How to file T5013 partnership information return

A surprising 84% of partnership tax returns have at least one error that could trigger a Canada Revenue Agency review.

Canadian partnerships must file their T5013 partnership information return accurately. This remains one of the most misunderstood tax obligations. A clear understanding and attention to detail will help you direct this process smoothly and avoid getting hit with penalties. The T5013 return lets partnerships report their income, expenses, and allocations to partners.

Small business partnerships and complex tiered partnership structures need to understand T5013 filing requirements to stay tax compliant. Each partnership has unique obligations based on its size, revenue, and structure. Your partnership type determines the T5013 due date, so you need to know exactly when to submit your partnership tax return.

We’ve put together a detailed guide to help you figure out the filing requirements, deadlines, and steps to complete the process right the first time. Let’s head over to everything about preparing and submitting your partnership information return.

Understanding the T5013 Partnership Information Return

The T5013 partnership information return is the life-blood document in Canada’s tax system for businesses that operate as partnerships. You need to understand this form to comply with tax regulations and avoid any potential penalties.

What is the T5013 form used for?

The T5013 partnership information return helps report how partnerships allocate their net income, losses, and other amounts from activities to members during a fiscal period. This form doesn’t calculate tax liability. The Canada Revenue Agency (CRA) uses it to gather everything in financial information about partnerships and their relationships with partners.

This form has several parts:

• T5013 FIN (Partnership Financial Return)
• Related schedules and forms
• T5013 SUM (Summary of Partnership Income)
• T5013 slips for each partner

The T5013 keeps track of where income comes from. To cite an instance, see dividend income earned by a partnership – that same type flows through to the partners. Partners get detailed allocation information they need to include in their tax filings.

Why partnerships must file it

Canadian law under subsection 229(1) of the Income Tax Regulations requires partnerships doing business in Canada, Canadian partnerships, or specified investment flow-through (SIFT) partnerships to file this return. Notwithstanding that, CRA’s administrative policies exempt some partnerships from this requirement.

Your partnership must file a T5013 return if either condition applies:

1. At fiscal period end, the partnership has:
   • An absolute value of revenues plus expenses that’s a big deal as it means that CAD 2.79 million
   • Assets worth more than CAD 6.97 million
2. At any time during the fiscal period, the partnership:
   • Is a tiered partnership (has another partnership as a partner or is itself a partner in another partnership)
   • Has a corporation or trust as a partner
   • Invested in flow-through shares of a principal-business corporation that renounced Canadian resource expenses to the partnership
   • Got a written request from the Minister of National Revenue

The partnership must submit a T5013 if the minister of revenue asks for it. Partnerships filing T5013 returns need mandatory forms including T5013 FIN and schedules like T5013 SCH 1, T5013 SCH 50, T5013 SCH 100, T5013 SCH 125, and others as needed.

How it fits into the Canadian tax system

Canada’s tax system handles partnerships differently from corporations. Partnerships don’t pay income tax directly. The Income Tax Act states that partnership’s income or loss goes to individual partners, who report these amounts on their personal or corporate tax returns.

This creates an information gap that T5013 fills. CRA uses the form to check if partnership income reported by partners matches the partnership’s actual financial results. Partners use their T5013 slip information to report their share of partnership income or loss on tax returns.

To cite an instance, two siblings run an ice cream shop as partners. Their business makes $100,000 in revenue. One sibling owns 60% while the other owns 40%. They report $60,000 and $40,000 on their individual tax returns. The T5013 shows CRA this allocation for verification.

Partnerships can own depreciable property and claim Capital Cost Allowance (CCA) on assets. They can also own eligible capital property and deduct annual allowances. Partners get these deductions based on their percentage interest in the partnership.

The T5013 system works efficiently by preventing double taxation while ensuring proper income reporting. It creates clear links between partnership operations and partner tax filings. This lets CRA oversee everything without taxing the partnership directly.

