ARCHIVED - Net income

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ARCHIVED - Net income


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Line 206 - Pension adjustment

Enter on line 206 the total of all amounts in box 52 of your T4 slips, or box 34 of your T4A slips. Generally, this total represents the value of the benefits you earned in 2005 under a registered pension plan (RPP) or a deferred profit-sharing plan (DPSP).

Do not include the pension adjustment (PA) amount in your income, and do not deduct it on your return. Simply enter this amount on line 206. We will use it to calculate your registered retirement savings plan (RRSP) deduction limit for 2006, which we will show on your Notice of Assessment or Notice of Reassessment for 2005. See line 208 for details.

If you have any questions about how your PA was calculated, ask your employer.

Note
 If you live in Canada and you participated in a foreign pension plan in 2005, you may have to enter an amount on this line. For details, contact us.

Line 207 - Registered pension plan (RPP) deduction

Generally, you can deduct the total of all amounts shown in box 20 of your T4 slips, in box 32 of your T4A slips, or on your union or RPP receipts. Contact us or see guide T4040, RRSPs and Other Registered Plans for Retirement , to find out how much you can deduct if any of the following applies:

  • the total is more than $3,500 and your information slip shows a past-service amount for service before 1990;
  • you contributed in a previous year and could not deduct part of the contributions; or
  • you made contributions to a pension plan in a foreign country.

Receipts - If you are filing a paper return, do not include your receipts (other than your T4 and T4A slips), but keep them in case we ask to see them. If you are filing electronically, keep all of your documents.

Line 208 - RRSP deduction

This section gives general information on registered retirement savings plans. If you need more information after reading this section, get guide T4040, RRSPs and Other Registered Plans for Retirement . See "Schedule 7" later on this page for details about completing Schedule 7. To view your RRSP information, visit My Account on our Web site.

Receipts - If you are filing a paper return, include your official receipts for all amounts you contributed from March 2, 2005, to March 1, 2006, including those you are not deducting on your return for 2005 and those you are designating as Home Buyers' Plan (HBP) or Lifelong Learning Plan (LLP) repayments. See "Lines 6 and 7 - Repayments under the HBP and LLP" for details about HBP and LLP repayments. If you contributed to your spouse or common-law partner's plan, the receipt has to show your name as the contributor and your spouse or common-law partner's name as the annuitant. Also attach Schedule 7 if you have to complete it. If you are filing electronically, keep your documents in case we ask to see them.

Maximum contributions you can deduct

The maximum you can deduct on line 208 is whichever of the following amounts is less:

Notes
After the end of the year you turn 69, you cannot contribute to your RRSP, and neither can your spouse or common-law partner. However, you still can contribute to your spouse or common-law partner's RRSP until the end of the year he or she turns 69, and you can deduct those contributions as long as you still have an unused RRSP deduction limit.

If you contribute more to an RRSP than you can deduct, you may have to pay a tax of 1% per month. To pay this tax you must file a T1-OVP, Individual Tax Return for RRSP Excess Contributions , for each applicable tax year. For more details, see the section called "Tax on RRSP excess contributions" in guide T4040, RRSPs and Other Registered Plans for Retirement .

Schedule 7

You may not have to complete Schedule 7. To find out, read the information at the top of the schedule. If you do have to complete it, you will find information below about lines 1, 2, 3, 6, 7, 10, 11, and 15 to 18.

Line 1 - Unused RRSP contributions

These are amounts you contributed to your own RRSP or to an RRSP for your spouse or common-law partner after 1990, but did not deduct on line 208 of any previous return or designate as an HBP or LLP repayment. The total of these amounts is shown on your Notice of Assessment or Notice of Reassessment for 2004 if you showed them on a previous year's Schedule 7.

If you do not have your notice, you can find out if you have unused RRSP contributions by using RRSP deduction limit, one of our T.I.P.S. services.

Notes
 If you have unused RRSP contributions that you made from March 2, 2004, to March 1, 2005, you should have filed a completed Schedule 7 with your 2004 paper return. If you did not, you should submit your receipts and a completed copy of a 2004 Schedule 7 to your tax centre, but not with your return for 2005. See "How do you change a return?" for details.

If you have unused contributions that you made from January 1, 1991, to March 1, 2004, but did not show on a Schedule 7 for 2003 or earlier, contact us.

