General Information (T5008)

Proceeds

Proceeds is a term used to describe the amount that arises as the result of a sale, disposition, deemed disposition (see Deemed dispositions), redemption, acquisition, or cancellation of securities, or an exchange or conversion of property. The term does not mean only cash or money. For the purposes of Regulation 230, it includes all consideration, such as cash, debt obligations, shares, and so on. that is paid or payable to the transferor.

Securities

For the T5008 information return, securities mean:

publicly traded shares of the capital stock of a corporation
publicly traded debt obligations
debt obligations of, or guaranteed by:
- the Government of Canada (such as Treasury bills)
- the government of a province or territory or its agents
- a municipality in Canada
- a municipal or public body performing a function of government in Canada, or
- the government of a foreign country or a political subdivision of a foreign country, including a local authority of such a government
prescribed debt obligations as described in paragraph 7000(1)(d) of the Income Tax Regulations
publicly traded interests in a partnership or a trust
any option or contract for any of the properties listed above
publicly traded options or contracts for any property including any commodity
publicly traded options or contracts for financial futures, foreign currency, or precious metal, or
publicly traded options or contracts for any index relating to any property

Unclaimed proceeds of disposition

Unclaimed proceeds of disposition are proceeds of disposition you get in a tax year for a person (the beneficial owner) who remains unknown at the end of your next tax year. If you still hold unclaimed proceeds then, you have to deduct a specified percentage of tax from these amounts and send it to the receiver general within 60 days.

Remittances

To calculate the tax, subtract any outlays and expenses relating to the disposition of the property from the proceeds of its disposition (if you did not deduct the outlays and expenses in calculating your income). Multiply the result by 50%. Send the tax withheld with a statement showing the period covered, net proceeds, and amount of tax deducted. Send the payment and statement separately from any T5008 information return you may be filing.

Example

As a securities dealer with a tax year ending on March 31, you received proceeds of $30,000 during the previous tax year for an unidentified beneficiary. The rightful owner of the proceeds is still unknown on March 31 of the current tax year. You have to send $15,000 to the receiver general within 60 days after the end of the current tax year (i.e. before May 31).

If you are a trader or dealer in securities, penalties apply if you do not send amounts withheld. For a first failure in a calendar year, the penalty is 10% of the amount that was withheld but not sent. A second or later failure in the same calendar year could result in a penalty of 20% of the amount that was withheld but not sent.

We will charge you interest on amounts that you do not send as required. Interest accrues at a prescribed rate from the required date of remittance to the date you send it and is payable to the receiver general.

Reporting requirements

If you are a trader or dealer in securities holding an unclaimed amount and you later identify the beneficial owner and pay the amount, you have to prepare a separate T5008 information return. In this case, prepare a separate T5008 Summary and related T5008 slips for the applicable tax year to report the proceeds paid and the tax withheld. The beneficial owner has to calculate the amount of income from these securities transactions and include it in income for the calendar year shown on the T5008 slip. The beneficial owner can claim as a credit the tax you withheld. A non-resident will generally claim the credit in the same way as a resident.

In some cases, you can pay unclaimed proceeds of disposition received in different calendar years to the same beneficial owner in one lump sum. If so, you have to prepare separate T5008 slips for each calendar year in which you received the proceeds.

You also have to report the amount of tax withheld on the T5008 slip. Identify the amount as "TAX WITHHELD" and enter it directly below the recipient's name and address. Enter "UNCLAIMED PROCEEDS OF DISPOSITION ACCOUNT" directly below the name and address of the trader or dealer in securities. There is no separate box to enter this amount.

Note

Submissions for unclaimed dividends and unclaimed interest must be filed on paper.

Deemed dispositions

You do not have to report deemed dispositions on a T5008 slip.

In certain circumstances, the Income Tax Act considers that a property has been disposed of, even though no real compensation in the form of money or other consideration has been received.

