Corporation Tax Guide
Corporation Tax Guide
2013
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in braille, large print, etext, or MP3 by going to
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your personalized correspondence in these formats by calling
1-800-959-5525. If you are outside Canada and the United States,
call us at 613-940-8497. We accept collect calls. An automated
system will answer. You may hear a beep and experience a
normal connection delay until your call is connected.
The law allows Statistics Canada to access business taxpayer information collected by the Canada Revenue Agency (CRA).
Statistics Canada can now share with provincial or territorial statistical agencies, for research and analysis purposes only,
data concerning business activities carried out in their respective province or territory.
This guide uses plain language to explain the most common tax situations. If you need help after you read this guide, call
our Business Enquiries line at 1-800-959-5525.
La version franaise de cette publication est intitule Guide T2 Dclaration de revenus des socits.
Unless otherwise noted, all legislative references are to the Income Tax Act and the Income Tax Regulations.
www.cra.gc.ca
Whats new?
Register for online mail
You can now choose to receive notices of assessment and
reassessment, as well as some letters online. When you
register for online mail, the CRA will no longer print and
mail correspondence items to you. Instead, you will receive
an email to notify you that there is mail to view in your
secure online business account
at www.cra.gc.ca/mybusinessaccount. For more
information, see Receive your CRA mail online on
page 14.
Synthetic dispositions
Currently, certain financial arrangements (synthetic
disposition transactions) do not result in a disposition for
tax purposes even though the corporation has acquired
another property (or the right to acquire another property)
and so eliminated their future risk of loss and opportunity
for gain or profit in respect of a property. For synthetic
disposition arrangements generally entered into after
March 20, 2013, the corporation will be deemed to dispose
of and reacquire the property at the time of entering into
the agreement, regardless of the form of the arrangement.
This measure will not apply when convertible shares or
convertible debt have been exchanged only for new shares.
Moreover, it will generally not apply to ordinary hedging
transactions or ordinary-course securities arrangements.
synthetic dispositions
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Non-resident trusts
Deemed residence rules for trusts are expanded to
situations where a Canadian-resident corporation
maintains effective ownership over property held by a
non-resident trust. This applies to tax years ending after
March 20, 2013. See page 29.
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Table of contents*
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Before you start ...................................................................
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Chapter 8 Page 8 of the T2 return .................................
Summary of tax and credits ...............................................
Federal tax ............................................................................
Provincial and territorial tax .............................................
Other credits ........................................................................
Refund or payment .............................................................
Electronic payment of balance owing ..............................
Direct deposit request ........................................................
Mandatory electronic filing for tax preparers .................
Certification .........................................................................
Language of correspondence.............................................
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* See the first page of each chapter for more detailed content listings.
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Partnerships Deferral of corporation tax ......................
Adjusted stub period accrual (ASPA)...........................
Transitional relief ............................................................
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Penalties ...............................................................................
What happens if you file your return late? ......................
Non-resident corporations .............................................
Large corporations ..........................................................
What happens if you do not comply with mandatory
Internet filing?..................................................................
What happens if you do not report income? ...................
False statements or omissions ...........................................
Misrepresentation in tax matters by a third party ..........
Other penalties ....................................................................
Cancel or waive penalties or interest................................
Voluntary Disclosures Program ........................................
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Resident corporations
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Non-resident corporations
A non-resident corporation has to file a T2 return if, at any
time in the year, one of the following situations applies:
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For each of the questions asked at lines 164, 170, and 171
on page 2 of the return to which your response is yes,
complete the appropriate form or schedule and attach it to
your return. In addition, you have to complete Schedule 91,
Information Concerning Claims for Treaty-Based Exemptions.
Rental income from Canada
Rental income from Canada is subject to a 25% withholding
on the gross rental income under Part XIII, unless the rate is
reduced by a reciprocal tax treaty. A non-resident
corporation can elect to be taxed under Part I on its net
rental income by filing a T2 return under subsection 216(1)
within two years of the end of the tax year. If the
non-resident corporation has filed Form NR6, Undertaking
to File an Income Tax Return by a Non-Resident Receiving Rent
from Real Property or Receiving a Timber Royalty, it must file a
T2 return under subsection 216(4) within six months of the
tax year end. For more information, see IT393R2 Election
Re: Tax on Rents and Timber Royalties Non-Residents.
Note
If you file a T2 return under section 216, include only
rental income. If you have any other income, file a
second T2 return.
Reference
Guide T4144, Income Tax Guide for Electing Under Section 216
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2D bar code
CRA-certified software produces two-dimensional (2D) bar
codes that contain the information needed to assess your
return. We use bar code scanners to capture the information
on our processing systems.
CRA-certified software produces a T2 Bar Code Return that
contains the corporations identification information, a
summary of the financial data, bar codes, and a certification
area.
The paper quality and print legibility of your T2 Bar Code
Return have to meet our standards and must be printed on
one side only. Use paper that is as durable as the
32M paper we use to print our forms. The print quality has
to be clear and dark enough to read and photocopy easily.
If the T2 Bar Code Return you file was not generated by
software that we certified or does not meet our
requirements, we will contact you to re-file the return,
either in an approved format or using our preprinted
forms.
Generally, in addition to the T2 Bar Code Return, certified
software produces a client copy of the T2 return, which
looks like a CRA pre-printed T2 return. Keep the client
copy for your files and send the T2 Bar Code Return to us.
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Filing deadline
September 30
December 31
February 28
March 23
April 2
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Resident corporations
Corporations served by
tax services offices in:
Tax centre
Alberta, Manitoba,
Northwest Territories,
Saskatoon, London, Windsor,
and Thunder Bay
Sudbury/Nickel Belt,
Toronto Centre, Toronto East,
Toronto West, Toronto North,
and Barrie
Shawinigan-Sud Tax
Centre
e
4695 12 Avenue
Shawinigan-Sud QC
G9N 7S6
Qubec, Chicoutimi,
Rimouski, Trois-Rivires,
Outaouais, and
Montrgie-Rive-Sud
Non-resident corporations
The International Tax Services Office in Ottawa assesses
and reassesses returns that non-resident corporations file.
If the corporation is non-resident, send the returns and
related correspondence to:
International Tax Services Office
2204 Walkley Road
Ottawa ON K1A 1A8
If you have questions about non-resident returns, go to
www.cra.gc.ca/tx/nnrsdnts/bsnss or call one of the
following numbers:
Long distance from Canada and
continental United States ...................................1-855-284-5944
Long distance from outside Canada and
continental United States .................................... 613-940-8497*
Fax number ............................................................. 613-952-3845
* We accept collect calls. An automated system will answer.
You may hear a beep and experience a normal connection
delay until your call is connected.
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Balance-due day
Generally, all corporation taxes (with the exception of
Part III and Part XII.6) are due two months after the end of
the tax year. However, the tax is due three months after the
end of the tax year if the following conditions apply:
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Transitional relief
The ASPA rules generally apply to tax years of a
corporation that end after March 22, 2011. In many cases,
these rules could result in an income inclusion of a
significant incremental amount of partnership income for a
corporations first tax year ending after March 22, 2011. The
rules providing transitional relief will generally result in no
additional taxes being payable for that first tax year.
Instead, the additional income will generally be brought
into the corporations income over the five following tax
years.
Qualifying transitional income
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View mail
We have renamed the View correspondence service to
View mail service.
With this service, you can view a notice of assessment,
letter, or statement up to three years from the date of the
item. To access this service, go to:
Penalties
$100; and
Large corporations
A large corporation has to file the T2 Corporation Income Tax
Return and, if applicable, a Schedule 38, Part VI Tax on
Capital of Financial Institutions. If a corporation fails to file
these returns, a penalty will be charged for each complete
month that the forms are late, up to a maximum of
40 months. The penalty will be calculated as follows:
Non-resident corporations
A non-resident corporation will be subject to a failure to file
penalty equal to the greater of:
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Note
If a corporation is charged a penalty for making a false
statement or omission under subsection 163(2), the
corporation cannot be charged a penalty on the same
amount for failing to report income under
subsection 163(1).
References
Sections 162 and 163.1
extraordinary circumstances;
other circumstances.
References
Subsection 220(3.1)
IC07-1, Taxpayer Relief Provisions
References
IC01-1, Third-Party Civil Penalties
Section 163.2
Other penalties
We can also charge penalties for late or incomplete
instalment payments and for not providing information on
an authorized or prescribed form.
The most common forms are:
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Enquiries service
You can ask an account-related question online and we will
provide an answer online. You can use the Enquiries
service to make an online request (for example, to order
additional remittance vouchers) or submit an enquiry about
your corporation income tax return.
We will try to respond within 10 business days, depending
on the complexity of the question. To view the response,
you can either use the View mail service or access the
response through the Online mail received service.
To access these online services, go to:
Reference
Section 237.3
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You can file these schedules with the return on which you
report the loss or earned the credit, or you can forward
them separately to the tax centre that serves the
corporation.
