Important Information about Royalties and T5s

Friday, February 10, 2017

Revenue Canada permits royalty payments to be reported on one of three different lines on a tax return:

Line 104 - Royalties

Royalties are considered payments received as compensation for using or allowing the use of a copyright, patent, trademark, formula, or secret process. They can also include payments in regard to cinematic films, film works, or television tapes.

Royalties may also be income from investments or from a business.

Your income from royalties may be shown in box 17 of a T5 slip.

If your royalties are from a work or invention of yours and there are no associated expenses, report the income on line 104.

If there were associated expenses, the income should be reported on line 135.

Report all other royalties on line 121.

Completing your tax return

Enter on line 104, your royalties from a work or invention with no associated expenses.

Enter on line 135, your royalties that have expenses associated with them.

Enter on line 121, all other royalties.

It appears that Revenue Canada’s default is line 121 which is investment income; however, as indicated above this is not the only option.

Below is the link to the Revenue Canada page:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/104/rylts-eng.html

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