Who Needs to File a T5013 Return

A clear understanding of T5013 return filing requirements is vital for tax compliance. The Canada Revenue Agency (CRA) mandates specific partnerships to file this information return based on certain criteria, though some partnerships can get administrative exemptions.

Partnerships with over $2M in revenue/expenses

Your partnership needs to file a T5013 return if the combined absolute value of worldwide revenues and expenses crosses a specific threshold. This applies to any partnership doing business in Canada or Canadian partnership with operations or investments (domestic or foreign) when their combined total exceeds CAD 2.79 million at fiscal period end.

“Absolute value” means the numerical value without positive or negative signs. The calculation is straightforward:

1. Add your total worldwide revenues to your total worldwide expenses
2. Don’t subtract expenses from revenues like you would for net income

To name just one example, a partnership with CAD 2.09 million in revenue and CAD 1.74 million in expenses would have an absolute total of CAD 3.83 million. This is a big deal as it means that the threshold and requires a T5013 filing.

Partnerships with over $5M in assets

Assets are another trigger for T5013 filing. Your partnership must file if it has more than CAD 6.97 million in worldwide assets. This total counts both tangible and intangible assets.

The CRA wants you to use the cost figure of all worldwide assets without factoring in depreciation. You’ll need to look at the original purchase price or value rather than the current book value after depreciation.

Therefore, partnerships with minimal revenue but significant assets must still file if they cross this threshold.

Tiered partnerships and SIFT partnerships

Whatever the revenue, expense, or asset thresholds, certain partnership structures must file T5013 returns. We primarily focused on tiered partnerships.

A partnership becomes tiered in two ways:

• It has another partnership as a partner
• It partners in another partnership

To name just one example, ABCD, a Canadian partnership with an individual partner (Sawyer) and a partnership partner (Phoebe Properties), must file a T5013 return and give T5013 slips to each partner just because one partner is a partnership.

Partnerships with a corporation or trust as a partner must also file the T5013 return, regardless of their numbers. This rule applies to partnerships that invested in flow-through shares of a principal-business corporation with Canadian resource expenses renounced to the partnership.

All specified investment flow-through (SIFT) partnerships must file a T5013 return under subsection 229(1) of the Regulations. These partnerships face special tax rules and reporting requirements.

When the CRA requests a return

Keep in mind that even partnerships exempt under administrative policy must file a T5013 return if the Minister of National Revenue asks in writing.

Filing a T5013 return can be beneficial even when not required. The filing starts the “determination period” clock, which limits how long partners might face reassessment for their partnership income or loss. Without filing, partners could face indefinite reassessment of their partnership income under paragraph 152(1.7)(b).

Anyone holding a partnership interest as a nominee or agent must complete and file a separate Form T5013SUM and related T5013 slips for each partnership they represent.

A full picture of these requirements helps ensure compliance and avoids penalties for missing required partnership information returns.

Exemptions from Filing the T5013

Many partnerships must file the T5013 return. Some partnerships qualify to skip this requirement. You can save time and resources if your partnership belongs to these categories.

Farm partnerships with individual partners

Canadian farm partnerships that only have individual partners (who file T1 income tax and benefit returns) do not need to file a T5013 partnership information return for the 2024 fiscal period. This helps many Canadian agricultural operations.

The rules are specific. Your farm partnership must file a T5013 return if any partner is not an individual – like a corporation or trust.

The Canada Revenue Agency aims to reduce paperwork for certain businesses. Over the last several years, farm partnerships with only individual partners have not needed to file.

Partnerships with no income or activity

Small partnerships may not need to file T5013 returns. A partnership where all partners are individuals (not trusts, corporations, or other partnerships) skips filing unless:

• Its combined revenues and expenses exceed CAD 2.79 million, or
• Its gross assets exceed CAD 6.97 million

On top of that, partnerships that no longer meet filing criteria in a fiscal period usually skip filing T5013 returns for that period. This helps partnerships that once needed to file but now have less business activity or different structures.

