T5013 Slip: Statement of Partnership Income

The T5013 Partnership Information Return is a vital tax slip that many partnerships in Canada must file. This guide will explain everything you need to know about T5013 slips.

Failing to file complete and accurate T5013 returns can lead to reassessments, penalties, and increased audit risk for both the partnership and individual partners. This guide will walk you through everything you need to know about T5013 slips to avoid these problems.

What is a T5013 Slip?

A T5013 Partnership Information Return provides the Canada Revenue Agency (CRA) with crucial financial details regarding a partnership for a given tax year.

It outlines how the partnership’s net income or losses are allocated to each individual partner based on their ownership percentages in the partnership.

Unlike corporations, partnerships themselves do not pay income tax. Instead, the individual partners must report their allocated share of the partnership’s net income or losses on their personal or corporate tax returns annually.

The T5013 allows the CRA to verify that partners accurately report the proper amounts on their own returns and pay the correct tax.

The T5013 helps fill an information gap, as partnerships engage in business activities but don’t pay taxes directly.

What Types of Partnerships Must File a T5013 Return?

According to the Canada Revenue Agency (CRA), a partnership carrying on business in Canada or a Canadian resident partnership partnered with non-residents carrying on business partly in Canada must file a T5013 Partnership Information Return if it meets any of the following thresholds:

• The partnership’s total global revenue plus expenses totals more than $2 million CAD. Exceptions exist for farming partnerships composed solely of individuals.
• The partnership has over $5 million CAD in global assets. Again, some farming partnerships may be exempt.
• One or more partners in the partnership are corporations. This rule applies even to farming partnerships with a corporate partner.
• The partnership invested capital in flow-through shares of oil/gas or mining companies.
• The CRA specifically requests or demands a T5013 return from the partnership.

Also, suppose you are a partner in a partnership meeting any of the above criteria. In that case, you as an individual must file your own T5013 slip documenting your specific share of net income or losses allocated from the partnership.

General partnerships, limited partnerships, and limited liability partnerships may all have to file the T5013 if they meet the requirements. The structure does not impact the filing obligations.

What Key Information is Included on a T5013 Slip?

The T5013 slip contains details about the partnership, ownership percentages, and financial data used to calculate each partner’s net income/loss allocation. Here is the information included:

What Schedules and Forms Must Be Filed With the T5013 Return?

When a partnership files its T5013 Partnership Information Return, it must include the core T5013 FIN Partnership Financial Return form along with several required schedules:

Depending on the partnership’s unique business activities, additional schedules detailing capital assets, resource expenses, charitable donations, CCA schedules, etc., may be required.

When Are the T5013 Filing Deadlines?

The exact deadline for a partnership to file its T5013 Partnership Information Return hinges on the composition of the partnership itself:

• For partnerships exclusively comprised of individual partners, the filing deadline is March 31 of the year following the fiscal year-end.
• If any partner in the partnership is a corporation, the deadline is accelerated to the earlier of March 31 or 5 months past the fiscal year-end.
• For partnerships consisting entirely of corporate partners, the deadline is 5 months after the fiscal year-end.

Late filing of the T5013 return can result in substantial penalties assessed by the Canada Revenue Agency. Interest charges will also accumulate on any unpaid penalties.

How to Report T5013 Amounts on a Personal Tax Return

As a partner in a partnership, you must accurately report the amounts from your T5013 slip when completing your T1 Personal Income Tax Return. Follow these four important steps:

1. Enter your T5013 details into tax software to retain an electronic record.
2. Transfer amounts to a T2125 Statement of Business Activities.
3. Report T2125 amounts on your actual T1 return.
4. Only claim your allocated share of partnership income/losses on your personal return, not the total partnership amounts.

This ensures you accurately report only the amounts that pertain to your share of the partnership.

Otherwise, doing so could potentially result in reassessments and double taxation. In that case, you should consult an accountant if you need help reporting complex partnership amounts.

What If I Don’t Receive a T5013 Slip from the Partnership?

Even if you don’t receive a T5013 slip, you must still report your share of partnership income or loss. There are options to estimate your share:

• Review the partnership’s financial records
• Contact the partnership’s accountant
• Use other CRA forms to estimate business income
• Hire an accountant or tax professional for guidance

The absence of a T5013 slip does not relieve a partner of their tax obligations. Partners must make reasonable efforts to obtain accurate information and report their share of partnership income.

Significant underreporting due to missing T5013 slips can trigger audits, reassessments, or penalties.rting due to missing T5013 slips can trigger audits, reassessments, or penalties.

Consequences of Not Filing T5013 Slips

Both the partnership entity and individual partners can face serious tax and financial repercussions for not meeting T5013 filing obligations. Potential consequences include:

For partnerships:

• Late filing penalties imposed by the CRA are up to $2500 per T5013.
• Inaccurate income/loss reporting if partners don’t receive T5013 allocation amounts.
• Increased risk of a comprehensive tax audit by the CRA.
• Closer scrutiny and monitoring of finances by the CRA.

For individual partners:

• Inability to claim expenses, credits, and other deductions flowing from the partnership. This can lead to higher personal taxes.
• Potential double taxation if partnership amounts are not deducted appropriately on personal tax returns.
• Again, there is a heightened risk of audit or reassessment due to unreported partnership income.

Partners who deliberately and substantially underreport partnership income could also face civil or criminal tax evasion penalties and even jail time in extreme cases.

Special Considerations for Limited Partnerships

While the T5013 filing requirements apply to limited partnerships (LP), there are additional factors:

• Cash distributions decrease the partner’s adjusted cost base.
• Impact of foreign investments or operations.
• Understanding complex partnership investments.
• Quebec Relevé 15 filing requirement.

Obtaining guidance from an accountant experienced with LP investments can ensure proper T5013 reporting and optimal tax management.

Tax time can be confusing with all the different slips you might get. To help you out, we’ve made a quick list of the most common ones. You can check them out below:

• T3 Slip
• T4A Slip
• T4 Slip
• T4E Slips
• T4RIF Slip
• T4A(P) Slip

The bottom line

Filing your T5013 Partnership Information Return doesn’t have to be complicated or stressful.

By following the guidelines in this guide, you can ensure your partnership meets its reporting obligations and that your personal taxes are done right.

While the T5013 may seem complex, taking it step by step and working with an accountant when needed will set you on the path for smooth filing. Don’t let a missed deadline or incomplete slip create problems down the road.

FAQs related to T5013 slips in Canada