Investment income and capital gains
Three kinds of investment income are taxed three different ways, and the slips you receive do not carry everything the return needs. What is missing is usually the cost base.
Quick answer: Interest is taxed at full rates, eligible and non-eligible dividends are grossed up and credited at different rates, and only part of a capital gain is included in income. The slips report proceeds but generally not your adjusted cost base, which is what decides the gain — and holding foreign property above a cost threshold triggers a separate filing.
What is included
- Interest, dividends and capital gains reported correctly, each on its own basis.
- Adjusted cost base worked out, including reinvested distributions the slips do not show.
- Capital losses applied, carried back or forward where that is worth more.
- Foreign income and the T1135 where foreign property crosses the threshold.
- Eligible against non-eligible dividends, which are credited at different rates.
- Coordination with the corporate return where the investments are held corporately.
The cost base is what goes missing
A T5008 reports what you sold and for how much. It frequently does not report what you paid, and where it does, it may not include reinvested distributions that raised your cost base over the years. Filing the slip as issued therefore overstates the gain, sometimes substantially, and the CRA has no way to know.
Keeping the cost base is the investor’s job, not the broker’s. Where it has not been kept, reconstructing it is possible but takes time, and it is worth doing before a large disposition rather than after.
Held personally or in the corporation
Investment income earned inside a corporation is taxed differently from the same income earned personally, and above a threshold it reduces the small business deduction on the operating income. Investment income in a corporation covers the mechanics, and it is a decision worth taking deliberately rather than by default.
Who this is for, and who it is not
A good fit: anyone with a non-registered portfolio, a disposition to report, foreign holdings above the reporting threshold, or a cost base nobody has tracked.
Not a fit: someone whose investments sit entirely inside registered accounts, where nothing is reportable until money comes out. In either case we say so on the first call rather than quoting for work you do not need.
Common questions about investment income
Do I have to report a loss?+
What is the T1135 threshold?+
Are US dividends treated the same?+
Does crypto count?+
Talk to a CPA about this
One Chartered Professional Accountant, start to finish. Fixed fees, quoted in writing before any work begins, and no obligation from a first conversation.
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