Partnership Information Return

If you run a business partnership in Canada, the CRA will require you to complete the T5013 form if your gross earnings surpass a specified threshold. Find all that you need to know about T5013 slip and the intricacies of partnership return filing information.

What is T5103?

The T5013 form serves as the designated Partnership Information Return, recognized also as the Statement of Partnership Income. Professional partnerships in Canada use this document to provide crucial information about their business to the Canada Revenue Agency (CRA). Although the income generated by the partnership itself is not taxed in Canada, the CRA requires the submission of this form to determine the net income or loss that each partner should disclose on their personal tax return. It's worth noting that the T5013 is a component of the comprehensive Partnership Information Return, which includes various schedules covering different aspects of the partnership's financial activities. In case, you have a business that needs to complete the T5013 form, you need to fill the following slips as well –

• T5013 FIN Partnership Financial Return
• T5013 Schedule 1 (Partnership's Net Income or Loss)
• T5013 Schedule 50 (Partnership's Ownership and Account Activity)
• T5013 Schedule 100 (Balance Sheet Information)
• T5013 Schedule 125 (Income-Statement Information)
• T5013 Schedule 140 (Summary Statement)
• T5013 Schedule 141 (Financial Statement Notes Checklist)
• T5013 SUM Income Partnership Summary

Who has to file partnership return – T5013?

In Canada, the T5013 form is used to report partnership income and expenses for partnerships that are engaged in a business, trade, or profession. Partnerships that meet certain criteria are required to file the T5013 form with the Canada Revenue Agency (CRA). These criteria include the following –

• Partnership Business Activities: Partnerships that are involved in carrying on a business, trade, or profession in Canada are generally required to file the T5013 form.
• Income or Loss: If the partnership had either gross revenue exceeding $2 million or a net income (profit) for tax purposes, it is required to file the T5013 form.
• Limited Partnerships: Most limited partnerships are required to file the T5013 form, regardless of their income or loss, if they meet certain conditions.

Professional partnerships obligated to submit the T5013 form must adhere to the prescribed filing deadline. This form serves as a comprehensive source of information regarding each partner's portion of the partnership's earnings, expenditures, and pertinent particulars.

As tax regulations can be complex and subject to change, it's advisable to consult with a qualified tax professional or the Canada Revenue Agency directly to ensure accurate and up-to-date information regarding T5013 filing requirements.

How to determine partnership income?

Determining partnership income involves a method akin to calculating other types of income. The net income or loss is determined by subtracting expenses from the total gross revenue. The allocation of this income among partners is dependent on the conditions outlined in the partnership agreement, which are frequently tied to the individual contributions made by each partner. In a situation where there's a 50-50 partnership arrangement, profits and losses are generally distributed equally, unless the terms of the agreement specify a different arrangement.

How to report partnership income?

If the submission of a T5013 is mandated, you should provide information about the partnership in its entirety. Additionally, there are concise segments within the form designated for detailing each partner's portion of the revenue and expenses. It's important to note, however, that this form does not function as your tax return.

As an individual partner, it is your responsibility to report your share of partnership income on your personal income tax return. You should use Form T2125, known as the Statement of Business or Professional Activities, to detail your earnings and expenditures. Afterwards, transfer these figures to your income tax return following the provided guidelines.

When completing Form T2125, focus exclusively on the portion of the partnership's revenues and expenses that belongs to you. 

Additionally, it is crucial to report partnership-related capital losses in a similar manner. Specifically, include only your portion of the partnership's capital losses in your return. Then, subtract these losses from your capital gains, regardless of whether those gains come from the partnership or other sources.

How to file T5013 slip?

When you are required to complete the T5013 slip for Statement of Partnership Income, it is essential to also fulfill all the relevant documentation. To make this process more convenient, you can choose to either use the official website of the CRA for online submission or access downloadable forms for offline completion. Here’s a step-by-step guide –

1. Fill the T5103 FIN

Beginning the process of completing your T5013 tax slip marks the initial phase, encompassing a total of four pages divided into three main sections: partnership details, mandatory documents, and additional or mixed data. This slip requires the inclusion of specific information such as the partnership's name, address, type, account number, and other relevant details. Additionally, it involves indicating the schedules that need to be filled out as part of the process.

2. Complete the required schedules

Every fiscal year, eligible partnerships must undertake the task of completing a range of schedules. Among the schedules mentioned earlier (1, 50, 100, 125, 140, and 1412), all qualifying partnerships are required to complete them as mandatory components. Depending on the information provided in the T5013 FIN section, there may also be a need to complete additional schedules such as 2, 5, 6, 8, 9, 12, and 52. These schedules can become quite complex, so it is advisable to consider seeking the assistance of professional tax services to ensure accurate and compliant reporting.

3. Fill the two-page T5013 form

When you seek out Form T5013, you will encounter this familiar document. It consists of two pages and features standard and universal fields where you can input information related to each partner's share in the partnership, net income (or loss), and capital gains (or losses). The universal fields are used for recording additional details regarding your share of the partnership's expenses, revenues, and income (or loss). If you are involved in multiple partnerships, it is crucial to fill out separate T5013 slips for each unique scenario.

4. Complete T5013 SUM

Contained within two pages, this document serves as a condensed overview of partnership income. Within it, you consolidate the cumulative figures from all your T5013 slips, encompassing both Canadian and foreign net income.

What do you need to file T5013?

To submit your T5013 form, you must possess a partnership account number, also known as an RZ number, which can be obtained through online registration. This 15-character code is required for all eligible partnerships filing the T5013 form. Once you have gathered accurate information for all the necessary fields, you can proceed to fill out and submit your form. This can be done through the CRA My Business Account or Represent a Client platform if you are filing on behalf of a client. Alternatively, you have the option to use trusted tax preparation platforms or you can download the forms, complete them, and then send them by mail to the appropriate tax center. It is important to acknowledge that while the paper filing and mailing route is available, the CRA generally discourages this method.

Dealing with transactions involving non-Canadian partners

The T5013 tax slip is designed to accommodate partnerships in Canada, Canadian corporations engaged in international activities, and partnerships involving foreign entities. Even if your partners are not Canadian residents, it's still essential to report your partnership income if you exceed the revenue and expense threshold of $2 million and meet other eligibility criteria. In addition, you will be obligated to fill out sections pertinent to both Canadian and Foreign Investments.