T5 Slip

Taxable income is what is left after you total the income the tax rules include and subtract the deductions you are allowed. Employment and self-employment earnings, most pensions, EI and CPP benefits, interest, dividends, rental profit, the taxable portion of capital gains, RRSP and RRIF withdrawals and most taxable benefits from work all go into the total. Tax is then calculated on that figure and reduced by non-refundable credits such as the basic personal amount.

The GST rate is 5%, unchanged since 1 January 2008 and current for 2025 and 2026. It reaches every province and territory, but in five provinces it is folded into the HST: you charge 13% in Ontario, 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island, and 14% in Nova Scotia, down from 15% on 1 April 2025. In Alberta, the Northwest Territories, Nunavut and Yukon, 5% applies alone.

A refund is the difference between the tax already paid on your behalf during the year and the tax you actually owe once income, deductions and credits are totalled on the return. Tax withheld from pay, instalments and refundable credits all count towards the amount paid. Where that total exceeds the tax calculated, the CRA refunds the excess; where it falls short, a balance is payable instead. The notice of assessment sets out the calculation.

Federal income tax is the share of income tax that goes to the federal government, calculated on taxable income using federal brackets and then reduced by federal credits. Your province or territory levies its own income tax on the same income, which is why a paycheque outside Quebec shows one blended deduction rather than two. Employers estimate both when withholding. For your own figure, read the federal tax line on your assessed T1 rather than a rate table.