the old guy

[the old man]

i have received a t5 from bmo  for interest  earned on an equity linked note which matured last feb 2020.  The investment was made with in a joint

acct for my wife and myself.  The note in question has also appeared on a t5008 received from my own bank. I assume the interest is taxable and can be split between between my wife and myself ?  i don't think i have to record both the t5 and the t5008 on my return do I?

[TheTaxSmith]

Hi the old man. A T5 is not the same as a T5008. The T5 reports income such as interest or dividends, while a T5008 reports transactions in securities such as a sale or disposition (deemed and /or realized). The deemed disposition can be a transfer from a non-registered to a registered account. It can result in a capital gain or capital loss.

I suspect in your case the T5008 reports the disposition of the interest bearing equity based note/units. You need to report the disposition as per the T5008 separately using the Proceeds and the Cost (Adjusted Cost Base). The T5008 may not report your cost so you will have to go back through your records to find that or get it from the broker.

In some cases you purchase notes at an amount and it matures at an amount with included interest. In that case the T5 will report the interest and the difference between the amount received (Proceeds) and the amount paid (Cost) may be equal to the interest. In some cases there could still be a gain or loss and the process can be a bit confusing to calculate the actual investment income and the gain/loss. Those conditions happen when you purchase the note after it was initially issued. If you held the note from initial issue through to maturity then you will not have a gain or loss.

CRA tracks the dispositions based on the T5008 so to prevent them adding it to your return again and saying you had unreported income/gains it is best to get the data entered to your return. The Proceeds may in fact equal the Cost and there is will be no gain or loss for many interest based notes. That said however for an equity based investment where you earn interest or dividends (such as Pimco) there could be a gain and or loss and that needs to be reported.

Oh yes if the account is joint then split the amounts between yourself and your spouse.