Reference
Subsection 152(6)
You must explain the reasons for the objection, and outline
all the relevant facts.
For a large corporation, the notice of objection has to:
References
Subsections 152(3.1), 152(4), and 152(4.1)
IC75-7, Reassessment of a Return of Income
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a non-capital loss;
a farm loss; or
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Keeping records
Keep your paper and electronic records for a period of
six years from the end of the last tax year to which they
relate. However, if you want to destroy them before the
period is over, complete Form T137, Request for Destruction
of Records.
For more information, go to www.cra.gc.ca/records.
References
Subsections 230(4), 230(4.1), 230(5), and 230(6)
Regulation 5800
IC78-10, Books and Records Retention/Destruction
RC4409, Keeping Records
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Identification
Accurately complete page 1 of your return, so we can
properly identify the corporation and process the return
more quickly. You cannot use the Corporation Internet
Filing service to change the corporations head office
address or mailing address.
You can change the mailing, physical, and books and
records address of the corporation by:
Page
Line 070 Is this the first year of filing after
incorporation? ..................................................................
Line 071 Is this the first year of filing after
amalgamation?.................................................................
Line 072 Has there been a wind-up of a subsidiary
under section 88 during the current tax year? .............
Line 076 Is this the final tax year before
amalgamation?.................................................................
Line 078 Is this the final return up to dissolution? ......
Line 079 If an election was made under section 261 ....
Lines 080 to 082 Is the corporation a resident of
Canada? ............................................................................
Line 085 If the corporation is exempt from tax
under section 149 .............................................................
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Line 020 Has this address changed since the last time
we were notified?
If you answer no, do not complete lines 021 to 028.
Lines 021 to 028
Enter the new mailing address of the corporation by
completing lines 021 to 028. Complete line 027, if it applies.
calling 1-800-959-5525.
online at www.cra.gc.ca/mybusinessaccount or
www.cra.gc.ca/representatives; or
Line 010 Has this address changed since the last time
we were notified?
If you answer no, do not complete lines 011 to 018.
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it is a private corporation;
References
Subsections 89(1) and 125(7)
IT-458, Canadian-Controlled Private Corporation
it is resident in Canada;
References
Subsection 89(1)
Regulations 6700 and 7100
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Note
If the corporation changed from, or to, a CCPC see
line 066 on the following page. Do not complete line 043
if you answer yes at line 066, and you are filing a tax
return with a deemed tax year-end because of
subsection 249(3.1).
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the corporation has wound-up and you are filing its final
return with an abbreviated fiscal period;
References
IT-364, Commencement of Business Operations
IT-454, Business Transactions Prior to Incorporation
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Note
The tax year of a new corporation cannot be longer than
53 weeks from the date it was incorporated.
Notes
If you want to dissolve your corporation, you should
send an application for dissolution to the government
body that governs the affairs of your corporation.
Note
The tax year of a new corporation cannot be longer than
53 weeks from the date it was amalgamated.
If this is your first year of filing after amalgamation, you
must tick yes at line 030 and complete lines 031 to 038.
References
Subsection 159(2)
IC82-6, Clearance Certificate
investment corporations;
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Note
Certain non-resident corporations can file electronically
through Corporation Internet Filing and do not have to
mail their returns to the ITSO.
Line 082 Is the non-resident corporation claiming an
exemption under an income tax treaty?
If you answer yes, file Schedule 91, Information Concerning
Claims for Treaty-Based Exemptions.
For more information about the filing obligations of
non-resident corporations, see page 7.
chambers of commerce.
social welfare;
civic improvement;
pleasure or recreation; or
any purpose other than profit.
No part of these organizations income can be payable to,
or otherwise available for the personal benefit of, any
proprietor, member, or shareholder, unless the proprietor,
member, or shareholder was a club, society, or association
that promotes amateur athletics in Canada.
You may have to file Form T1044, Non-Profit Organization
(NPO) Information Return, if the organization meets the
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Form T5004, Claim for Tax Shelter Loss or Deduction ........
Information slip T5013, Statement of Partnership
Income ................................................................................
Schedule 22, Non-Resident Discretionary Trust .................
Schedule 25, Investment in Foreign Affiliates .....................
Schedule 29, Payments to Non-Residents ............................
Form T106, Information Return of Non-Arms Length
Transactions with Non-Residents ......................................
Foreign property .................................................................
Foreign affiliates ..............................................................
Beneficiaries of non-resident trusts ...............................
Transfers to non-resident trusts.....................................
Ownership of foreign property .....................................
Foreign investment entities (FIEs) and
non-resident trusts (NRTs) .........................................
Penalties ............................................................................
Schedule 50, Shareholder Information .................................
Line 172 Has the corporation made payments to, or
received amounts from, a retirement compensation
arrangement in the year? ................................................
Line 180 Schedule 88, Internet Business Activities .........
Calculation schedules........................................................
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Attachments
Note
Include any notes to the financial statements and the
auditor or accountants report, if they were prepared.
You should include this information even if you are
filing your return using tax preparation software. For
more information, see Using tax preparation software
on page 9.
When preparing the first return for a new corporation,
attach all of the following documents:
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Condition 2
Example
Bob owns 40% of the voting shares of ABC Company Ltd.
and 30% of the voting shares of XYZ Limited. Ike owns 20%
of the voting shares of ABC Company Ltd. and 40% of the
voting shares of XYZ Limited.
Reference
Section 251
Example
AB Co. owns 100% of the issued share capital of CD Co. It
also owns 25% of the Class A shares (other than shares of a
specified class) of XY Co., whose controlling shareholder is
Billy. Billys brother controls AB Co.
AB Co., CD Co., and XY Co. are associated.
Condition 4
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Example
Buddy controls AY Limited. His two daughters control
AZ Inc. Buddy also owns 50% of the Class A preferred
shares of AZ Inc.
Example
Anne and her two daughters control One Co. Anne and her
two sons control Two Co. Anne owns 33% of the common
shares in each corporation.
One Co. and Two Co. are associated.
For the second or later tax years that end in the same
calendar year, the business limit is whichever of the
following amounts is less:
Condition 6
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Example
A Co. and B Co. are associated in 2013.
A Co.s tax year runs from January 1, 2013, to June 30, 2013.
The business limit allocated to A Co. for its June 30, 2013,
tax year is $100,000.
On November 1, 2013, C Co. becomes associated with A Co.
and B Co. The tax year-end for C Co. is December 31, 2013.
A Co. and B Co. change their year-ends to match C Co.s
year-end.
The corporations decide to allocate a $300,000 business
limit to C Co. for the December 31, 2013 year-end. Because
the total of their business limits cannot be more than
$500,000, the corporations allocate $90,000 to A Co. and
$110,000 to B Co.
Question
What is A Co.s business limit for each of the two tax years
ending in the 2013 calendar year?
Answer
Tax year ending June 30, 2013:
Because the tax year is shorter than 51 weeks, A Co.
prorates the business limit for the number of days in the tax
year as follows:
$100,000 181 days = $49,589
365 days
Note: 365 is not adjusted for a leap year.
Tax year ending December 31, 2013:
Because the tax year is shorter than 51 weeks, A Co.
prorates the business limit for the number of days in the tax
year. A Co. uses the $90,000 business limit allocated in this
tax year, because it is less than the $100,000 business limit
allocated in its first tax year ending in 2013.
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Notes
You have to file a new election for each applicable tax
year.
Reference
Subsection 125(5)
For more details about the ITC, see Line 652 on page 66.
Note
Schedule 49 need only be filed by one of the associated/
related corporations for a calendar year. However, if
Schedule 49 is not already on file with us when we
assess any of the returns for a tax year ending in the
calendar year of the agreement, we will ask for one.
Associated corporations with more than one tax year in
a calendar year
Special rules apply to determine the expenditure limit for
associated corporations that have more than one tax year
ending in the same calendar year. Prorate the expenditure
limit for each tax year ending in the calendar year based on
the number of days in the tax year divided by 365.
Be sure that the amount you prorate for each of the tax
years is equal to the amount allocated to the corporation
for the first tax year ending in the calendar year.
Reference
Subsection 256(2)
References
Subsections 127(10.3) and 127(10.6)
Reference
Regulation 5301(8)
management fees;
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similar payments.
Notes
Each partnership has to file a T5013 FIN, Partnership
Financial Return and T5013 SUM, Information Slips
Summary, for each fiscal period. However, some
partnerships are exempt from this requirement. For
more information, see Guide T4068, Guide for the
Partnership Information Return.
rents;
for a limited partnership loss (see page 49), use lines 600
to 620 of Schedule 4, and line 222 of Schedule 1;
management fees/commissions;
interest;
dividends;
for a gift, use line 311, 312, 313, 314, or 315 of the return,
whichever applies;
Reference
IC89-4, Tax Shelter Reporting
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other services.
