Interest "Paid by You" on T5 (Canadian)

[SafetyinNumbers]

Hi all,

 

I just noticed the interest I have paid acquiring bonds/debentures is not netted against the interest received on my T5.

 

Does anyone know where (which line) I deduct that interest on my tax return?

 

Thanks in advance!

 

 

 

[rb]

You just net it yourself.

[SafetyinNumbers]

You just net it yourself.

 

Thanks!

 

Right on the T5 against box 13? I was worried that would cause CRA to flag the return.

[rb]

Yea you can do it right on box 13, it doesn't really matter as CRA only sees the total from the T1.

 

You don't need to worry if they flag your return. If they do they'll send out an  information request and you reply and explain. It is your responsibility to correctly record and report your income. It doesn't matter if the t slip in wrong. For what it's worth i've seen plenty of incorrect T slips.

 

Only thing you need to be careful about is temporal differences. You get to net accrued interest against the cupon. So if you paid the accrued interest in 2019 but received the cupon in 2020 then you net the interest in 2020 not in 2019.

[Cigarbutt]

An alternative would be to keep the amount of interest in box 13 as is and to claim the accrued interest upon purchase of the bond in line 22100 (deductible financial expense).

The net result is the same and it's the substance that counts.

See page 11 of the following for additional reference (investment income summary):

https://nbfwm.ca/~/media/FinancialMarkets/PDF/TaxGuide_CAN_2019_NBFWM.pdf?la=en

[SafetyinNumbers]

Thanks!

 

I found this too:

 

https://ca.rbcwealthmanagement.com/documents/258147/258168/Bonds+-+the+tax+implications+%282016%29.pdf/5bc97111-bf9e-4250-b208-184f2758584f

 

It suggests on page 2 putting the amount paid on Schedule 4. I’m assuming in section II but I’m not sure.

[Cigarbutt]

If you go by what the two banks 'recommend', you would put the interest income (box 13) in section II and the accrued interest "paid by you" in section III.

Example of a 2016 form, since then 2 zeros have been added to the lines:

https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/5000-s4/5000-s4-fill-16e.pdf

[SafetyinNumbers]

Thanks for the help.