The T5007 form, also known as the Statement of Benefits, is a slip used to report workers’ compensation benefits or social assistance rendered by organizations, workers’ compensation boards, social services agencies, and other related organizations in Canada.
In this article, you will find all you need to know about the T5007, how to file and distribute it, how to make amendments or cancel it, and more.
What is the T5007 Form?
According to the Income Tax Regulations, anybody who pays an amount for workers’ compensation benefits or social assistance must file an information return to report the payments. The T5007 information return is used to report those payments.
It consists of a T5007 Summary and all related T5007 slips. You can use these to report income payments of benefits or social assistance. There are three individual slips on each page of the T5007, and they are used to identify recipients of either benefit or assistance payment. They are also used to report the amount of either payment they received.
The income shown on the slips is not taxable. Still, it must be included by the recipients in their net income to enable them to claim the guaranteed income supplements and tax credits they may be eligible to claim, such as the Canada Child Benefit, GST/HST credits, and so on. The T5007 must not show any negative amounts.
Who Can Use the T5007?
Provincial, territorial, municipal agencies or boards, or similar bodies are required to file a T5007 information return when they;
- Make social assistance payments based on a means, needs, or income test.
- Pay an amount to an individual for compensation under a federal, provincial, or territorial employees’ or workers’ compensation law for injury, disability, or death.
- Prove a claim to be valid and determine that an individual is entitled to compensation under a federal, provincial, or territorial employees’ or workers’ compensation law for injury, disability, or death. This is applicable even if they do not make a payment to the individual. The overall compensation gotten by the individual exceeds the original amount he or she is entitled to.
Employers who continuously pay their employees’ salaries before and after their workers’ compensation board claim are decided and do not have to file the T5007 information return.
Eligible Payments
As described by the Income Tax Act, the most common social assistance payments and workers’ compensation benefits that the receiver has to include in their income are:
Workers’ compensation benefits
Some workers’ compensation benefits include:
- Injury
This is compensation paid as required by a federal, provincial, or territorial employees’ or workers’ compensation law for an injury, including wage-loss replacement income.
- Disability
This compensation is paid under a federal, provincial, or territorial employees’ or workers’ compensation law for persons with disabilities, and it includes;
- Wage-loss replacement income that is paid to an injured worker who suffers a partial, total, temporary, or permanent disability due to a work-related accident
- Compensation for projected loss of earnings made to an injured worker who suffers from an injury that results in permanent impairment or temporary disability
This also includes settlement claims that determine individuals entitled to compensation under the compensation law for injury, disability, or death.
- Death
This compensation is paid under a federal, provincial, or territorial employees’ compensation law due to an employee or worker’s demise. Amounts under this category of worker’s compensation include;
- Survivor benefits are paid periodically to a dependent spouse or common-law partner and other dependants.
- Wage-loss replacement income occasionally paid to a surviving spouse or common-law partner in place of the revenue that a worker or employee who died in a work-related accident/as a result of an industrial accident would have earned
Social Assistance Payments
Social assistance payments are payments made to individuals or third parties depending on a means, needs, or income test. They include expenses for food, clothing, and shelter requirements. These amounts can also have the actual rental or mortgage charges paid for accommodation or shelter for the social assistance recipients in case of any.
Non-Eligible Payments
For workers’ compensation benefits, you cannot report the following payments.
- Medical expenses incurred by or for an employee.
- Funeral expenses for an employee
- Legal fees for an employee
- Job training or counselling for the employee that is not paid as part of, or instead of, wage replacement benefits
- The death of the employee, besides the periodic payments made after the demise of the employee
- Interest payments of retroactive workers’ compensation payments
Social assistance payments
For social assistance payments, you don’t have to report the following:
- Payment made in a year as part of a series of payments that is equal to $500 or less in the tax year
- Any Payment that is not part of a series of payments
- Payment for medical expenses incurred by or for the payee
- Payments for childcare expenses include babysitting services, day-nursery services, or services provided at a boarding school or camp if the total cost for these services qualifies for a deduction under the Income Tax Act.
- Payment for funeral expenses for a person related to the payee
- Payment for legal expenses incurred by or for the payee or a relative of the payee
- Payment for job training or counselling for the payee or a relative of the payee
- Payment made to individuals to enable them to keep their principal place of residence available for use by a foster agency (bed reservation).