* Technical assistance fees are payments for technical or
industrial services related to producing goods or
applying processes, formulae, and expertise in the
production process.
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References
Sections 233.1 and 251
Subsections 162(7) and 162(10)
Foreign property
Foreign affiliates
A corporation resident in Canada, of which a non-resident
corporation is a foreign affiliate at any time in the year,
must file Form T1134, Information Return Relating to
Controlled and Not-Controlled Foreign Affiliates, within
15 months after the end of its tax year. A separate
supplement has to be filed for each foreign affiliate.
Form T1134 contains more information about filing.
Note
If you file Form T106 late, the corporation will be subject
to penalties. When the filing deadline falls on a
Saturday, Sunday, or statutory holiday, we will consider
the return filed on time if it is sent on the first business
day after the filing deadline.
tangible property;
rents;
services; and
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Penalties
There are substantial penalties for not completing and filing
Forms T1134, T1135, T1141, and T1142 by the due date, and
for knowingly or under circumstances amounting to gross
negligence making false statements or omissions in any of
the information returns.
References
Sections 233.1 to 233.6
Subsections 162(7), 162(10), 162(10.1), 163(2.4)
Calculation schedules
You may also have to use various calculation schedules to
complete the rest of your return. We list these schedules on
page 2 of the return. You will find details about each of
these schedules in the following chapters.
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Losses ...................................................................................
Current-year losses ..............................................................
Applying losses ....................................................................
Losses carryback ..................................................................
Calculating losses when there is an acquisition of
control ................................................................................
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How to complete Schedule 4, Corporation Loss
Continuity and Application ..........................................
Part 1 Non-capital losses .................................................
Determination of current-year non-capital loss ..........
Calculating current-year farm loss ................................
Continuity of non-capital losses and request for a
carryback.......................................................................
Part 2 Capital losses .........................................................
Continuity of capital losses and request for a
carryback.......................................................................
Part 3 Farm losses .............................................................
Continuity of farm losses and request for a
carryback.......................................................................
Part 4 Restricted farm losses ...........................................
Current-year restricted farm loss ..................................
Continuity of restricted farm losses and request for
a carryback ....................................................................
Part 5 Listed personal property losses ..........................
Continuity of listed personal property loss and
request for a carryback ................................................
Part 6 Analysis of balance of losses by year of origin .
Part 7 Limited partnership losses...................................
Current-year limited partnership losses ......................
Limited partnership losses from prior tax years that
may be applied in the current year ...........................
Continuity of limited partnership losses that can be
carried forward to future tax years ...........................
Part 8 Election under paragraph 88(1.1)(f) ....................
Taxable income ...................................................................
Line 300 Net income or (loss) for income tax
purposes ...........................................................................
Lines 311 to 315....................................................................
Line 311 Charitable donations ........................................
Line 312 Gifts to Canada, a province or territory ........
Line 313 Cultural gifts .....................................................
Line 314 Ecological gifts ..................................................
Line 315 Gifts of medicine ...............................................
Line 320 Taxable dividends deductible under
section 112 or 113, or subsection 138(6) ........................
Line 325 Part VI.1 tax deduction ....................................
Line 331 Non-capital losses of previous tax years .......
Line 332 Net capital losses of previous tax years .........
Line 333 Restricted farm losses of previous
tax years ............................................................................
Line 334 Farm losses of previous tax years...................
Line 335 Limited partnership losses of previous
tax years ............................................................................
Line 340 Taxable capital gains or taxable dividends
allocated from a central credit union ............................
Line 350 Prospectors and grubstakers shares.............
Line 355 Section 110.5 additions and/or
subparagraph 115(1)(a)(vii) additions ..........................
Line 360 Taxable income .................................................
Line 370 Income exempt under paragraph 149(1)(t) ...
Taxable income for a corporation with exempt
income under paragraph 149(1)(t) ................................
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Attachments
Additional information
Provide all the information we request in the Additional
information area of your return.
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shares;
real estate;
bonds;
other properties;
In this part, list the shares disposed of during the tax year.
Give the number of shares, the name of the corporation in
which the shares were held, and the class of the shares.
Usually, disposing of a share of the capital stock of a
corporation will result in a taxable capital gain or an
allowable capital loss. However, if the corporation that is
disposing of the share is in the business of trading shares,
the resulting gain or loss is considered business income or
loss.
If a share is converted because of a merger or an
amalgamation, subsection 248(1) deems a disposition to
have occurred.
Under paragraph 112(3)(b) and subsection 112(5.2), a
corporation (the shareholder) must reduce the losses from
the disposition of shares held as capital property by certain
dividends received for those shares. This is called a
stop-loss rule. Generally, this rule does not apply when the
shareholder owns less than 5% of the shares and has held
these shares for over a year.
For dispositions of shares occurring after March 21, 2011,
the stop-loss rule is extended to include a dividend deemed
by subsection 84(3) to have been received upon the
redemption, acquisition, or cancellation of those shares by a
corporation that are held by the shareholder, regardless of
the shareholders percentage of share ownership and the
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In this part, list all real estate disposed of during the tax
year. Give the municipal address of each property.
References
Subsection 50(1)
IT-159, Capital Debts Established to be Bad Debts
References
IT-218, Profit, Capital Gains and Losses From the Sale of Real Estate, Including
Farmland and Inherited Land and Conversion of Real Estate From Capital
Property to Inventory and Vice Versa
IT-478, Capital Cost Allowance Recapture and Terminal Loss
Part 3 Bonds
In this part, list all bonds disposed of during the tax year.
Give the face value, the maturity date, and the issuers
name for each type of bond.
When you make a capital disposition of a debt obligation,
the amount of any realized discount or bonus received is
usually considered a capital gain. Similarly, a premium
paid is considered a capital loss, either when the obligation
matures or on the date you dispose of the obligation.
Use the $1,000 rule to determine gains and losses when you
dispose of personal-use property. According to this rule, if
the adjusted cost base is less than $1,000, it is considered to
be $1,000. As well, when the proceeds of disposition are less
than $1,000, they are considered to be $1,000.
The $1,000 rule will not apply when donors acquire
personal-use property as part of an arrangement in which
the property is gifted to a qualified donee, such as a
registered charity.
Reference
IT-479, Transactions in Securities
Reference
Subsection 46(1)
jewellery;
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35
stamps; and
coins.
The reserve that you can claim in a tax year cannot be more
than the lesser of the following two amounts:
36
A.
Capital gain
Amount not due until after
Proceeds of disposition
the end of the year
and
B.
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You can deduct an ABIL from all sources of income for the
year. If any balance remains after the year the loss occurs,
it becomes part of the non-capital loss. You can carry the
non-capital loss back 3 tax years and carry it forward 10 tax
years.
If you are unable to deduct an ABIL as a non-capital loss
within this allowed time frame, the unused part becomes a
net capital loss, and you can carry it forward indefinitely to
reduce taxable capital gains.
Include all unused ABIL after the applicable carry-forward
period in Part 2, Capital losses, of Schedule 4. See
page 47, for more details.
References
Paragraph 39(1)(c)
IT-484, Business Investment Losses
References
Subsections 13(26) to 13(32)
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Completing Schedule 8
This section explains how to complete each column of
Schedule 8. Use a separate line for each class of property.
Column 1 Class number
Reference
Regulation 1101
38
www.cra.gc.ca
Note
A corporation that receives an amount of
non-government assistance to buy depreciable property
has the option of either reducing the capital cost of the
property by this amount, or including it in its income.
References
Subsections 13(7.1), 13(7.4), and 13(21)
Paragraph 12(1)(x)
IT-285, Capital Cost Allowance General Comments
You can claim full CCA for that property in the next tax
year.
Terminal loss
A terminal loss results when you dispose of all the
property in a particular class and there is an amount of
undepreciated capital cost left in column 6. You have to
deduct the terminal loss from income. For details, see
example 1 under the heading Schedule 8 examples
that follows.
Recapture of CCA
If the amount in column 6 is negative, you have a recapture
of CCA. A recapture of CCA occurs when the proceeds
of disposition in column 5 are more than the total of
columns 2 and 3, plus or minus the amount in column 4
of that class.
You have to add the recapture to income. For details, see
example 2 under the heading Schedule 8 examples that
follows.
Third year:
$741,000 $74,100 = $666,900 (undepreciated capital cost)
$666,900 10% = $66,690 CCA
And so on for the following years.
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39
Class 14 assets;
Class 15 assets;
certified productions;
40
www.cra.gc.ca
Schedule 8 examples
Example 1
An import-export business decided to sell its warehouse, because it is better to lease instead. The business received $30,000
for the warehouse. At the end of the 2013 tax year, the business had no more assets in Class 3.
The businesss Schedule 8 for its 2013 tax year looks like this:
1
Class
number
1.
