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T5013 Guide for Partnerships

As a professional accountant or bookkeeper who offers tax services to the public, it is up to you to determine which income tax returns your clients will need to file this tax season. This T5013 guide is meant to help professional accountants and bookkeepers with their client’s Partnership Return filing.

What is a T5013 Partnership Information Return?

The Canadian T5013 Partnership Information Return must be filed by the partnership for those who operate a business in a partnership business structure. The Canada Revenue Agency (CRA) defines a partnership as a relation that exists between persons carrying on a business, in common, with a view to profit.

The T5013 Partnership Information Return illustrates to the CRA basic financial details of the partnership business. There are a few different partnership structures that a business can decide to use.

General partnerships are jointly liable for the business and must take on the personal responsibility of any debts incurred in running the business. However, limited partnerships and limited liability partnerships are similar to incorporated businesses, as they protect certain partners (limited partners), separating the business income, assets, and liabilities from personal income, assets, and liabilities.

According to the Canadian Income Tax Act, partnerships are not considered entities that must pay taxes. Instead, all of the business’s income and losses are treated as flowing out to its partners and must be accounted for by the partners on their respective personal / corporate / trust income tax returns where they will pay the appropriate income taxes on such income.

What is a T5013 slip?

The T5013 slip is part of the T5013 Partnership Information Return. This form is used to illustrate to the CRA each partner’s share of the income/losses and other information of the partnership business.

All partners of the partnership must report his or her share of the T5013 information on their applicable tax returns (e.g. individual, corporate, trust returns) with the CRA for each fiscal period that the partnership operates in Canada.

Which Clients Need to File a Partnership Information Return?

As a professional accountant, you will need to determine which clients of yours must file the Partnership return. Any business partnership that operates in Canada, or a Canadian partnership that operates or possesses investments in Canada or foreign countries will file this return with the CRA.

If your client checkmarks the box for one of the following criteria, you will be required to file the T5013 Partnership forms for them and their business:

  • The partnership possesses an absolute value sum of revenues and expenses that exceeds $2 million within the fiscal period
  • The partnership owns tangible and intangible assets, worldwide, worth more than $5 million
  • The business uses a tiered partnership, whereby one of the parties is another partnership, or the partner is in another partnership
  • The business possesses a partner that is a trust or corporation

Completing Form T5013 for Your Clients

To file a Partnership Information Return for your clients, you will need to complete form T5013-FIN, the Partnership Financial Return. This four-page form is where you will fill in the client’s partnership and miscellaneous information while attaching all relevant documentation as evidence.

Using the T5013-FIN, you can figure out which additional T5013 schedules and forms should be included in your client’s return. Such schedules relevant to the partnership include:

  • T5013 SCH 1 – Partnership’s Net Income
  • T5013 SCH 50 – Partner’s Ownership and Account Activity
  • T5013 SCH 100 – Business’s Balance Sheet Information
  • T5013 SCH 125 – Business’s Income Statement Information
  • T5013 SCH 140 – Business’s Summary Statement
  • T5013 SCH 141 – Financial Statement Notes Checklist

The partnership must also complete and file T5013 partnership slips for each partner. This tax slip is where you will enter in the partner’s share of the partnership, including net income and loss, capital gains and losses, and revenue and income or loss.

The T5013SUM form must also be completed and filed. This two-page form summarizes the partnership’s income and should be used to report the total amounts from all the T5013 slips issued by the partnership, including all Canadian net income, as well as foreign net income.

How to Report T5013 on T2

Certain partnerships will have a corporation as a partner. If this is the case, then the corporation, who is a partner will need to include their share of T5013 income, expenses, gains and losses and other information on their T2 Corporation return.

T5013 Partnership Filing Deadline Requirements

The type of partners that make up the partnership- whether individuals or corporations- will dictate the T5013 filing deadline. You will need to determine which partnership tax return dates apply to your client.

Partnerships without a corporation partner have a filing deadline of March 31st each year. However, if the partnership includes an incorporated business as a partner, then the deadline is either March 31st or five months after the end of the partnership’s fiscal year, whichever comes first. In the case where all partners in a partnership are corporations, then the filing deadline will be five months after the end of the partnership’s fiscal year.

If you fail to meet your client’s partnership tax return deadlines, the CRA will penalize them. Failing to file on time will incur a penalty of $100, or $25 per day, up to a maximum of 100 days- whichever is greater. However, repeat offenders are subject to greater penalties, so it is essential for you to get your client’s returns in on time, as they are relying on you for this service.

That being said, you can extend the client’s partnership return deadline if you need more time to complete and file their T5013 and general returns. To do so, you must contact the CRA directly as the representative of your client.

Filing Form T5013 Using ProFile

To file the T5013 return, ensure you have the client’s partnership account number (RZ number), which is a unique 15 character code assigned to each partnership by the CRA. If your client does not have this number, you can request one for them using Form RC1.

With the RZ number in hand, you can file your client’s partnership return using the Represent a Client CRA portal or tax preparation software like Intuit’s ProFile. ProFile is professional tax prep and EFILE software you can trust. With ProFile’s comprehensive form sets, you can handle virtually every tax scenario for all tax jurisdictions, including Québec.

Learn more about filing partnership returns with the CRA, or check out this informative ProFile FX & T5013 webinar to help you with your client’s partnership return this tax season.

Find out for yourself why ProFile is Canada’s #1 best-selling professional tax software. Try it for free today.

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