T3’s, T5’s and T5008’s – What do they mean?
These comments are related to investments that you own that are not part of your RRSP (Registered Retirement Savings Plan) or TFSA (Tax Free Savings Account).
If you have investments in a mutual fund, you will receive a T3 or T5 whenever the mutual fund earns income that is reinvested back into the mutual fund. The income could be interest, dividends, capital gains, foreign income or other types of investment income. You will not have received this income as ‘cash’ into your bank.
The difference between a T3 and a T5 is determined by the type of mutual fund. If a mutual fund is a trust, you will receive a T3. If a mutual fund is a corporation, you will receive a T5.
If you ‘cash out’ an investment you may receive a T5008 slip, or alternatively an account statement from your investment company. Sometimes only the amount that you received (Proceeds of Disposition) will be shown on the T5008 in which case you will have to ask your investment advisor for the adjusted cost base (what you originally paid when you purchased the asset plus any costs associated with buying or cashing it out).
For the T5008 transactions, the calculation to determine taxable income is:
Proceeds of disposition (the money you received)
less the original cost
less any costs association with buying or cashing it out.
This amount is called ‘capital gains’. Only one half of the capital gains is taxable.
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