By Rob Cosman, Partner, Jones & Cosman Chartered Professional Accountants
A T5013 Partnership Information Return is a form for information about your partnership. The form doesn’t help you calculate tax liability. Rather, it simply shows the Canada Revenue Agency some basic financial details about your company. Not all partnerships have to file this form, but if you have a partnership, it is important to know when this form is required and what type of information it contains.
If your partnership has more than $2 million in worldwide absolute revenues plus absolute expenses for the year, or if it has more than $5 million in worldwide assets, you must file a T5103. For example, if your partnership has $3 million in revenue and $3 million in expenses, its total absolute revenue plus expenses is $6 million. This number is past the threshold, and as a result, the partnership must file this form. However, farming partnerships made up of individuals do not have to follow this rule.
If one of your partners is a corporation or a partnership, you have to file a T5103 regardless of your revenues or assets, and this rule also applies to farming partnerships. You must also submit this return if your partnership invested in flow-through shares or if the minister of revenue requests an informational return.
If you are required to submit a T5103, this form requires data on the partnership as a whole, and it also has brief sections to report each partner’s share of revenue and expenses. However, this form does not serve as your tax return.
As an individual, you must report your partnership income on your personal income tax return. Use Form T2125, Statement of Business or Professional Activities to outline your revenue and expenses, and then transfer numbers to your income tax return as prompted. When filling out this form, only include your portion of the partnership’s revenues and expenses. For example, if you have $100,000 in revenue and own 60% of the partnership, you report $60,000 in revenue on your return and your partner reports the remaining $40,000 on his return. Then, divvy up expenses in a similar fashion.
You should also report capital losses from your partnership in the same manner. Namely, take your portion of the partnership’s capital losses and report only them on your return. Then, subtract the losses from your capital gains, regardless of whether the gains are associated with the partnership.
What Other Forms Should Partnerships Fill Out?
In most cases, there are no additional forms that partnerships need to file. However, regardless of whether your partnership is required to file a T5103, you may want to file Form GST370, Employee and Partner GST/HST Rebate Application. You file this form on your own as an individual, and it allows you to claim a rebate on the GST/HST you paid on partnership expenses. For example, if you purchased $100 worth of office supplies and paid $15 HST on them, you can use this form to claim a rebate of those taxes.
What Do You Need to File a T5103?
To file the Partnership Information Return, you need an RZ account, and to obtain that, you need a business number. If you don’t have one already, you may get a business number through Business Registration Online; by mail using Form RC1, Request for a Business Number; or by calling the CRA at 1-800-959-5525 and answering questions over the phone. Once you have a business number, you can apply for an RZ account.
To apply for an RZ number, use the online service or fill out Form RC257, Request for an Information Return Program Account, and send it to the CRA. You only have to go through this process the first year; after that, you can simply file the information return using your assigned RZ number.
How Do You File a Partnership Return?
You may file your return electronically using My Business Account, or your agent may file the form using Represent a Client. Alternatively, you may use the CRA’s web form application to fill out your T5103 summary and slips or use tax preparation software to fill out this form and submit it.
If you like, you may send the T5103 to the CRA through the post. If your partnership is in Alberta, British Columbia, Manitoba, Saskatchewan, the Northwest Territories, or the Yukon, send your return to the Surrey Tax Centre in British Columbia. If your partnership resides in any other part of Canada or outside of Canada, send the return to the Summerside Tax Centre in Prince Edward Island.
About Rob Cosman
Rob Cosman, is a Chartered Professional Accountant who runs his own accounting and tax practice with his wife in Toronto, Ontario. Beginning in 2000, Rob’s career spanned over Halifax, Cayman Islands, and Toronto. Rob held senior industry positions including CFO roles in public and private industries ranging from telecommunications, retail sales, and consumer packaged goods.
Rob has over 10 years of tax experience and is the author of numerous articles. He has the ability to take complex tax situations, explain them in common sense terms, and guide clients to make the best decisions based on their individual situations.