What slips does my Ontario corporation need to issue when I pay myself salary or dividends?
When your corporation pays you a salary, it must issue you a T4 slip after the calendar year ends, reporting the employment income, income tax withheld, CPP contributions, and any other employment-related amounts. The T4 and a T4 Summary form are filed with the CRA by the last day of February following the calendar year. If you miss this deadline, penalties apply.
When your corporation pays you a dividend, it must issue a T5 slip — a statement of investment income — reporting the actual amount of the dividend and the taxable amount (after the gross-up) on Schedule 3 of the T5. T5 slips are also due by the last day of February. Unlike salaries, dividends do not require payroll deductions at the time of payment, but the slip obligation remains.
If you use both compensation forms in the same year, you will receive both a T4 and a T5. Both must be reported on your personal income tax return. Keep good records of dividend payments — board resolutions declaring dividends and contemporaneous banking records help confirm that dividends were actually paid and authorized rather than simply characterized after the fact.
Key takeaways
- Salary requires a T4 slip and T4 Summary filed with CRA by the end of February.
- Dividends require a T5 slip filed by the same deadline.
- Both slips flow through to your personal T1 tax return.
- Board resolutions and banking records support that dividends were properly declared and paid.