Boxes available in the T5007 slip
The T5007 slip has four boxes, and each serves various purposes. Below are the boxes and their information:
- Box 10
This box contains the total amount of worker’s compensation benefits. The amount gotten is added to the total amount in line 144 of the income tax as annual income and line 250 for deductions made to taxable income.
- Box 11
Box 11 contains any social assistance payments and their provincial or territorial supplements. You must include this section’s amounts to the overall amount in line 145 of the income tax return and 25o for a tax deduction.
- Box 12
This box has the social insurance number of the compensation benefit recipient.
- Box 13
Box 13 is for report code that’ll determine if your slip is original, amended, or cancelled. “O” shows that the slip is original, “A” is for amended like financial data or identification information, while “C” denotes that the slip is cancelled. A description will be written at the top of the T5007 if A or C is entered.
How to Obtain the T5007 Slip
The T5007 slips and summary can be obtained from the CRA website and can be downloaded and printed. Alternatively, you can use the web forms. You can file the T5007 slips electronically, on paper, or by using customized forms.
Electronic Filing
You can either file your T5007 electronically by using the internet file transfer or the web forms. As of January 11, 2021, you can now file your T5007 via the internet.
You must file your returns electronically if you file more than 50 slips for a year by paper. Failure to do so can attract the payment of penalty fees shown in the table below:
Number of Returns (slips) | Penalty Fee (CAD) |
|---|---|
51 to 250 | 250 |
251 to 500 | 500 |
501 to 2500 | 1500 |
2501 and more | 2500 |
If you use commercial or in-house-developed software to manage your business, you can file via the Internet file transfer, provided your returns do not exceed 150 MB. If they exceed it, you can compress or divide them. Also, you must save your tax return in XML format. You will require a web access code and a business number. If you’re filing more than 50 slips, the CRA recommends that you file electronically.
Web Filing
To file the T5007 using the web forms is free and secure. You will also require a web access code and access to the internet. If you do not have a web access code, you can quickly request it online or call the CRA.
If you don’t want to file with a web access code, all you need to do is register as a business owner on a My Business Account on the CRA website. You can also file the T5007 using Represent A Client without an access code.
Filing on Paper
If you file your return on paper, you are to mail it to:
T5007 Program
Jonquière Tax Centre
Post Office Box 1300 LCD Jonquière
Jonquière QC G7S 0L5.
Filing with Computer Printed/Customized Forms
The relevant details printed on the back of your information slip must be provided if you complete many slips. Follow this guideline to learn more.
Completing and Distributing T5007 Forms
In completing the T5007, the CRA requires you to provide the following information on the slips:
- The four digits of the calendar year you made the payment.
- The workers’ compensation benefits depending on the type of payment
- Social assistance payments or provincial/territorial supplement
- The payer’s name and address
- Social Insurance Number (you can still file the return if you are yet to receive your SIN)
- Report code (to show whether the return is original (O), cancelled (C), or amended (A) )
- The recipient’s name and address
After completing the return, you will have to send it to recipients on or before the due date (the last day of February of the calendar year the return applies to). You can send electronic copies as long as the recipients consent to it via writing or by email. You don’t need to send paper copies of the return if you filed it electronically.
If you file your T5007 on paper, you are to send each slip along with the T5007 summary to the CRA on or before the due date to the following address;
T5007 Program
Jonquière Tax Centre
Post Office Box 1300 LCD Jonquière
Jonquière QC G7S 0L5.
You will then send two copies of the T5007 slip to the recipient on or before the due date. You are not required to keep a copy for the slips, but instead, the information used to prepare the slips in an accessible and readable format.
If a business or activity ends, you must send the appropriate copies of the T5007 slips to the recipients and the CRA no later than 30 days after the date the business or activity ended.
What Next After Filing?
After filing your return and sending them, the CRA will verify them, and if they are any issues concerning it, you will be contacted. For cancelling, amending, replacing, or adding T5007 slips, click here for more details.
T5007 Summary
A T5007 summary is a form that sums up all the amounts you are reporting on the T5007 slips. You don’t have to send a paper copy of the T5007 summary to the CRA if you file your information return electronically.
T5007 Penalties
There are various penalties for filing the return late, not providing your information on the return, and many more. The minimum penalty for late filing is CA$100, and the maximum is CA$7500. Interest is also compounded on these penalties and is payable to the receiver-general. The CRA can also waive or cancel penalties or claims at their discretion.
Conclusion
The T5007 reports workers’ compensation benefits and social assistance payments made by employers, organizations, agencies, and related bodies. For more information on the form, use this guide.