Small partnerships with minimal activity often avoid filing requirements. Keep in mind that you should keep good financial records whatever your exemption status. The CRA might ask to see these during an audit or review.

Indigenous partnerships on reserves

Partnerships where all members are registered or entitled to register under the Indian Act get special treatment. These partnerships do not file T5013 returns if they earn all income at a permanent establishment on a reserve.

Section 87 of the Indian Act allows tax exemptions on certain reserve income. This shows First Nations’ unique position in Canada’s tax system.

The rules have limits. Partnerships might still need to file T5013 returns if they earn non-exempt income off-reserve. The location of business activities and income source determine what you need to do.

Section 87 of the Indian Act makes income from on-reserve business activities tax-free. Income from off-reserve activities becomes taxable. This difference affects both filing needs and tax obligations for Indigenous partnerships.

Indigenous partnerships use interesting tax structures. To cite an instance, see how First Nations use limited partnerships to keep tax exemptions even when operating off-reserve. They often create structures where a First Nation-owned corporation acts as the general partner and the First Nation becomes the limited partner.

T5013 Filing Deadlines and Penalties

Filing your T5013 partnership information return on time helps you avoid penalties that can get pricey. Your partnership structure determines when you need to file, so you need to know which deadline applies to your case.

T5013 due date for different partnership types

The filing deadline for your T5013 partnership information return changes based on who your partners are:

The deadline for tiered partnerships depends on the end members. In fact, if all end members are individuals, the March 31 deadline applies.

Some partnerships stop operations mid-year, which leads to special timing rules. When your partnership ends its operations before its usual fiscal period ends, you must file any outstanding returns by the earlier of:

• 90 days after ceasing all business activities
• The date you would normally have filed if operations had continued

You should mark these deadlines on your calendar right after your fiscal year ends to stay compliant.

Penalties for late or incorrect filing

The Canada Revenue Agency (CRA) sets significant penalties when you miss T5013 filing deadlines:

• Basic late filing penalty: The greater of CAD 139.34 or CAD 34.83 per day for each day the return is late, up to a maximum of 100 days
• Partnerships with late filings in the last three years face an extra penalty of CAD 139.34 per month for each month or partial month the return stays unfiled, up to 24 months

A single late filing can cost you up to CAD 6,827.46 plus interest on unpaid penalties. Your partnership might face more penalties under subsections 66(12.74) and (12.75) of the Income Tax Act if you’ve allocated renounced resource expenses to partners.

Tax preparers or advisors who make false statements or omissions can face third-party penalties. They might be personally liable if they knowingly misrepresent your partnership’s financial position or show gross negligence.

Voluntary disclosure and penalty relief

The Voluntary Disclosures Program (VDP) can help if you find out your partnership hasn’t met its T5013 filing obligations. This program lets partnerships fix their non-compliance before the CRA contacts them about it.

Your disclosure must meet these requirements to qualify for VDP:

• Be truly voluntary (before any CRA enforcement action)
• Include all relevant information
• Be subject to a penalty
• Include information at least one year past due

The CRA will give you penalty relief and partial interest relief if they accept your application. This program gives you a chance to fix past mistakes without facing full penalties.

The CRA might waive penalties and interest in cases where unusual circumstances stopped you from complying. These situations could include serious illness, natural disasters, or CRA service disruptions.

Knowing these deadlines and potential risks will keep your partnership in good standing with tax authorities and help you avoid extra costs.

Step-by-Step Guide to Filing a T5013 Return

Filing a T5013 partnership information return demands precision and attention to detail. You need to complete this process correctly to stay tax compliant and avoid penalties. Let me guide you through each step.

Register for a partnership account (RZ)

You need to get a partnership account number before filing your T5013 return. This number, also known as an RZ account number, consists of three parts that total 15 characters: a 9-digit Business Number (BN), the 2-letter program identifier “RZ,” and a 4-digit reference number. A partnership account number looks like this: 123456789RZ0001.