Lines 2 and 3 - Total RRSP contributions

This total includes amounts you:

  • contributed to your own RRSP or an RRSP for your spouse or common-law partner from March 2, 2005, to March 1, 2006;
  • transferred to your own RRSP (see "Line 11 - Transfers" later in this section); and
  • designated as Home Buyers' Plan (HBP) or Lifelong Learning Plan (LLP) repayments (see "Lines 6 and 7 - Repayments under the HBP and LLP" in the next section).

Make sure you include on these lines all contributions you made from January 1, 2006, to March 1, 2006, even if you are not deducting or designating them on your return for 2005. Otherwise, we may reduce or disallow your claim for these contributions on your return for a future year.

Tax Tip

 If you have made deductible RRSP contributions for 2005 (other than transfers) from March 2, 2005, to March 1, 2006, you do not have to claim the full amount on line 208 of your 2005 return. Depending on your federal and provincial or territorial rates of tax for 2005, and your expected rates of tax for future years, it may be more beneficial for you to claim, if applicable, only part of your contributions on line 10 of Schedule 7 and on line 208 of your 2005 return. The contributions you do not claim for 2005 will then be available for you to carry forward and claim for future years when your federal and provincial or territorial rates of tax are higher.

Remember, in either case, you must record the total contributions you made from March 2, 2005, to March 1, 2006, on either line 2 or 3 and line 245 of your 2005 Schedule 7.

Do not include the following amounts:

  • Any unused RRSP contributions you made after March 1, 2005, that were refunded to you or your spouse or common-law partner in 2005. Report the refund on line 129 of your return for 2005. You may be able to claim a deduction on line 232.
  • Part or all of the contributions you made to your RRSP or an RRSP for your spouse or common-law partner less than 90 days before either of you withdrew funds from that RRSP under the HBP or LLP. For more details, get guide RC4135, Home Buyers' Plan (HBP) , or guide RC4112, Lifelong Learning Plan (LLP) .
  • Any payment directly transferred to your RRSP if you did not receive an information slip for it or if it is shown in box 35 of your T4RSP or T4RIF slip.
  • The part of an RRSP withdrawal that you recontributed to your RRSP and deducted on line 232. This would have happened if, in error, you withdrew more RRSP funds than necessary to obtain past-service benefits under a registered pension plan (RPP).
  • The excess part of a direct transfer of a lump-sum payment from your RPP to an RRSP or registered retirement income fund (RRIF) that you withdrew and are including on line 129 or 130 of your return for 2005, and deducting on line 232.

Lines 6 and 7 - Repayments under the HBP and LLP

If you withdrew funds from your RRSP under the Home Buyers' Plan (HBP) before 2004, you have to make a repayment for 2005. If you withdrew funds from your RRSP under the Lifelong Learning Plan (LLP) before 2004, you may have to make a repayment for 2005. In either case, the minimum amount you have to repay for the year is indicated on your Notice of Assessment or Notice of Reassessment for 2004.

To make a repayment for 2005, contribute to your own RRSP from January 1, 2005, to March 1, 2006, and designate your contribution as a repayment on line 6 or 7 of Schedule 7. Do not include an amount you deducted or designated as a repayment on your 2004 return, or that was refunded to you. Do not make your repayment to us. You cannot deduct any RRSP contribution you designate as an HBP or LLP repayment on Schedule 7.

Note
 If you repay less than the minimum amount for 2005, you have to include the difference on line 129 of your return.

Line 10 - RRSP contributions you are deducting for 2005

Your RRSP deduction limit for 2005 is shown on your Notice of Assessment or Notice of Reassessment for 2004, or, if we sent you one, on Form T1028, Your RRSP Information for 2005. You can carry forward indefinitely any part of your RRSP deduction limit accumulated after 1990 that you do not use.

If you do not have your notice or Form T1028, you can find out your limit for 2005 by using RRSP deduction limit, one of our T.I.P.S. services, or by contacting us.

If you would like to calculate your RRSP deduction limit for 2005, get guide T4040, RRSPs and Other Registered Plans for Retirement .

Note
 In a previous year, you may have received income for which you could contribute to an RRSP, but you may not have filed a return for that year. If you want to keep your RRSP deduction limit up to date, you have to file a return for that year.

Line 11 - Transfers

You may have reported income on line 115, 129, or 130 of your return for 2005. If you contributed certain types of this income to your own RRSP on or before March 1, 2006, you can deduct this contribution, called a transfer, in addition to any RRSP contribution you make based on your "RRSP deduction limit for 2005."

