Unclaimed amounts: Dividends or interest
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Unclaimed amounts: Dividends or interest
We use the term unclaimed dividends or unclaimed interest to refer to dividends or interest you receive in a year for another person (the beneficial owner) who remains unknown at the end of the next year.
Remittances
If you received any of these unclaimed amounts, you have to deduct a specified percentage as tax payable by that beneficial owner. Send the tax you withhold, along with a statement showing the period covered, the gross income amount, and the amount of tax you deducted to your tax centre, no later than 60 days after the end of the next year (due date). Send the payment and statement separately from any T5 information returns you are filing.
If the type of unclaimed amount is a dividend, the percentage to be withheld and remitted is 33.3333%. If the type of unclaimed amount is interest, the percentage to be withheld and remitted is 50%. The remitting method for both types of unclaimed amounts is a statement.
Interest and Penalties
We charge interest, compounded daily at the prescribed rate, on amounts you deduct but do not send us before the due date. We will charge interest from the date the remittance is due to the actual date you remit the amounts you deducted. Both the interest charges and the tax you deduct are payable to the receiver general.
A penalty applies if you do not remit tax withheld. The penalty is 10% of the amount you withheld but did not remit. If we have assessed this penalty, and then for a second time in the same calendar year you do not remit tax knowingly or under circumstances amounting to gross negligence, you could be subject to a penalty of 20% of the amount you withheld but did not remit.
Note
You do not have to withhold and remit tax for unclaimed amounts you included in your income for the current or any previous year, or on which you withheld and remitted tax in a previous year.
Reporting requirements
You have to follow special procedures to report unclaimed amounts you held and later paid out to the rightful owner. An owner who is a resident of Canada must report the gross amount of dividends or interest for the year during which you originally received the amount.
You have to prepare a separate Form T5, Statement of Investment Income (slip) and Form T5SUM, Return of Investment Income stating the amount you received for the recipient, the year in which you received the amount, and the amount of tax you remitted on it.
If you pay unclaimed amounts you received in different calendar years to the same claimant in the same year, make sure you prepare separate T5 slips and T5 Summary forms for each calendar year in which you actually received the amounts. The calendar year on each T5 slip you issue must be the calendar year in which you received the amount, not the year you paid it to its rightful owner.
Prepare a T5 slip for the previously unclaimed amount in all cases, regardless of the amount of income.
Instructions
When completing the T5 slip, enter the year you made the payment and the amount of tax you deducted in the space directly above the dividends from Canadian corporations and the federal credit (above boxes 25 and 26). Identify the T5 slip with the words "UNCLAIMED DIVIDEND ACCOUNT" or "UNCLAIMED INTEREST ACCOUNT" directly below the area for your name and address. Also, enter the name of the person paying the amount, if different from that of the filer, directly below this description (see an example of a T5 slip).
A separate T5 Summary has to accompany these T5 slips. Identify the T5 Summary by entering either "UNCLAIMED DIVIDEND ACCOUNT" or "UNCLAIMED INTEREST ACCOUNT" on the second line provided for the name and address of the filer or nominee.
Note
Submissions for unclaimed dividends and unclaimed interest must be filed on paper.
To calculate the federal dividend tax credit on unclaimed dividends later paid out, use the rate in effect for the calendar year in which you received the dividends.
Notes
For eligible dividends received in 2010, the taxable amount of dividends is 44% more than the amount paid. The dividend tax credit that applies to these dividends is 17.9739% of the taxable amount.
For eligible dividends received from 2006 to 2009, the taxable amount of dividends is 45% more than the amount paid. The dividend tax credit that applies to these dividends is 18.9655% of the taxable amount.
For dividends received from 1988 to 2005, and for dividends other than eligible dividends received from 2006 to 2013, the taxable amount of dividends is 25% more than the amount paid. For dividends other than eligible dividends received from 2014 and 2015, the taxable gross‑up amount of dividends paid is 18%. Effective January 1, 2016, the taxable gross‑up amount applicable to non‑eligible dividends is 17%. The corresponding dividend tax credit rate is 21/29 of the gross‑up amount effective January 1, 2016. Expressed as a percentage of the grossed‑up amount of a non-eligible dividend, the effective rate of the dividend tax credit in respect of such a dividend will be 10.5217% in 2016.
For more information, see Information Circular IC 71-9R, Unclaimed Dividends.
If unclaimed interest or dividends received in 1987 or previous years are eligible for the interest and dividend income deduction, indicate this on the T5 slip.
Example
Over a period of several years, Agents Inc. (Agents) received dividend payments from XYZ Company Limited (XYZ), a Canadian public corporation subject to the general corporate income tax rate. Some of the dividends were on shares held by Agents for an unidentified shareholder.
These amounts represent unclaimed dividends. They remained unclaimed on April 30, Agents' next fiscal year end. Before the due date (no later than 60 days after the year-end following the year in which the amounts are received), Agents deducted 33.3333% of the dividend amount and sent it to us.
The first dividend of $1000 was received by Agents on March 6, 2013; Agents deducted 33.3333% of the dividend amount ($333) as tax on an unclaimed amount. The second dividend of $1000 was received by Agents on April 28, 2014. The third dividend of $1000 was received by Agents on May 27, 2015. The deadlines for remitting tax on unclaimed amounts are as follows:
| Date dividend received by Agents | Deadline for remitting tax on unclaimed amount | Available for Mr. Chang |
|---|---|---|
| March 6, 2013 | June 29, 2014 | $667 |
| April 28, 2014 | June 29, 2015 1 | $1,000 1 |
| May 27, 2015 | N/A 1 | $1,000 1 |
1The owner of the dividend amounts was identified on June 7, 2015.
On June 7, 2015, Mr. Albert Chang advised Agents that he had inherited some stock in XYZ and was expecting dividends totalling $3,000.
Agents paid Mr. Chang $2,667, the amount remaining after the unclaimed dividend tax was remitted. They gave him separate T5 slips for 2013 and 2014 showing the actual amounts of dividends that Agents received. The T5 for 2015 will be issued on or before the last day of February, 2016.
The $333.33 tax remitted is available as a credit to Mr. Chang for the 2015 tax year when he files his income tax and benefit return.
Unclaimed dividends later paid out – See the completed T5 slip for the 2009 dividends.
Unclaimed dividends later paid out – See the completed T5 slip for the 2010 dividends.
Forms and publications
- Form T5, Statement of Investment Income (slip)
- Form T5SUM, Return of Investment Income
- Information Circular IC 71-9R, Unclaimed Dividends
- Date modified:
- 2017-01-18