10
11
12
13
50% rule
CCA Recapture Terminal
Capital cost Undepreciated
Undepreciated
Cost of
Adjustments Proceeds of Undepreciated
Reduced
capital cost
(1/2 of the
loss
allowance (for
capital cost
acquisitions
and transfers dispositions
undepreciated rate of capital
capital cost
capital cost
%
cost
declining
at the beginning
during the year (show amounts during the (column 2 plus amount, if any,
at the end
year (amount column 3 plus by which the net
(column 6
allowance
balance method, of the year
of the year (amount (new property
that will
not to
or minus
cost of acquisitions
minus
column 8
from column 13 of must be available decrease the
(column 6
column 7)
column 4
multiplied by
last years
for use)
undepreciated exceed the
minus
exceeds column 5)
column 12)
minus
column 9; or a
schedule 8)
capital cost in capital cost)
column 5)
lower amount)
brackets)
200
201
$35,000
203
205
207
$30,000
211
$5,000
212
$5,000
213
n/a
215
217
220
$5,000
2.
3.
4.
1.
10
11
12
13
Undepreciated
Reduced
Cost of
Adjustments Proceeds of Undepreciated
CCA Recapture Terminal
Capital cost Undepreciated
50% rule
capital cost
acquisitions
and transfers dispositions
capital cost
undepreciated rate of capital
loss
allowance (for
capital cost
(1/2 of the
at the beginning
at the end
during the year (show amounts during the (column 2 plus amount, if any,
capital cost
%
cost
declining
of the year (amount (new property
that will
(column 6
allowance
balance method, of the year
year (amount column 3 plus by which the net
from column 13 of must be available decrease the
minus
column 8
(column 6
not to
or minus
cost of acquisitions
column 7)
last years
for use)
undepreciated exceed the
exceeds column 5)
minus
column 4
multiplied by
column 12)
schedule 8)
capital cost in capital cost)
column 9; or a
minus
column 5)
brackets)
lower amount)
200
201
$7,200
203
205
207
$10,000
211
($2,800)
212
213
215
217
220
2.
3.
4.
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41
Example 3
In the 2013 tax year, a bookstore bought a photocopier to help keep up with the paperwork, and started using it right away.
The copier cost $5,000. The bookstore has to apply the 50% rule when it calculates the amount of CCA it can deduct for 2013.
The bookstores Schedule 8 for its 2013 tax year looks like this:
1
Class
number
1.
10
11
12
13
50% rule
CCA Recapture Terminal
Capital cost Undepreciated
Undepreciated
Cost of
Adjustments Proceeds of Undepreciated
Reduced
capital cost
acquisitions
and transfers dispositions
capital cost
(1/2 of the
undepreciated rate of capital
loss
allowance (for
capital cost
at the end
at the beginning
during the year (show amounts during the (column 2 plus amount, if any,
capital cost
%
cost
declining
of the year (amount (new property
that will
year (amount column 3 plus by which the net
(column 6
allowance
balance method, of the year
(column 6
from column 13 of must be available decrease the
not to
or minus
cost of acquisitions
minus
column 8
column 7)
column 4
multiplied by
minus
last years
for use)
undepreciated exceed the
exceeds column 5)
column 12)
schedule 8)
capital cost in capital cost)
minus
column 9; or a
column 5)
lower amount)
brackets)
200
201
$10,000
203
$5,000
205
207
211
$15,000
$2,500
2.
3.
4.
42
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212
$12,500
20
213
215
217
220
$2,500
$12,500
Description
CCA
rate
Most buildings made of brick, stone, or cement acquired after 1987, including their component parts such as
electric wiring, lighting fixtures, plumbing, heating and cooling equipment, elevators, and escalators
(additional allowance of 6% for buildings used for manufacturing and processing in Canada and 2% for
buildings used for other non-residential purposes, for buildings acquired after March 18, 2007)
4%
Most buildings made of brick, stone, or cement acquired before 1988, including their component parts as
listed in Class 1 above
5%
Buildings made of frame, log, stucco on frame, galvanized iron, or corrugated metal that are used in the
business of farming or fishing, or that have no footings below-ground; fences and most greenhouses
10%
Canoes, boats, and most other vessels, including their furniture, fittings, or equipment
15%
Property that is not included in any other class such as furniture, calculators and cash registers (that do not
record multiple sales taxes), photocopy and fax machines, printers, display fixtures, refrigeration equipment,
machinery, tools costing $500 or more, and outdoor advertising billboards and greenhouses with rigid
frames and plastic covers
20%
Aircraft, including furniture, fittings, or equipment attached, and their spare parts
25%
10
Automobiles (except taxis and others used for lease or rent), vans, wagons, trucks, buses, tractors, trailers,
drive-in theatres, general-purpose electronic data-processing equipment (for example, personal computers)
and systems software, and timber-cutting and removing equipment
30%
30%
12
Chinaware, cutlery, linen, uniforms, dies, jigs, moulds or lasts, computer software (except systems
software), cutting or shaping parts of a machine, certain property used for earning rental income such as
apparel or costumes, and videotape cassettes; certain property costing less than $500 such as kitchen
utensils, tools, and medical or dental equipment acquired after May 1, 2006
100%
13
Property that is leasehold interest (the maximum CCA rate depends on the type of leasehold and the terms
of the lease)
n/a
14
Patents, franchises, concessions, and licences for a limited period the CCA is limited to whichever is less:
the capital cost of the property spread out over the life of the property; or
the undepreciated capital cost of the property at the end of the tax year
Class 14 also includes patents, and licences to use patents for a limited period, that you elect not to include
in Class 44
n/a
16
Automobiles for lease or rent, taxicabs, and coin-operated video games or pinball machines; certain tractors
and large trucks acquired after December 6, 1991, that are used to haul freight and that weigh more than
11,788 kilograms
40%
17
Roads, sidewalks, parking-lot or storage areas, telephone, telegraph, or non-electronic data communication
switching equipment
8%
38
Most power-operated movable equipment acquired after 1987 used for moving, excavating, placing, or
compacting earth, rock, concrete, or asphalt
30%
39
Machinery and equipment acquired after 1987 that is used in Canada mainly to manufacture and process
goods for sale or lease
25%
43
Manufacturing and processing machinery and equipment acquired after February 25, 1992, described in
Class 39 above
30%
44
Patents and licences to use patents for a limited or unlimited period that the corporation acquired after
April 26, 1993however, you can elect not to include such property in Class 44 by attaching a letter to the
return for the year the corporation acquired the property. In the letter, indicate the property you do not want
to include in Class 44
25%
45
Computer equipment that is general-purpose electronic data processing equipment and system software
included in paragraph f of Class 10 acquired after March 22, 2004. Also see Class 50 and 52.
45%
46
Data network infrastructure equipment that supports advanced telecommunication applications, acquired
after March 22, 2004 it includes assets such as switches, multiplexers, routers, hubs, modems, and
domain name servers that are used to control, transfer, modulate and direct data, but does not include office
equipment such as telephones, cell phones or fax machines, or property such as wires, cables or structures
30%
50
General-purpose computer equipment and systems software acquired after March 18, 2007, that is not used
principally as electronic process control, communications control, or monitor equipment, and the systems
software related to such equipment, and data handling equipment that is not ancillary to general-purpose
computer equipment
55%
52
General-purpose computer equipment and systems software acquired after January 27, 2009, and before
February 2011
100%
10.1
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43
depletion;
goodwill;
trademarks;
before 2018.
44
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45
Losses
Current-year losses
A corporation may not always have net income to report.
Instead, it may have incurred a loss for the year. The
different types of losses a corporation can incur are:
non-capital loss;
farm loss;
46
Applying losses
A corporation can apply unused losses and deduct them
from income it earned in the current tax year or in prior tax
years.
Note
You can choose whether or not to deduct an available
loss from income in a tax year. You can deduct losses in
any order. However, for each type of loss, make sure to
deduct the oldest available loss first.
You can view non-capital loss balances using the View
return balances service at:
Losses carryback
You can use losses in any order, but consider the following:
Except for net capital losses, you cannot use other year
losses to create or increase a non-capital loss for the tax
year.
Use Schedule 4 to request the carryback of any losses to
prior years. If you do not attach your request to the return,
you can send it separately to your tax centre.
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Note
You cannot use prior-year losses to create or increase a
current-year non-capital loss, except with net capital
losses of other years.
References
Subsection 111(8)
IT-302, Losses of a Corporation The Effect That Acquisitions of Control,
Amalgamations and Windings-Up Have on Their Deductibility
After January 15, 1987
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47
48
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If the limited partner does not receive this slip because the
partnership is exempt from filing (for example, if it has
fewer than six members), you have to file the partnerships
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49
Taxable income
The following section explains how to calculate the
deductions you may be able to claim to reduce net income.
You will use these amounts to arrive at your taxable
income.
50
If you are reporting nil net income or a loss for the year,
you cannot claim donations to create or increase a loss.
However, you can carry forward unused charitable
donations and claim them in any of the five following tax
years.