For example, if you received a retiring allowance in 2005, you would report it on line 130 of your return. You can contribute to your RRSP up to the eligible part of that income (box 26 of your T4A slip) and deduct it as a transfer. Include the amounts you transfer on lines 2 or 3 and 11 of Schedule 7.

For more information about amounts you can transfer, get guide T4040, RRSPs and Other Registered Plans for Retirement .

Lines 15 to 18 - 2005 withdrawals under the HBP and the LLP

On line 15, enter the total of your HBP withdrawals for 2005 from box 27 of your T4RSP slips. In addition, check the box at line 16 if the address of the home you acquired with these withdrawals is the same as the address on page 1 of your return.

On line 17, enter the total of your LLP withdrawals for 2005 from box 25 of your T4RSP slips. In addition, you can check the box at line 18 to designate that your spouse or common-law partner was the student for whom the funds were withdrawn. If you do not check the box, you will be considered to be the student for LLP purposes. You can change the person you designate as the student only on the return for the year you make your first withdrawal.

The guides RC4135, Home Buyers' Plan (HBP) , and RC4112, Lifelong Learning Plan (LLP) , include more information about:

  • when you have to make your repayments; and
  • the rules that apply when the person who made the withdrawal dies, turns 69, or becomes a non-resident.

Line 209 - Saskatchewan Pension Plan (SPP) deduction

You can deduct contributions to the SPP for 2005, up to whichever of the following three amounts is least:

  • $600;
  • your 2005 RRSP deduction limit minus your RRSP deduction from line 208 (not including transfers to your RRSP); or
  • the total amount you contributed to the SPP for yourself or your spouse or common-law partner from January 1, 2005, to March 1, 2006, not including any contributions that you deducted on your 2004 return.

Receipts - If you are filing a paper return, include your receipts. If you are filing electronically, keep them in case we ask to see them.

Line 212 - Annual union, professional, or like dues

Enter the total of the following amounts related to your employment that you paid (or that were paid for you and included in your income) in the year:

  • annual dues for membership in a trade union or an association of public servants;
  • professions board dues required under provincial or territorial law;
  • professional or malpractice liability insurance premiums or professional membership dues required to keep a professional status recognized by law; and
  • parity or advisory committee (or similar body) dues required under provincial or territorial law.

Annual membership dues do not include initiation fees, licences, special assessments, or charges for anything other than the organization's ordinary operating costs. You cannot claim charges for pension plans as membership dues, even if your receipts show them as dues. For more information, get Interpretation Bulletins IT-103, Dues paid to a union or to a parity or advisory committee, and IT-158, Employees' professional membership dues.

The amount shown in box 44 of your T4 slip, or on your receipts, includes any GST/HST you paid.

Tax Tip
You may be eligible for a rebate of any GST/HST you paid as part of your dues (see line 457).

Receipts - If you are filing a paper return, do not include your receipts (other than your T4 slips) but keep them in case we ask to see them. If you are filing electronically, keep all of your documents.

Line 214 - Child care expenses

You or your spouse or common-law partner may have paid for someone to look after your child so one of you could earn income, go to school, or conduct research in 2005. The expenses are deductible only if, at some time in 2005, the child was under 16 or had a mental or physical infirmity. Generally, only the spouse or common-law partner with the lower net income (even if it is zero) can claim these expenses.

For more information, and to make your claim, get Form T778, Child Care Expenses Deduction for 2005 . However, if you claimed child care expenses on your 2004 return, the package we mailed to you should include this form.

Tax Tips
You may be able to claim payments you made to a boarding school, sports school, or camp. For details, get Form T778.

If your child needs special attendant care or care in an establishment, see guide RC4064, Information Concerning People With Disabilities , for details about different amounts you may be able to claim.

Receipts - If you are filing a paper return, include a completed Form T778 but not your receipts. Keep them in case we ask to see them. If you are filing electronically, keep all of your documents.

Line 215 - Disability supports deduction

You can claim expenses you paid for personal attendant care and other disability supports expenses that allowed you to go to school or to earn certain income. This includes income from employment or self-employment and a grant you received for conducting research.