You can register for an RZ account through:

1. The CRA’s Business Registration Online service
2. Form RC1 (Request for a Business Number)
3. Direct phone contact with the CRA

The CRA emphasizes that you should get your RZ program account before you try to file your information return.

Gather partner and financial information

The next step involves collecting all financial documents and partner details:

• Complete financial statements including balance sheets and income statements
• Partner information (names, addresses, tax identification numbers)
• Partnership allocation percentages for each partner
• Capital transactions during the fiscal period
• Details of any special allocations

The CRA might ask to see your financial statements and any auditor or accountant’s reports later, so keep them in your records. Having this information ready helps you complete the required forms accurately.

Complete T5013, T5013SUM, and slips

Your T5013 partnership information return must include these components:

• T5013 FIN (Partnership Financial Return) – The four-page primary form
• T5013 schedules – Including SCH 1, SCH 50, SCH 100, SCH 125, SCH 140 (if applicable), and SCH 141
• T5013 slips – Individual slips for each partner
• T5013SUM – Summary of Partnership Income

Start with the T5013-FIN by adding your partnership’s information, such as trade name, address, partnership type, and account number. Then figure out which additional T5013 schedules your partnership needs based on its financial situation.

Each partner needs their own T5013 slip, with information for two partners fitting on one sheet. Remember to keep copies of all T5013 slips and the T5013 summary for your records.

Choose between electronic and paper filing

Electronic filing comes with several benefits:

• You get confirmation within minutes with an electronic submission number
• Your data travels securely using Transport Layer Security protocol
• You can file from anywhere in Canada
• The process saves paper
• You can submit amendments electronically

These electronic filing options are available:

• Internet file transfer using tax preparation software (for files up to 150 MB)
• The CRA’s free Web Forms application
• The “File a return” service in My Business Account (for business owners)
• Represent a Client portal (for authorized representatives)

Paper filing remains an option. This method requires you to send one copy of each required form to your tax center.

BOMCAS Canada’s specialized team can help you with your T5013 partnership information return. They’ll guide you through each step and ensure your filing meets all CRA requirements.

Special Filing Considerations

Tax partnerships must deal with more than simple filing requirements. You need to pay extra attention to specialized tax matters that can affect your tax reporting accuracy and financial benefits by a lot.

Capital cost allowance (CCA) and eligible capital

Filing your T5013 return needs careful handling of capital cost allowance if your partnership owns depreciable property. We claimed CCA on assets owned by partnerships rather than individual partners. Your partnership can deduct CCA up to the maximum allowable amount for the fiscal period or choose not to claim any.

Partners can see their share of CCA claimed by the partnership in Box 040 on the T5013 slip. This amount has already been subtracted from business income (box 116) or professional income (box 120) on the slip. Partners should avoid deducting it again on their personal returns.

Recent CCA changes now affect partnership reporting:

• New purpose-built residential rentals get an extra 6% allowance (10% combined rate) if construction started after April 15, 2024, and before 2031
• Immediate expensing (100% first-year deduction) applies to new additions in CCA classes 44, 46, and 50 acquired after April 15, 2024

Box 220 needs special attention for rental properties. Partners who own other rental properties as proprietors must add their partnership rental income to their personal rental income before they calculate CCA.

GST/HST rebates for individual partners

Partners might qualify for GST/HST rebates on expenses they paid personally that:

• Were not charged to the partnership’s account
• They deducted from their share of partnership income

Your rebate calculation changes based on the tax rate:

• 5/105 of eligible expenses with 5% GST
• 12/112 of eligible expenses with 12% HST
• 13/113 of eligible expenses with 13% HST
• 15/115 of eligible expenses with 15% HST

Partners can also claim rebates on CCA deducted for motor vehicles, musical instruments, or aircraft used to earn partnership income if they paid GST/HST personally on these items. Any rebate related to CCA must reduce the undepreciated capital cost of that property.