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Note
On line 255 of Schedule 2, enter the amount of any other
adjustments (these adjustments would apply to
corporations that have undergone an acquisition of
control and whose donations carryforward that accrued
before the acquisition of control are not deductible after
the acquisition of control).
Complete Part 1 of Schedule 2 to calculate the total
donations available and the charitable donations closing
balance.
Complete Part 2 of Schedule 2 to calculate the maximum
deduction allowable and to determine the amount to claim
for charitable donations including gifts of capital property.
On line 311, enter the amount you want to apply against
taxable income. This amount cannot be more than the lesser
of:
On line 313, enter the eligible amount for cultural gifts you
want to apply against taxable income.
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51
multiplied by
52
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References
Paragraphs 111(1)(a), 186(1)(c), and 186(1)(d)
References
Subsections 112(1), 112(2), and 112(2.1) to 112(2.9)
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53
the ITC.
Note
If you want to carry back a current-year loss to a prior
tax year, see How to complete Schedule 4 on page 47
for details.
The amount you add to income for this purpose forms part
of the non-capital loss. See page 47 for details.
Enter on this line the result of line 360 minus line 370.
References
Subsections 149(4.1) and 149(4.2)
54
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Page
How to calculate income from an active business
carried on in Canada ...................................................
Specified partnership income ........................................
Line 405 Taxable income for the SBD ............................
Line 410 Business limit ....................................................
Line 425 Reduced business limit ....................................
Line 430 Small business deduction ................................
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Note
The business a credit union carries on, or the business of
leasing property other than real property, is not
considered specified investment business.
Personal services business
A personal services business is a business that a
corporation carries on to provide services to another entity
(such as a person or a partnership) that an officer or
employee of that entity would usually perform. Instead, an
individual performs the services on behalf of the
corporation. That individual is called an incorporated
employee.
Any income the corporation derives from providing the
services is considered income from a personal services
business, as long as both of the following conditions are
met:
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55
References
Paragraph 125(1)(b)
Subsection 126(7)
56
References
Subsections 125(1), 125(7), and 248(1)
Section 251
IT-73, The Small Business Deduction
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Reference
Subsection 125(5.1)
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Reference
Subsection 123.4(1)
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Page
Reference
Subsection 123.4(2)
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Page
Dividend refund.................................................................
Parts 3 and 4 of Schedule 3 ................................................
exempt income;
taxable dividends deductible after deducting related
expenses; and
add
the total losses for the year from property from a source
outside Canada.
deduct
deduct
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59
To calculate the RDTOH at the end of the tax year, add the
following amounts:
stock dividends;
References
Subsections 129(3) and 186(5)
Dividend refund
A private or subject corporation may be entitled to a
dividend refund for dividends it paid while it was a private
or subject corporation, regardless of whether it was a
private or subject corporation at the end of the tax year.
Note
To claim a dividend refund or to apply the amount to
another debit for any tax year, including the same tax
year, you have to file your income tax return within
three years of the end of the tax year. If your income tax
return is not filed within three years of the end of the tax
60
www.cra.gc.ca
References
Section 129
Subsection 186(5)
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Page
Lines 638 and 639 General tax reduction ......................
Line 640 Federal logging tax credit ................................
Line 648 Federal qualifying environmental trust tax
credit .................................................................................
Line 652 Investment tax credit........................................
Available-for-use rule .....................................................
Investments and expenditures that qualify for an
ITC .................................................................................
Activities that qualify for an ITC on qualified
property ........................................................................
Scientific research and experimental development
(SR&ED) qualified expenditure pool ........................
SR&ED investment tax credit and refund ....................
Apprenticeship job creation tax credit..........................
Investment tax credit (ITC) for child care spaces ........
Investment tax credit (ITC) claim ..................................
When to complete Schedule 31 ......................................
Investment tax credit refund..........................................
Part I tax payable .................................................................
Part I tax
ABC
where
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References
Section 125.1
Regulation 5200
IT-145, Canadian Manufacturing and Processing Profits Reduced Rate of
Corporate Tax
63
minus
the least of lines 400, 405, 410, and 425 of the small
business deduction calculation (page 4 of the return).
64
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References
Subsection 127(1)
Regulation 700
Note
You can use this credit only to reduce Part I tax on
income originating from the same foreign country.
65
Reference
Section 127.41
logging;
Atlantic ITC
For property acquired after March 28, 2012, the Atlantic ITC
will be phased out over a four-year period for qualified
property used in oil and gas, and mining activities by:
reducing the rate from 10% to 5% for 2014 and 2015, and
to 0% after 2015.
www.cra.gc.ca
For property acquired after March 28, 2012, that has not
been used or acquired for use or lease before
March 29, 2012, the definition of qualified property will be
amended to include prescribed energy generation and
conservation property that is electricity generation
equipment described in Class 17 or 48, or clean energy
generation and conservation equipment described in
Class 43.1 or Class 43.2.
In addition, the following rules apply to certain
corporations that lease qualified properties:
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Prince Edward Island .........................................................
Prince Edward Island political contribution
tax credit .......................................................................
Prince Edward Island corporate investment
tax credit .......................................................................
Nova Scotia ..........................................................................
Nova Scotia tax on large corporations ..........................
Nova Scotia energy tax credit ....................................
Nova Scotia political contribution tax credit ...............
Nova Scotia corporate tax reduction for new small
businesses .....................................................................
Nova Scotia film industry tax credit .............................
Nova Scotia research and development tax credit ......
Recapture of Nova Scotia research and
development tax credit ...............................................
Nova Scotia digital media tax credit .............................
New Brunswick ...................................................................
New Brunswick political contribution tax credit ........
New Brunswick refundable research and
development tax credit ...............................................
Recapture of New Brunswick research and
development tax credit ...............................................
New Brunswick film tax credit ......................................
Ontario ..................................................................................
Ontario small business deduction .................................
Ontario additional tax re Crown royalties ...................
Ontario transitional tax debits and credits...................
Ontario corporate minimum tax ...................................
Ontario special additional tax on life insurance
corporations ..................................................................
Ontario political contributions tax credit .....................
Ontario resource tax credit .............................................
Ontario tax credit for manufacturing and
processing .....................................................................
Ontario credit union tax reduction ...............................
Ontario research and development tax credit .............
Recapture of Ontario research and development
tax credit .......................................................................
Ontario corporate minimum tax credit ........................
Ontario qualifying environmental trust tax credit ......
Ontario co-operative education tax credit ...................
Ontario apprenticeship training tax credit...................
Ontario computer animation and special effects
tax credit .......................................................................
Ontario film and television tax credit ...........................
Ontario production services tax credit .........................
Ontario interactive digital media tax credit .................
Ontario sound recording tax credit ...............................
Ontario book publishing tax credit ...............................
Ontario innovation tax credit.........................................
Ontario business-research institute tax credit .............
Ontario Ministry of Government Services annual
return .............................................................................
Ontario specialty types ...................................................
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Manitoba ...............................................................................
Manitoba manufacturing investment tax credit ..........
Manitoba refundable manufacturing investment
tax credit ........................................................................
Manitoba research and development tax credit ..........
Manitoba co-op education and apprenticeship tax
credit ..............................................................................
Manitoba odour-control tax credit ................................
Manitoba small business venture capital tax credit ....
Manitoba cooperative development tax credit ............
Manitoba Neighbourhoods Alive! tax credit ...........
Manitoba cultural industries printing tax credit .........
Manitoba interactive digital media tax credit ..............
Manitoba book publishing tax credit ............................
Manitoba green energy equipment tax credit ..............
Manitoba film and video production tax credit ...........
Manitoba data processing centre investment tax
credit ..............................................................................
Manitoba nutrient management tax credit ...................
Manitoba rental housing construction tax credit .........
Saskatchewan ......................................................................
Saskatchewan political contribution tax credit ............
Saskatchewan manufacturing and processing
profits tax reduction.....................................................
Saskatchewan manufacturing and processing
investment tax credit ...................................................
Saskatchewan research and development tax credit ..
Saskatchewan royalty tax rebate....................................
Saskatchewan qualifying environmental trust tax
credit ..............................................................................
Saskatchewan film employment tax credit...................
British Columbia ..................................................................
British Columbia logging tax credit ..............................
British Columbia political contribution tax credit .......
British Columbia small business venture capital tax
credit ..............................................................................
British Columbia scientific research and
experimental development tax credit ........................
British Columbia SR&ED refundable tax credit ..........
British Columbia SR&ED non-refundable
tax credit ........................................................................
Recapture of British Columbia SR&ED tax credit .......
British Columbia qualifying environmental trust
tax credit ........................................................................
British Columbia film and television tax credit ...........
British Columbia production services tax credit .........
British Columbia mining exploration tax credit ..........
British Columbia book publishing tax credit ...............
British Columbia training tax credit ..............................
British Columbia interactive digital media tax
credit ..............................................................................
British Columbia shipbuilding and ship repair
industry tax credit ........................................................
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Yukon....................................................................................