Some examples of when a deemed disposition may occur are:

transfers of property to a trust
gifts of property (that is, the name of the beneficial owner of the property is changed)
the owner dies
the owner ceases to be a resident of Canada

In this page, "sale" generally refers to a transaction where the ownership of property is transferred from one person or entity to another for a sum of money or other consideration. In the case of a deemed disposition, ownership of the property is not transferred for money or other consideration. In addition, a deemed disposition is not a purchase, redemption or cancellation of a security. Consequently, a deemed disposition is not considered for the purposes of Income Tax Regulation 230 and a T5008 slip is not required.

Are you acting as a trustee

Publicly traded interests in a trust are securities and can be issued in the form of units or shares. The trust, as issuer of these interests, has to report the redemption, acquisition, or cancellation of the units or shares to the beneficial owner. If a trustee acts for the trust, the trustee must report these transactions on T5008 slips.

You have to report income realized by a trust and distributed to its beneficiaries on Form T3, Statement of Trust Income Allocations and Designations (slip). This income is gained by holding an interest in the trust, and it is different from the proceeds received from the disposition of those interests.

Payments to non-residents of Canada

You have to file Form NR4SUM, Return of Amounts Paid or Credited to Non-Residents of Canada to report amounts paid or credited, or amounts we consider to be paid or credited, by residents of Canada to non-resident persons.

You have to do this if the total annual amount you paid or credited is $50 or more, or if you withheld tax (regardless of the amount you paid or credited).

For more information on how to complete the NR4 return, see Guide T4061, NR4 – Non-Resident Tax Withholding, Remitting, and Reporting.

You have to withhold income tax of 25% (or the percentage established under a tax convention or agreement) on amounts you paid or credited to non-residents.

If so you have to complete the remittance part (Part 2) of Form NR76, Non-Resident Tax – Statement of Account, and send it with the tax to:

Sudbury Tax Centre
Canada Revenue Agency
PO Box 20000 Station A
Sudbury ON P3A 5C1

Alternatively, you can make the payment to your chartered bank by the 15th day following the month in which the tax was withheld.

For more information, see Information Circular IC76-12R, Applicable rate of part XIII tax on amounts paid or credited to persons in countries with which Canada has a tax convention.

If, as a resident of Canada who pays or credits amounts to or for a non-resident of Canada, you do not withhold (or you withhold but do not remit) non-resident tax, you are liable for the amount of tax you should have withheld and remitted, plus a penalty of 10% of the tax. We charge interest, compounded daily at the prescribed rate, on the total of the tax, penalties, and outstanding interest.

For more information about how we determine an individual's residence for tax purposes, see Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status.

Flowcharts

We have developed flowcharts to help you determine the reporting requirements.

Chart 1 - Debt obligations
Notes
Debt obligations include bonds, debentures, notes, or any other certificates of indebtedness.

This category includes Government of Canada Treasury bills.

Municipal or public bodies performing a function of government in Canada include school boards, educational institutions, and hospitals.

Publicly traded means:

listed or posted for trading on a stock exchange, commodity exchange, futures exchange, or any other exchange, including exchanges in foreign jurisdictions

sold and distributed by prospectus, registration statement, or similar document filed with a public authority such as a provincial securities commission

Banker's acceptances and commercial paper are examples of debt obligations in bearer form that are not usually traded publicly. Debt obligations in bearer form include debt obligations payable to the "bearer" or to "cash". Instruments held in street name (that is, in the name of a broker or another nominee) are usually endorsed to the bearer.
Chart 2 - Shares
Note
Publicly traded means:

listed or posted for trading on a stock exchange, commodity exchange, futures exchange, or any other exchange, including exchanges in foreign jurisdictions

sold and distributed by prospectus, registration statement, or similar document filed with a public authority such as a provincial securities commission
Chart 3 - Interest in a trust or partnership
Note
Publicly traded means:

listed or posted for trading on a stock exchange, commodity exchange, futures exchange, or any other exchange, including exchanges in foreign jurisdictions

sold and distributed by prospectus, registration statement, or similar document filed with a public authority such as a provincial securities commission
Chart 4 - Other securities
Notes
An option is a right to buy or sell securities during an agreed period at a fixed price. Unlike an option, a contract for securities creates an obligation to buy or sell the securities.

