Reporting Dividend (T5) and Capital Gains (T5008) Income in Corporation Tax Filing T2

EDAR · ‎March 04, 2024

Hi everyone,

Here's what I've found so far:

For reporting capital gains, I understand that I need to use Schedule 6 of the T2 corporate tax form.
Dividends received should be reported on Schedule 3 of the T2 Return.
Additionally, Schedule 7 needs to be completed, which the software automatically generates once Schedules 3 and 6 are completed.

My question is regarding the inclusion of these same incomes from Schedules 3 and 6 in the GIFI Schedule 125. Won't this be a duplication of income since they're already reported using Schedules 3 and 6?

Once I entered the received dividends and capital gains in Schedule 125 too then my taxes increased by $500. Is this how it's supposed to be or am I getting double taxed?

I appreciate any insights or advice you can provide on this matter. Thank you in advance!

janisbossenberry · ‎March 05, 2024

The Schedule 125 does not let the program know the nature of the program. Recording dividends on Schedule 3 will tell the program the income is taxable under Part IV instead of Part 1 and will give a deduction from taxable income on the T2 on line 320. Recording the gains on Schedule 6 will tell the program that only 1/2 of the income is taxable - you need to record a deduction on line 401 of the Schedule 1 to generate a deduction from income for the book gain which will be replaced by the taxable gain from Schedule 6.

EDAR · ‎March 05, 2024

Thank you so much. Forgive my ignorance, but I'm still not clear on why I need to include these incomes on Schedule 125 at all, if I already reported them using Schedule 3 ,etc.

janisbossenberry · ‎March 11, 2024

The Schedule 125 is the GIFI, which replaces the need to attach financial statements to the tax return. It reports book items, not tax items.