Yukon political contribution tax credit.........................
Yukon manufacturing and processing profits tax
credit ..............................................................................
Yukon research and development tax credit ...............
Northwest Territories .........................................................
Northwest Territories political contribution tax
credit ..............................................................................
Northwest Territories investment tax credit................
Nunavut ...............................................................................
Nunavut political contribution tax credit ....................
Line 765 Provincial tax on large corporations ..............
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Federal tax
Line 700 Part I tax payable
On line 700, enter the amount of Part I tax payable that you
determined on line F of page 7.
www.cra.gc.ca
Reference
Subsection 89(1)
Subject corporation
Connected corporation
Exempt corporations
Definitions
a bank; or
Private corporation
an insurance corporation;
a corporation licensed as a trustee;
resident in Canada;
Reference
Section 186.1
Exempt dividends
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73
References
Section 186.2
Regulation 6704
On line 716, enter the amount of Part IV.1 tax payable that
you calculated on line 340 of Schedule 43.
References
Sections 187.1 to 187.6
Subsection 191.2(1)
74
Note
Schedule 39 need only be filed by one of the
associated/related corporations for a calendar year.
However, if Schedule 39 is not already on file with us
when we assess any of the returns for a tax year ending
in the calendar year of the agreement, we will ask for
one.
Under subsection 190.1(3), you can deduct Part I tax
payable for the year from Part VI tax payable. This is called
the Part I tax credit. You can deduct any unused Part I tax
credits from Part VI tax in any of the three previous and
seven following tax years.
To calculate the balance of unused Part I tax credits and to
carry back this credit, you can use Schedule 42, Calculation
of Unused Part I Tax Credit.
You could also deduct Canadian surtax payable for the year
from Part VI tax payable. This was called the surtax credit.
As the surtax was eliminated effective January 1, 2008, you
can now only deduct an unused surtax credit from Part VI
tax payable in the seven following tax years that they were
earned in.
To calculate the balance of your unused surtax credit, you
can use Schedule 37, Calculation of Unused Surtax Credit.
Financial institutions include banks, trust companies, life
insurance corporations, certain holding corporations, and
corporations that accept deposits and carry on the business
of lending money on the security of real property or
immovables, or investing in indebtedness on the security of
mortgages on real property or of hypothecs on immovables.
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the transferors tax year for which it owes Part VI.1 tax;
and
You can deduct Part VI.1 tax payable from income. See
page 53 for more information. Any Part VI.1 tax that is left
over after the taxable income is reduced to zero is part of
the non-capital loss for the year. See page 46 for details.
On line 724, enter the amount of Part VI.1 tax payable you
calculated on line 270 of Schedule 43.
References
Sections 191, and 191.1 to 191.4
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75
Permanent establishment
A permanent establishment in a province or territory is
usually a fixed place of business of the corporation, which
includes an office, branch, oil well, farm, timberland,
factory, workshop, warehouse, or mine. If the corporation
does not have a fixed place of business, the corporations
permanent establishment is the principal place in which the
corporations business is conducted.
If the corporation carries on business through an employee
or an agent established in a particular place, it is considered
to have a permanent establishment in that place if the
employee or agent:
76
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For tax years that start after October 31, 2008, corporations
must also complete Part 2 of Schedule 5 if they have
Newfoundland and Labrador capital tax on financial
institutions payable.
On line 255 of Schedule 5, enter the net amount of
provincial and territorial tax payable or the net amount of
refundable credits. When the result is positive, enter the net
provincial or territorial tax payable on line 760 of the
return. When the result is negative, enter the refundable
provincial or territorial tax credit on line 812 of the return.
Attach to your return any forms you completed to claim
provincial or territorial credits or rebates.
In the following sections, you will find information about
provincial and territorial tax rates, foreign tax credits, and
details on the provincial and territorial credits and rebates.
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77
$ 2,080
$ 3,200
Taxable income
$90,000
$78,000
$12,000
$ 3,120
$ 1,680
$ 4,800
$30,000
$90,000
$78,000
Note
If the tax rate has changed during the tax year, you have
to prorate the calculation in Part 9 of Schedule 21 using
the number of days in each period. For British Columbia,
prorate the tax rate in each period, round off the
prorated rates to the nearest one-thousandth of 1 percent
(= 0.001%), and add the rounded percentages for the
periods before multiplying by the foreign non-business
income.
$52,000
$60,000
$52,000
$ 8,000
$ 1,120
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plus
plus
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79
80
plus
plus
Nova Scotia
The lower rate of Nova Scotia income tax is:
81
$750.
82
and
whichever is less:
whichever is less:
60% of eligible salaries paid to residents of the
province prorated for the number of days of principal
photography that are inside the eligible geographic
area over the total number of days of principal
photography; plus
50% of eligible salaries paid to residents of the
province prorated for the number of days of principal
photography that are outside the eligible geographic
area over the total number of days of principal
photography;
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New Brunswick
The lower rate of New Brunswick income tax is 4.5%,
effective January 1, 2012. It was previously 5%.
The income eligible for the lower rates is determined using
the New Brunswick business limit of $500,000.
The higher rate of New Brunswick income tax is 10% since
July 1, 2011.
Effective July 1, 2013, the higher rate of New Brunswick
income tax is increased from 10% to 12%.
This rate applies to all income not eligible for the lower
rates.
The tax is prorated based on the number of days in the year
when the tax year straddles these dates.
You can use Schedule 366, New Brunswick Corporation Tax
Calculation, to help you calculate the New Brunswick tax
before the application of credits. You do not have to file it
with your return. See the schedule for more details.
On line 225 of Schedule 5, enter the amount of tax
calculated.
New Brunswick political contribution tax credit
You can claim a tax credit on contributions made to a
registered political party, a registered district association, or
a registered independent candidate, as defined under the
New Brunswick Elections Act, as follows:
plus
plus
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83
Ontario
www.cra.gc.ca
an investment corporation; or
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85
exceeds
86
and
and
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Reference
Section 45, Taxation Act, 2007 (Ontario)
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87
88
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be a Canadian corporation;
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89
less
You cannot claim the Ontario film and television tax credit
if you claim the Ontario production services tax credit for
that same production for any tax year.
not be exempt from tax, for the tax year, under Part III of
the Taxation Act, 2007 (Ontario) or Part I of the Income Tax
Act;
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be a Canadian corporation;
Reference
Section 92, Taxation Act, 2007 (Ontario)
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91
To claim the credit, file the following with your return for
the year for each eligible Canadian sound recording:
Reference
Section 93, Taxation Act, 2007 (Ontario)
92
Note
If the books and records are maintained outside Canada
your claim will be reviewed by the Vancouver FSU.
If you file a paper return, send the return and required
attachments to your tax centre. A list of the tax centres is
available at www.cra.gc.ca/cntct/t2ddr-eng.html.
On line 464 of Schedule 5, enter the total amount of the
credit you are claiming.
Reference
Section 94, Taxation Act, 2007 (Ontario)
pre-production costs;
marketing expenditures;
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not be exempt from tax under Part III of the Taxation Act,
2007 (Ontario) for the tax year; and
are not exempt from tax under Part III of the Taxation
Act, 2007 (Ontario);
were not exempt from tax under Part III of the Taxation
Act, 2007 (Ontario).
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93
Reference
Section 97, Taxation Act, 2007 (Ontario)
94
Manitoba
The higher rate of Manitoba income tax is 12%.
Corporations may be eligible for a small business deduction
to reduce part of the tax otherwise payable.
The lower rate of Manitoba income tax for small business
is 0%.
The income eligible for the small business deduction rate is
determined using the Manitoba business limit of $400,000.
Manitoba business limit is increased to $425,000 effective
January 1, 2014.
You can use Schedule 383, Manitoba Corporation Tax
Calculation, to help you calculate your Manitoba tax before
the application of credits. You do not have to file it with
your return. See the schedule for more details.
On line 230 of Schedule 5, enter the amount of tax
calculated.
Manitoba manufacturing investment tax credit
You can earn this 10% credit on the cost of qualified
property you acquired before January 1, 2015, to reduce
Manitoba tax payable. This credit is 70% refundable and
30% non-refundable.
The refundable portion of the credit is increased from 70%
to 80%, effective on qualified property acquired after
June 30, 2013.
Under subsection 7.2(7) of the Manitoba Income Tax Act,
you can renounce, in whole or in part, the manufacturing
investment tax credit earned in the current tax year.
You have to use the qualified property in Manitoba mainly
for manufacturing or processing goods for sale or lease.
Qualifying property includes new and used buildings,
machinery, and equipment made available for use in
manufacturing or processing goods for sale or lease.
You can carry back an unused credit to the three previous
tax years from the tax year in which you acquired the
property. You can also carry forward the unused credit to
the 10 tax years that follow the tax year in which you
acquired the property.