A security includes a publicly traded option or contract for any property, including commodities, financial futures, foreign currency, precious metals, or any index relating to any property.

Publicly traded means:

listed or posted for trading on a stock exchange, commodity exchange, futures exchange, or any other exchange, including exchanges in foreign jurisdictions

sold and distributed by prospectus, registration statement, or similar document filed with a public authority such as a provincial securities commission

Municipal or public bodies performing a function of government in Canada include school boards, educational institutions, and hospitals.
Chart 5 - Reporting institutions
Notes
A trader or dealer in securities is either:

a person who is registered or licensed under the laws of a province or territory to trade in securities

a person who commonly makes sales of securities as an agent for other persons

A nominee is a person or firm, such as a bank official or brokerage house, into whose name securities are transferred to make transactions easier. The customer remains the true owner of the securities.
An agent is any person authorized to act for another person in transactions involving a third party. An agent includes:

an account executive or an investment counsellor who advises and handles orders for clients

a person appointed by a corporation to maintain records of stock and bond owners, to cancel and issue certificates, and to distribute payments to stock or bond owners

The reporting requirement for securities transactions does not apply to transactions for which an information return is required under section 202 (payments to non-residents) or section 204 (estates and trusts) of the Income Tax Regulations.
Chart 6 - Reporting the transactions
Note
If a person acts as nominee or agent of the vendor or security owner and gets the proceeds of disposition from the transaction, that person has to report the transaction to the vendor or security owner.

A purchase as principal means a purchase on your own account. Do not report purchases made for clients or other investors.

You do not need to:

report transactions to another trader or dealer in securities, except if you purchase securities from a non-resident trader or dealer in securities

report a sale of securities by a trader or dealer in securities on behalf of a non-taxable entity such as a registered retirement savings plan, a deferred profit-sharing plan, a registered pension plan, a municipality, an agricultural organization, a board of trade, or a chamber of commerce, or a municipal or public body such as a school board, educational institution, or hospital

Do not report a sale of currencies or precious metal in the form of jewelery, works of art, or numismatic coins. Do not report a sale of precious metals by a person who, in the ordinary course of business, produces or sells precious metals in bulk or commercial quantities.

Do not report the redemption, acquisition, or cancellation of a debt obligation if:

the debt obligation is issued for its principal amount

the redemption, acquisition, or cancellation satisfies all of the issuer's obligations (that is, once the redemption occurs, no more amounts are payable to any person with an interest in the debt obligation)

each person with an interest in the debt obligation is entitled to an equal proportion of principal and interest payments (that is, the debt obligation is not a strip bond)

an information return is already required to be made as a result of the redemption, acquisition, or cancellation (for example, a T5 slip for the redemption of an investment contract or a T600 slip for accrued interest on redemption of a bond, debenture, or similar security)

Do not report transactions involving:

convertible property, that is, shares, bonds, debentures, or notes of a corporation which give the holder the right to exchange the security for shares of the same corporation (if you get consideration, other than shares, of $200 or more in the conversion, you have to report the transaction)

capital property that is a bond exchanged for another bond of the same debtor when the provisions of the exchanged bond gave the holder the right to make the exchange and the exchanged bond and the acquired bond both have the same maturity value

the redemption, cancellation, or acquisition of shares as a result of an amalgamation (if you get consideration, other than shares, of $200 or more in the exchange, you have to report the transaction)

share-for-share exchanges as a result of a capital reorganization of a corporation (report all transactions when you get any consideration other than shares)

interests in a partnership disposed of when a partnership ends

interests in a partnership transferred when a new partnership continues from a predecessor partnership