicle, most insurance premiums, gift cards, many parking arrangements
• Allowances not based on receipts or kilometres

Plus the deductions withheld: income tax, CPP, CPP2, EI.

Taxable benefits are the most common omission. They are not cash, so they get forgotten, and they surface years later in a review as several years of adjustments to both the corporation and the employee.

What goes on a T5

Investment income paid out:

• Dividends, with eligible and non-eligible reported separately. The distinction changes the recipient’s dividend tax credit, so it is not cosmetic
• Interest you paid, including interest on a shareholder loan owing to you
• Certain other investment income

There is a small-amount threshold below which a T5 is not required for interest, but dividends should be reported regardless of size. A corporation that declares a dividend and files no T5 has an unexplained gap between its retained earnings and its filings.

Contractors: usually no slip, with one large exception

Payments to a genuine self-employed contractor generally need no information slip. They invoice you, you pay, they report it.

Construction is different. A business whose primary activity is construction must file a T5018 reporting payments to subcontractors. That obligation catches people who consider themselves a general contractor rather than a construction business.

And the prior question is always the same: is this person genuinely a contractor? If the relationship is really employment, no T5018 saves you. The test is in hiring your first employee.

What late filing actually costs

Every slip is its own information return, so the penalty is driven by how many are late and by how long. T4s, T5s and T5018s fall under the CRA’s relieving administrative policy, which gives small filers a gentler scale than the legislated one:

Daily penalties run for up to 100 days, and the charge is the greater of $100 and the calculated amount. Above 500 slips the scale keeps climbing to a $7,500 ceiling. As a single headline number this is not frightening. As five unfiled years across two slip types it stops being small, and the CRA assesses each year separately.

Electronic filing is mandatory at more than five slips

This is the change most small employers have not registered. For returns filed on or after January 1, 2024, you must file electronically if you have more than five information returns of the same type for a calendar year. The previous threshold was 50, which is why a business that has always mailed its T4s may now be filing the wrong way without knowing it.

Filing on paper when you were required to file electronically carries its own penalty, assessed separately from lateness and calculated per type of return: $125 for 6 to 50 slips, $250 for 51 to 250, and rising from there. Six T4s and six T5s on paper are two penalties, not one.

Web Forms takes up to 100 slips per submission and costs nothing, so the fix here is an afternoon, not a system.

Amended, cancelled, additional, duplicate

Four words, four different filings, and reaching for the wrong one creates a second problem on top of the first:

Amended and cancelled slips can go in electronically regardless of how the original was filed. Do not amend the summary; the adjustment follows once the slip is processed. Do not send amended slips because you received a PIER report, because you are only changing someone’s address, or because the original return has not been processed yet.

The one that catches owner-managers: you cannot amend a slip to change the nature of the income. Salary that was recorded and reported as salary cannot be converted to dividends afterwards, the shareholder loan cannot be reduced to absorb it, and the amount cannot be reallocated to a spouse. The CRA names this retroactive tax planning in its guidance on amending and cancelling slips and refuses it. The remuneration mix is a decision made during the year, not one made in February with a calculator.

The reconciliation that prevents most errors

Before filing, tie three things together:

1. Total T4 employment income to the wages expense in your financial statements
2. Total deductions on the T4 Summary to what you actually remitted through the year
3. Total T5 dividends to the dividends declared in your minute book

If any pair disagrees, find out why now. A gap between remittances and slips is the single most common trigger for a payroll review, and February is a much better time to discover it than the following November. This reconciliation is one line in the monthly close.

The owner-manager checklist

If you run a corporation and paid yourself last year:

• Took a salary → T4, and the remittances should already have gone in monthly
• Took dividends → T5, and the dividend needs a directors’ resolution in the minute book
• Took both → both slips
• Took money with no declaration → that is a shareholder loan, and it has its own deadline, which is more serious than a slip

That last row is worth checking every year. Withdrawals with no characterisation do not generate a slip precisely because nothing has been decided, and the one-year rule is running regardless.

Six rules to check before the last day of February

• Both slips are due the last day of February
• File with the CRA and give copies to recipients
• Slips follow the calendar year, not your fiscal year
• Taxable benefits belong on the T4
• Dividends need a T5 and a resolution
• Reconcile slips to remittances and to the books before filing

That reconciliation is trivial where payroll and dividends were posted as they happened and painful where they were not, which is the practical case for closing the books monthly.

If February is approaching and you are not certain which slips your corporation owes, that is a quick thing to confirm and an expensive one to get wrong.