To claim the credit, file a completed Schedule 381, Manitoba
Manufacturing Investment Tax Credit no later than 12 months
after your income tax return is due for the tax year in which
the expenditures were incurred. For more details, see the
schedule.
On line 605 of Schedule 5, enter the amount of the credit
you are claiming.
Manitoba refundable manufacturing investment
tax credit
The investment tax credit will first be applied to reduce the
Manitoba corporation income tax payable. Then you can
claim a part of the investment tax credit you are entitled to
claim in a tax year as a refundable credit. The maximum
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$1,000; and
Note
Manitoba Finance posted on its Web site the list of
Educational Institutions Potentially Eligible for Participation
in SR&ED Refundable Manitoba R&D Tax Credit Program.
You can renounce the research and development tax credit
for an eligible expenditure incurred during the year, in
whole or in part, under subsection 7.3(7) of the Income Tax
Act (Manitoba).
To claim the credit, file a completed Schedule 380, Manitoba
Research and Development Tax Credit, with your return. You
must identify the eligible expenditures no later than
12 months after your income tax return is due for the tax
year in which the expenditures were incurred. For more
details, see the schedule.
You can claim this credit if you are an employer that has
hired co-op graduates in full-time employment in
www.cra.gc.ca
95
You can claim this credit if you are an employer who hires
high-school and post-secondary level 1 and 2 apprentices in
Manitoba after December 31, 2010, and before 2015.
For employers of apprentices who complete a level
after 2012, the early-level apprentice hiring incentive is
equal to 15% of wages and salaries up to a maximum of
$3,000. It is equal to 20% of wages and salaries up to a
maximum of $4,000 for employers of apprentices who
normally reside outside of Winnipeg and who normally
report to an employers office in rural and northern
Manitoba.
The credit was previously equal to 10% of net wages and
salaries paid to an apprentice, up to a maximum of $2,000.
This component of the credit now also covers employers
eligible for the federal apprenticeship job creation tax
credit, who will receive a top-up that is equal to the
difference between this provincial credit and the federal
credit. The apprentice has to complete a level after 2012.
Advanced level apprentice hiring incentive
You can claim this credit if you are an employer that has
hired an apprentice who is enrolling at an advanced
level (3, 4, or 5) in Manitoba after December 31, 2008, and
before 2015. The credit can be claimed in the year the level
is completed.
For employers of apprentices who complete an advanced
level after 2012, the advanced-level apprentice hiring
incentive is equal to 10% of wages and salaries paid to an
apprentice for work performed in Manitoba, less any
government assistance received or receivable. The
maximum credit for one apprentice completing one level
is $5,000. You can apply for an unlimited number of
apprentices.
The credit was previously equal to 5% of the wages and
salaries paid to an apprentice, up to a maximum of $2,500.
This credit is fully refundable but must first be applied
against total taxes payable. There are no carry-back or
carry-forward provisions.
Journeypersons hiring incentive
You can claim this credit if you are an employer that has
hired recent graduates of apprenticeship programs in full
time employment in Manitoba, and retained them for at
least one year. The journeyperson must have received their
certificate of qualification in Canada after April 9, 2008, in a
field related to the employment.
For employers of journeypersons who become newly
certified after 2012, the credit is equal to 10% of wages and
96
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$10,000 or less
T = C 3/4
$10,001 to $30,000
T = $7,500 +
[(C $10,000) 2]
$30,001 to $50,000
T = $17,500 +
[(C $30,000) 3]
$50,001 or more
T = $24,167
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97
98
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99
Saskatchewan
The lower rate of Saskatchewan income tax is 2%.
Income eligible for this lower rate is determined using the
Saskatchewan business limit of $500,000.
The higher rate of income tax is 12%.
This higher rate applies to all income not eligible for the
lower rate.
plus
plus
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NonCCPCs
CCPCs
$3 million or
less
nonrefundable
refundable
more than
$3 million
nonrefundable
nonrefundable
After
March 18, 2009,
and before
April 1, 2012
no limit
refundable
refundable
Before
March 19, 2009
no limit
nonrefundable
nonrefundable
Expenditures
incurred
After
March 31, 2012
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101
British Columbia
The lower rate of British Columbia income tax is 2.5%.
Income eligible for the lower rate is determined using the
British Columbia business limit of $500,000.
The higher rate of British Columbia income tax is 10% since
January 1, 2011.
Effective April 1, 2013, the higher rate of British Columbia
income tax is increased from 10% to 11%.
This rate applies to all income not eligible for the lower
rate.
The tax is prorated based on the number of days in the year
when the tax year straddles these dates.
You can use Schedule 427, British Columbia Corporation Tax
Calculation, to help you calculate your British Columbia tax
before the application of credits. You do not have to file it
with your return. See the schedule for more details.
On line 240 of Schedule 5, enter the amount of tax
calculated.
References
Sections 14, 14.1, and 16, British Columbia Income Tax Act
plus
plus
33 1/3% of the amount contributed that is more than
$550, to a maximum credit of $500.
102
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Reference
Section 21, British Columbia Income Tax Act
Reference
Section 99, British Columbia Income Tax Act
103
104
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Note
If the books and records are maintained outside Canada
your claim will be reviewed by the Vancouver FSU.
If you file a paper return, send the return and required
attachments to your tax centre. A list of the tax centres is
available at www.cra.gc.ca/cntct/t2ddr-eng.html.
You must claim these credits no later than 36 months after
the end of the tax year.
Note
If you are not eligible for, and do not claim the basic
production services tax credit, you cannot claim the
regional, distant location, or digital animation or visual
effects production services tax credits.
Note
If the books and records are maintained outside Canada,
your claim will be reviewed by the Vancouver FSU.
If you file a paper return, send the return and required
attachments to your tax centre. A list of the tax centres is
available at www.cra.gc.ca/cntct/t2ddr-eng.html.
You must claim these credits no later than 36 months after
the end of the tax year.
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105
is more than
Note
For level three or higher of a Red Seal or non-Red Seal
program, level has the same meaning as tax credit level.
To complete a tax credit level, see Requirements for
Completing Tax Credit Level in CIT 013 Training Tax
Credits for Employers.
References
Section 25.1, British Columbia Income Tax Act
CIT 006, Mining Exploration Tax Credit
106
The basic tax credit is 20% of the salary and wages (net
of designated assistance) that were paid to an employee
who was in the first 24 months of a non-Red Seal
apprenticeship program in the tax year. The maximum
basic tax credit you can claim is $4,000, per employee, per
year. This credit is not available to Red Seal trades and
cannot be claimed if you are claiming the federal
www.cra.gc.ca
In the tax year, the employer can claim the wages paid from
February 1, 2012, to January 31, 2013, for the level three tax
credit. In the same tax year, the employer can also claim the
wages paid from July 1, 2012, to June 30, 2013, for the
level four tax credit. The wages paid from July 1, 2012, to
January 31, 2013, are used for both credits.
be a corporation whose
For the completion and enhanced tax credits, the salary and
wages can be dually applied to overlapping periods when
more than one level is completed during the tax year.
Example
The employers tax year runs from January 1 to
December 31, 2013.
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107
For each of the basic and completion tax credits, the credit
is equal to 20% of the salary and wages (net of designated
assistance) that were paid to an employee, up to a
maximum of $5,250 per employee per tax year.
These numbers are increased by 50% when they apply to
the enhanced tax credit. This credit is equal to 30% of the
salary and wages (net of designated assistance) that were
paid to an employee, up to a maximum of $7,875 per
employee per tax year.
For the completion and enhanced tax credits, the salary and
wages can be dually applied to overlapping periods when
more than one level is completed during the tax year.
Yukon
108
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plus
plus
Northwest Territories
plus
Nunavut
www.cra.gc.ca
109
plus
Other credits
110
www.cra.gc.ca
References
Section 125.4
Regulation 1106
RC4164, Canadian Film or Video Production Tax Credit
References
IC77-16, Non-Resident Income Tax
IC75-6, Required Withholding From Amounts Paid to Non-Residents Providing
Services in Canada
Note
Qualified Canadian labour expenditure is net of any
assistance.
www.cra.gc.ca
111
Refund or payment
Your overpayment or balance unpaid is the difference you
get after subtracting all the credits on lines 780 to 840 from
the total tax payable on line 770.
If your total tax payable (line 770) is less than your total
credits (line 890), enter the difference on the overpayment
line.
If your total payable (line 770) is more than your total
credits (line 890), enter the difference on the balance
unpaid line.
Note
After we process your return and apply any interest
and/or penalty charges, if the total amount owing at
that time is $2 or less, you will not have to pay that
amount. If an amount of $2 or less is owed to you, the
amount will not be refunded; however, we will apply it
to any existing liability you may have.
