T3 and T5 slips — which you get, and when

Two slips report investment income in Canada, they arrive on different schedules, and which one you get is decided by something you probably never checked: whether the thing you hold is a corporation or a trust.

Which is which

T5 — Statement of Investment Income. Issued by corporations. If you hold bank shares, a telecom, a pipeline, or a GIC, this is your slip. The deadline is the end of February.

T3 — Statement of Trust Income Allocations and Designations. Issued by trusts. Most Canadian-listed ETFs, mutual funds, and REITs are structured as trusts, so if you hold Canadian income funds, this is your slip. The deadline is later — typically the end of March.

Most dividend investors get both, and the gap between them is where the trouble is.

Why the T3 is late

A T3 does not merely report an amount. It reports the characterisation: how much of the year’s distributions was eligible dividends, non-eligible dividends, capital gains, foreign income, other income, and return of capital.

A trust cannot know that split until it has closed its own books, reconciled what its underlying holdings paid it, and determined what was realised. Several of those inputs arrive from third parties on their own schedules. The fund is waiting too.

Amended slips are normal

For funds with complex distributions — covered call funds, funds holding other funds, anything with meaningful foreign content — an amended T3 is routine, not a sign of error. The first characterisation is sometimes an estimate that gets revised once everything reconciles.

Receiving an amended slip in May, after a March slip you already used, is ordinary. It is also why filing early is a false economy: a refund arriving three weeks sooner is not worth an amended return.

The practical rule

If you hold Canadian income ETFs, do not file before April.

Check CRA Auto-fill in mid-April rather than early March; slips populate progressively and the picture is far more complete. If you hold only Canadian corporations directly, you are dealing with T5s and can file earlier.

If a slip arrives after you have filed, the fix is an adjustment rather than a second return — “Change my return” in CRA My Account, or a T1-ADJ. You generally have ten years. The urgency is only that interest accrues from the original balance-due date if the omission meant you underpaid.

The box that matters years later

While reading the slip, find the return of capital figure.

Unlike every other box, it is not a tax-year detail that closes when you file. Return of capital permanently reduces the adjusted cost base of the holding, and the effect accumulates for as long as you own it. Fail to record it and you are reconstructing years of distribution history at sale time, from statements you may no longer have.

It is the one number on the slip that costs money to lose. Write it down annually, even in a year when nothing else about the slip is interesting.

What registered accounts get

Nothing. No T3, no T5, no characterisation, no adjusted cost base to track. Income inside a TFSA, RRSP, RESP or FHSA is not reported and not taxed, which is a genuine argument for holding the funds with the most complicated distributions inside one.

Where to go next

• How dividends are taxed in Canada
• My broker’s book value doesn’t match my adjusted cost base
• Cost base calculator