Under proposed legislation, the list of eligible expenses for this deduction will include amounts paid for:

  • Deaf-blind intervening services used by an individual who is both blind and profoundly deaf when paid to persons engaged in the business of providing such services.
  • Job coaching services (other than job placement or career counselling services) provided to an individual with a severe and prolonged impairment when paid to persons engaged in the business of providing such services. The need for these services will have to be certified in writing by a medical practitioner.
  • Reading services provided to an individual who is blind or has a severe learning disability when paid to persons engaged in the business of providing such services. The need for these services will have to be certified in writing by a medical practitioner.
  • A device that is a Bliss symbol board used by an individual who has a speech impairment to help the individual communicate by motioning at the symbols or spelling out words. The need for the device will have to be certified in writing by a medical practitioner.
  • A device that is a Braille note-taker used by a blind individual to allow that individual to take notes (that can be read back to them or printed or displayed in Braille) with the help of a keyboard. The need for the device will have to be certified in writing by a medical practitioner.
  • A device that is a page-turner used by an individual with a severe and prolonged impairment that markedly restricts the individual's ability to use their arms or hands to turn the pages of a book or other bound document. The need for the device will have to be certified in writing by a medical practitioner.
  • A device and/or software designed to be used by a blind individual or an individual with a severe learning disability to enable the individual to read print. The need for the device and/or software will have to be certified in writing by a medical practitioner.

For a complete list of allowable expenses, see Form T929, Disability Supports Deduction .

You cannot claim these expenses on this line if you or someone else will be claiming them as medical expenses on line 330 or 331.

To calculate your claim, complete Form T929. For more information, see Form T929 or use Info-Tax, one of our T.I.P.S. services.

Receipts - If you are filing a paper return, do not include your receipts or Form T929, but keep them in case we ask to see them. If you are filing electronically, keep all of your documents.

Line 217 - Business investment loss

A business investment loss is a special type of capital loss. Such a loss can occur, for example, when you dispose of shares or certain debts of a small business corporation. For more information, and to find out how to complete lines 217 and 228 (to the left of line 217), get guide T4037, Capital Gains .

If you have a tax shelter, see "Tax shelters."

Line 219 - Moving expenses

Generally, you can deduct moving expenses you paid in 2005 if both of the following apply:

  • You moved to work or run a business, or to study full-time at an educational institution that offers post-secondary courses.
  • You moved at least 40 kilometres closer to your new work or school.

Notes
 If you moved before 2005 but could not claim all your expenses on your return for that year or later, you may be able to claim the remaining expenses on your return for 2005.

In addition, if you pay expenses after the year of your move, you may be able to claim them on your return for the year you pay them. You may carry forward unused amounts until you have enough income to claim them.

Your deduction is limited to the amount of eligible income you earned at the new location. For more information, and to calculate how much you can deduct, get Form T1-M, Moving Expenses Deduction . Make sure you tell us your new address.

Receipts - If you are filing a paper return, do not include your receipts or Form T1-M, but keep them in case we ask to see them. If you are filing electronically, keep all of your documents.

Line 220 - Support payments made

Enter on line 230 the total of all deductible and non-deductible support payments for a spouse or common-law partner, or for a child, that you made (or, if you are the payee, that you repaid under a court order) in 2005. Claim on line 220 only the deductible amount. Most child support payments paid according to a written agreement or court order dated after April 1997 are not deductible. For more details, get guide P102, Support Payments .

Generally, to be allowed your claim, you should register your written agreement or court order (including any amendments) with us. For more information, get Form T1158, Registration of Family Support Payments .

Receipts - If you are filing a paper return, do not include your receipts or cancelled cheques, or your court order or written agreement. Keep them in case we ask to see them. If you are filing electronically, keep all of your documents.

Line 221 - Carrying charges and interest expenses

You can claim the following carrying charges and interest you paid to earn income from investments:

  • fees to manage or take care of your investments (other than administration fees you paid for your registered retirement savings plan or registered retirement income fund), including safety de posit box charges;
  • fees for certain investment advice (see Interpretation Bulletin IT-238, Fees Paid to Investment Counsel ) or for recording investment income;
  • fees to have someone complete your return, but only if you have income from a business or property, accounting is a usual part of the operations of your business or property, and you did not use the amounts claimed to reduce the business or property income you reported (see Interpretation Bulletin IT-99, Legal and Accounting Fees ); and
  • most interest you pay on money you borrow for investment purposes, but generally only as long as you use it to try to earn investment income, including interest and dividends. However, if the only earnings your investment can produce are capital gains, you cannot claim the interest you paid. For details, contact us.