112
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Note
You or your representative may not have a bank account
at a financial institution in Canada. If so, either of you
can make your payment using:
Certification
Lines 950 to 959
Lines 950 to 956 Complete these lines by giving the
www.cra.gc.ca
113
Note
Use My Business Account or complete Form RC59,
Business Consent, if you wish to authorize representatives
(including employees) to discuss your corporation
income tax return for any year with the CRA. Please
verify if your list of authorized representatives is
up-to-date and, if applicable, modify or cancel
authorized representatives. My Business Account allows
you to authorize a new representative, and to view,
update, and cancel authorizations of existing
representatives. For more information, go to
www.cra.gc.ca/mybusinessaccount.
114
Language of correspondence
Line 990
Indicate in which official language you would like to
receive your correspondence by entering the appropriate
code:
1 for English; or
2 for French.
www.cra.gc.ca
Title
Page
numbers
RC59
Business Consent
RC312
RC365
28
RC366
113
RC368
28
T2
113, 119
16
10
T2 Short
T2 Short Return
10
T2 SCH 1
32
T2 SCH 2
50-52
T2 SCH 3
60, 72
T2 SCH 4
47
T2 SCH 5
76
T2 SCH 6
33
T2 SCH 7
55, 59
T2 SCH 8
37
T2 SCH 9
25
T2 SCH 10
44
T2 SCH 11
27
T2 SCH 12
Resource-Related Deductions
44
T2 SCH 13
Continuity of Reserves
44
T2 SCH 14
27
T2 SCH 15
28
T2 SCH 16
45
T2 SCH 17
T2 SCH 18
T2 SCH 19
27
T2 SCH 20
75
45, 64
110, 111
T2 SCH 21
Federal and Provincial or Territorial Foreign Income Tax Credits and Federal Logging Tax Credit
T2 SCH 22
64, 78
T2 SCH 23
T2 SCH 24
21
T2 SCH 25
28
T2 SCH 27
63
T2 SCH 28
27
T2 SCH 29
Payments to Non-Residents
28
T2 SCH 31
66
T2 SCH 33
14
T2 SCH 34
14
T2 SCH 35
14
T2 SCH 37
74
28
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26, 56
115
Schedule
or form
Title
Page
numbers
T2 SCH 38
14, 74
T2 SCH 39
T2 SCH 42
17, 74
T2 SCH 43
74, 75
T2 SCH 44
27
T2 SCH 45
75
T2 SCH 46
72
T2 SCH 49
27
T2 SCH 50
Shareholder Information
30
T2 SCH 53
72
T2 SCH 54
72
T2 SCH 55
72
T2 SCH 71
13
T2 SCH 72
13
T2 SCH 73
13
74
T2 SCH 88
T2 SCH 91
30
T2 SCH 97
23
T2 SCH 100
24
T2 SCH 101
24
T2 SCH 125
24
T2 SCH 141
Notes Checklist
24
T2 SCH 300
79
T2 SCH 301
80
T2 SCH 302
Additional Certificate Numbers for the Newfoundland and Labrador Film and Video Industry Tax
Credit
80
T2 SCH 303
79
T2 SCH 304
80
T2 SCH 305
79
T2 SCH 306
Newfoundland and Labrador Capital Tax on Financial Institutions Agreement Among Related
Corporations
79
T2 SCH 307
78
T2 SCH 321
81
T2 SCH 322
80
T2 SCH 340
82
T2 SCH 341
82
T2 SCH 342
81
T2 SCH 343
81
T2 SCH 345
Additional Certificate Numbers for the Nova Scotia Film Industry Tax Credit
82
T2 SCH 346
81
T2 SCH 347
Additional Certificate Numbers for the Nova Scotia Digital Media Tax Credit
83
T2 SCH 360
83
T2 SCH 365
Additional Certificate Numbers for the New Brunswick Film Tax Credit
84
T2 SCH 366
T2 SCH 500
T2 SCH 502
116
7, 23
83
84, 87
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86
Schedule
or form
T2 SCH 504
Title
Ontario Resource Tax Credit and Ontario Additional Tax re Crown Royalties
Page
numbers
84, 86
T2 SCH 506
84
T2 SCH 507
84
T2 SCH 508
87
T2 SCH 510
T2 SCH 511
Ontario Corporate Minimum Tax Total Assets and Revenue for Associated Corporations
85, 86, 87
85
T2 SCH 512
86
T2 SCH 513
86
T2 SCH 524
94
T2 SCH 525
86
T2 SCH 546
94
T2 SCH 548
94
T2 SCH 550
88
T2 SCH 552
88
T2 SCH 554
89
T2 SCH 556
89
T2 SCH 558
90
T2 SCH 560
91
T2 SCH 562
92
T2 SCH 564
92
T2 SCH 566
93
T2 SCH 568
93
T2 SCH 569
93
T2 SCH 380
95
T2 SCH 381
94
T2 SCH 383
94
T2 SCH 384
95
T2 SCH 385
96
T2 SCH 387
97
T2 SCH 388
99
T2 SCH 389
98
T2 SCH 390
97
T2 SCH 391
97
T2 SCH 392
100
T2 SCH 393
100
T2 SCH 394
100
T2 SCH 400
101
T2 SCH 402
101
T2 SCH 403
101
T2 SCH 404
101
T2 SCH 410
Additional Certificate Numbers for the Saskatchewan Film Employment Tax Credit
102
T2 SCH 411
100
T2 SCH 421
106
T2 SCH 427
102
T2 SCH 428
106
T2 SCH 429
107
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117
Schedule
or form
Title
Page
numbers
T2 SCH 430
108
T2 SCH 440
109
T2 SCH 442
109
T2 SCH 443
108
T2 SCH 460
109
T2 SCH 461
109
T2 SCH 481
109
T106
T183CORP
T400A
29
17
T652
T661
T666
British Columbia (BC) Scientific Research and Experimental Development Tax Credit
103
T1031
Subsection 13(29) Election in Respect of Certain Depreciable Properties, Acquired for Use in a
Long Term Project
37
T1044
23
T1131
110
T1134
29
T1135
29
T1141
29
T1142
29
T1146
66
T1177
111
T1196
103
T1197
105
T1288
T1296
22
T2002
72
T2029
16
T2057
27
T2058
27
28
28
T5013 (slip)
28
T5013 FIN
15, 28
15, 28
T5003 (slip)
T5004
T5013 SUM
118
16
www.cra.gc.ca
45, 67
Online services
Handling business taxes online
Save time using the CRAs online services for businesses.
You can do many things online, including:
Electronic payments
Make your payment online using the CRAs My Payment
service at www.cra.gc.ca/mypayment or using your
financial institutions telephone or Internet banking
services. For more information, go to
www.cra.gc.ca/payments or contact your financial
institution.
www.cra.gc.ca
119
Mailing address
You may write to the International Tax Services Office at:
2204 Walkley Road
Ottawa ON K1A 1A8
CANADA
Fax
613-952-3845
120
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Index
Page
55
Amalgamated corporations
Final tax year before amalgamation .........................
22
First tax year Schedule 24 .......................................
22
Appeals ............................................................................
17
Associated corporations Schedules 23 and 49 ......... 26, 27
Authorizing representatives and employees .............. 113, 119
Available-for-use rule .................................................... 37, 67
12
9
62
18
56
19
65
110
63
9
10
10
7
Page
Film or video production services tax
credit refund................................................................
Final return (dissolution) ..............................................
Foreign
Affiliates (investment in) Schedule 25 ..................
Business income tax credit Schedule 21 ...............
Non-business income tax credit Schedule 21.......
Property .......................................................................
Tax deductions, addition to taxable income ...........
Functional currency .......................................................
111
22
28
64
64
29
54
22
24
52
51
51
52
9
113
63
10
Schedule 1 ....................................................................
New corporations Schedule 24 ..................................
Non-profit organizations
Exempt from tax .........................................................
Information return Form T1044 .............................
Non-resident
Corporations ...............................................................
Discretionary trust Schedule 22 .............................
Non-arms length transactions
with non-resident persons Form T106 ................
Ownership Schedule 19 ..........................................
32, 50
21
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23
23
7
28
29
27
121
Page
Payments to Schedule 29.........................................
28
122
72
72
73
74
74
75
75
53
75
28
12
45
28
27
14
76
55
102
94
83
78
109
81
109
84
80
100
108
Page
Reassessments ................................................................
Reduced business limit ..................................................
Refundable dividend tax on hand ...............................
Refundable portion of Part I tax ...................................
Related corporations Schedule 9 ...............................
Reserves
Capital gains ...............................................................
Continuity Schedule 13 ...........................................
17
56
59
59
25
36
44
45
30
10
55
55
56
62
Tax reduction
General .........................................................................
Tax shelter loss or deduction Form T5004 ...............
Tax withheld at source ..................................................
Taxable income
Addition for foreign tax deductions ........................
Calculation ..................................................................
Used to calculate small business deduction ...........
Transactions
Non-arms length Schedule 44 ...............................
With shareholders, officers, or employees
Schedule 11 ..................................................................
77
78
76
76
76
110
www.cra.gc.ca
58, 65
28
111
54
50, 54
56
27
27
22