You can claim this rebate by completing Form GST370 (Employee and Partner GST/HST Rebate Application). Include the amount in your income for the fiscal period when you receive it.

Functional currency and international rules

Special reporting rules apply to partnerships with corporate members who chose to report in a functional currency under subsection 261(3) of the Income Tax Act. These partnerships must file their T5013 returns and related forms in their chosen functional currency.

Partnerships with partners using different currency elections need to prepare separate T5013 slips:

• Partners with functional currency elections get slips in their chosen currency
• Partners without elections receive slips in Canadian dollars

The partnership must file only the functional currency slips with the CRA. They need to keep Canadian dollar slips in their records and provide them when asked.

Partnerships with international operations or partners must keep detailed documentation to handle these requirements effectively.

Common Mistakes to Avoid When Filing

Paying close attention to detail while filing your T5013 return helps you avoid penalties that can get pricey and corrections that take time. My experience with partnership returns has shown several common errors that partnerships should watch out for.

Incorrect or missing partner details

Accurate partner information is essential for proper T5013 filing. The federal Income Tax Act requires partners to provide their Social Insurance Numbers (SIN) to anyone who prepares information slips for them. Partnerships often make these critical mistakes:

• Missing complete contact information for all partners
• Wrong partnership percentage shares
• Missing tax shelter identification numbers where needed

Nominee relationships need extra care. Anyone who holds an interest as a nominee or agent must file a separate T5013SUM and related T5013 slips for each partnership where they hold interests for others.

Not filing when required

Confusion about filing requirements guides many partnerships to skip filing by mistake. The penalty for late filing is steep—the greater of CAD 139.34 or CAD 34.83 per day for each day the return is late, up to 100 days.

Partnerships must set up an RZ program account before they file information returns. Without an active RZ account, the system rejects submissions with the error message “Filer number is missing or invalid for this type of return”.

Errors in income allocation or slips

Wrong income distribution among partners can trigger CRA reviews and possible audits. Income allocation must line up exactly with the partnership agreement. These slip-related errors happen often:

• Wrong reporting of partners’ share of partnership income or loss
• Incorrect completion of fixed boxes versus generic information boxes
• Failure to settle information on nominee-issued T5013 slips with partnership-issued slips

Tiered partnerships face extra timing challenges. The CRA understands that partnerships who are partners themselves may find it hard to get slips from other partnerships before they complete their own returns. Filing with estimated amounts on time and submitting an amended return later might work better in these cases.

BOMCAS Canada can help you avoid these common T5013 filing mistakes and ensure your partnership information return meets all CRA requirements. Reach out to us today.

How BOMCAS Canada Can Help with T5013 Filing

The intricate world of partnership tax filings can overwhelm anyone who lacks professional guidance. BOMCAS Canada’s specialized expertise simplifies this complex process and ensures full compliance with CRA requirements.

T5013 preparation and electronic filing services

BOMCAS’s complete T5013 preparation services adapt to your partnership’s unique structure. Their certified accountants start with a consultation to understand your situation and meticulously collect and review documents. The team ensures accurate income reporting and proper claiming of eligible deductions.

BOMCAS reviews everything with you before filing electronically with the CRA. Electronic submissions provide instant confirmation through a submission number. The system uses secure Transport Layer Security protocol and remains accessible anywhere in Canada. This eco-friendly approach allows electronic amendments whenever needed.

Support for complex and tiered partnerships

Multi-tier partnerships create unique challenges that BOMCAS handles expertly. Their team manages complex cascading allocation requirements for partnerships with multiple tiers and various ownership structures. The simplified reporting process ensures proper documentation at all partnership levels.

