Common Tax Documents for Canadian Taxpayers

Hello All,

By now most of you have received a variety of tax documents. Some are straightforward while others may seem a bit cryptic. There are also some taxable events that do not actually result in a tax document, but require the filing of forms anyway. And if you are an unincorporated small business owner or have rental property, almost all of the burden of preparing your tax reporting is on you.

Let’s look at some of the more common tax documents and what they mean:

• The most common tax slips are the T4 (RL1 in Quebec) which summarizes your income from employment and deductions paid by you, for the year.

• T5s (RL3 in Quebec) reflect investment income such as interest and dividends that you might have earned on non registered accounts. A T3 is very similar to a T5 except that it relates to trust based investments.

  It should be noted that income earned in an RRSP or TFSA are not taxable and as such you will not receive a tax slip nor are you required to report it on your tax return.

• If you have made RRSP contributions, you will also receive a tax slip which indicates whether it was made during the previous year OR in the first 60 days of the current year (both of which can be used as a deduction against previous years income)

• Charitable donations to registered Canadian charities will come with a specific tax receipt upon which the charity number is reflected. If you don’t have this, then it is not claimable.

• If you have investments that are not in a TFSA or RRSP, you might also receive a T5008 which shows capital gains and losses on securities that have been sold.

• Anyone who received Covid related benefits will receive a T4A indicating the amounts received and any withholding taxes paid.

• Medical expenses should be accompanied by receipts issued by the medical practitioner. You should also make sure that the expense qualifies

• If you sell your principal residence, although no taxes are payable, you are required to complete Schedule 3.

• Small businesses might receive a T4A for some of their income. A T4A is supposed to be filed for all service providers e.g. freelancers, subcontractors etc. but this area of tax law is murky so not all businesses do this. If you do receive a T4A relating to business income make sure to reflect it on the T2125 schedule of business income, otherwise you might be subject to a reassessment.

When starting to do your taxes it is important to reflect upon everything that happened during the year that had financial implications, and determine if this needs to be reported on your tax return. A tremendous amount of information is available with an internet search, but if you are still feeling unsure or overwhelmed, it might be a good time to reach out to an accountant.

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