Partnerships with corporations, trusts, or non-resident partners receive specialized support from BOMCAS to handle additional filing complexities. Their expertise covers preparation of all required schedules: Schedule 1 (income statement reconciliation), Schedule 50 (partnership ownership details), and Schedules 100/125 (financial position and income statements).

Tax planning and compliance assistance

BOMCAS identifies tax-saving opportunities that match your partnership’s structure. Their team recommends strategic approaches like loss utilization or deferral strategies that benefit your specific circumstances.

CRA notices or audit requests become manageable with BOMCAS’s professional representation. Their post-filing support tackles questions or issues quickly. You gain confidence that your partnership meets all regulatory requirements.

Contact BOMCAS Canada today to gain peace of mind about your T5013 partnership information return. Their precision and expertise let you focus on your business while they handle your tax compliance obligations.

Conclusion

Canadian partnerships must file their T5013 partnership information returns accurately to stay tax compliant and avoid getting pricey penalties. This piece has covered everything in T5013 returns, from simple eligibility requirements to complex filing details.

Your partnership’s filing obligations are a vital first step. This is a big deal as it means that partnerships with revenues and expenses over CAD 2.79 million or assets above CAD 6.97 million must file T5013 returns. On top of that, all tiered partnerships, partnerships with corporate or trust partners, and SIFT partnerships must file whatever their size.

The CRA has strict deadlines that change based on your partnership’s makeup. Partnerships with only individuals must file by March 31, while those with corporate partners follow different schedules. Late filing leads to penalties of CAD 139.34 or CAD 34.83 daily, up to CAD 6,827.46.

Detailed preparation will help you avoid common errors like wrong partner information, incorrect income allocation, or missed deadlines. Professional help often proves valuable to handle complex aspects like capital cost allowance, GST/HST rebates, and functional currency reporting.

T5013 plays a significant role in Canada’s tax system by creating transparency between partnership operations and partner tax filings. While partnerships don’t pay income tax directly, proper reporting will give partners the right allocated amounts for their returns.

BOMCAS Canada provides detailed support for partnerships that need help with T5013 compliance, from original preparation through electronic filing and CRA questions. Their expertise becomes valuable especially when you have complex partnership structures with extra reporting needs.

Filing your T5013 partnership information return might look overwhelming at first. All the same, with good guidance and timely preparation, you can meet this tax requirement quickly while keeping your focus where it belongs—on your partnership’s success.

FAQs

Q1. What is the T5013 partnership information return and who needs to file it? The T5013 is a tax form used to report income, losses, and other financial information for partnerships in Canada. Partnerships with revenues and expenses exceeding CAD 2.79 million, assets over CAD 6.97 million, or those with corporate/trust partners must file this return.

Q2. When is the deadline for filing a T5013 return? The deadline depends on the partnership composition. For partnerships with only individual partners, it’s March 31 following the calendar year end. Partnerships with corporate partners must file within 5 months after the fiscal period end. For mixed partnerships, it’s the earlier of these two deadlines.

Q3. What are the penalties for late filing of the T5013 return? Late filing penalties start at the greater of CAD 139.34 or CAD 34.83 per day for up to 100 days. For partnerships with prior late filings, an additional penalty of CAD 139.34 per month may apply, up to 24 months. The maximum penalty can reach CAD 6,827.46 plus interest.

Q4. How do partnerships report capital cost allowance (CCA) on the T5013? Partnerships claim CCA on assets they own, not individual partners. The partnership deducts CCA up to the maximum allowable amount or may choose to claim none. Partners’ shares of CCA are reported in Box 040 on their T5013 slips and should not be deducted again on personal returns.

Q5. Can BOMCAS Canada assist with T5013 filing for complex partnerships? Yes, BOMCAS Canada offers specialized T5013 preparation and electronic filing services. They provide support for complex and tiered partnerships, handle intricate allocation requirements, and offer tax planning and compliance assistance. Their expertise is particularly valuable for partnerships facing additional reporting complexities.