You cannot deduct on line 221 any of the following amounts:

  • the interest you paid on money you borrowed to contribute to a registered retirement savings plan or a registered education savings plan;
  • the interest portion of your student loan repayments (although you may be able to claim a credit on line 319 on Schedule 1 for this amount);
  • subscription fees paid for financial newspapers, magazines, or newsletters; and
  • brokerage fees or commissions you paid when you bought or sold securities. Instead, you use these costs when you calculate your capital gain or capital loss. For more information, get guide T4037, Capital Gains , and Interpretation Bulletin IT-238, Fees Paid to Investment Counsel .

Policy loan interest - To claim interest you paid during 2005 on a policy loan made to earn income, have your insurer complete Form T2210, Verification of Policy Loan Interest by the Insurer , on or before April 30, 2006.

Refund interest - If we paid you interest on an income tax refund, you have to report the interest in the year you receive it, as we explain at line 121 in this guide. If we then reassessed your return and you repaid any of the refund interest in 2005, you can deduct the amount you repaid, up to the amount you had included in your income.

Carrying charges for foreign income - If you have carrying charges for Canadian and foreign investment income, identify them separately on Schedule 4, according to the percentage that applies to each investment.

Receipts - To make your claim, complete Part IV of Schedule 4. If you are filing a paper return, do not include your receipts or Form T2210, but keep them in case we ask to see them. If you are filing electronically, keep all of your documents.

If you have a tax shelter, see "Tax shelters."

Line 222 - Deduction for CPP or QPP contributions on self-employment and other earnings

You can claim, on this line, half of the total of your Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions, if any, from Schedule 8. You also can claim, on line 310 on Schedule 1, an amount for the other half. You can claim contributions you:

  • have to make on self-employment and limited or non-active partnership income;
  • choose to make on certain employment income (see "Making additional CPP contributions" at line 308); and
  • choose to make on your provincial income tax return for Quebec on certain employment income (see your Quebec provincial guide).

The amount of CPP or QPP contributions that you have to make, or choose to make, will depend on how much you have already contributed to the CPP or QPP as an employee, as shown in boxes 16 and 17 of your T4 slips.

Making additional CPP contributions

You may be able to make CPP contributions on certain employment income for which no contribution was made (for example, tips that were not included on a T4 slip) or additional contributions on T4 income if you had more than one employer in the year and the total CPP contributions on all T4 slips is less than the required amount. For more information, see "Making additional CPP contributions" at line 308.

How to calculate your contributions

Complete Schedule 8 to calculate your CPP or QPP contributions, and attach it to your paper return. If you were a member of a partnership, make sure you include on line 1 of Schedule 8 only your share of the net profit or loss. You cannot use self-employment or partnership losses to reduce the CPP or QPP contributions that you paid on your employment earnings.

If you were not a resident of Quebec on December 31, 2005, enter on lines 222 and 310, in dollars and cents, the amount from line 11 of Schedule 8. Enter on line 421 the amount from line 10 of Schedule 8.

If you were a resident of Quebec on December 31, 2005, enter on lines 222 and 310, in dollars and cents, the amount from line 10 of Schedule 8. Line 421 does not apply to you.

Note
 We will prorate your CPP or QPP contribution and show the correct amount on your Notice of Assessment in certain situations, such as if, in 2005, you:

  • were a CPP participant and either turned 18 or 70, or received a CPP retirement or disability pension; or
  • were a QPP participant and either turned 18 or received a QPP disability pension.

Request for refund of CPP contributions

Under the Canada Pension Plan Act all requests for a refund of CPP over-contributions must be made within four years after the end of the year for which the request is being made.

Line 224 - Exploration and development expenses

If you invested in a petroleum, natural gas, or mining venture in 2005, but did not participate actively, you can deduct your expenses on this line. If you participated actively, follow the instructions at line 135.

How to claim

Complete Form T1229, Statement of Exploration and Development Expenses and Depletion Allowance , using the information that the principals of the venture give you, such as T5, T101, or T5013 slips. Make sure you read the instructions on the back of these slips.

Claim your exploration and development expenses (including renounced resource expenses) and your resource allowances on line 224. Claim your depletion allowances on line 232.

Attach Form T1229 and your T5, T101, and T5013 slips to your paper return. If you do not have these slips, attach a statement that identifies you as a participant in the venture. The statement has to show your allocation (the number of units you own, the percentage assigned to you, or the ratio of your units to those of the whole partnership) and give the name and address of the fund.

If you have any questions about these expenses, contact our Business Enquiries service. See "Contacting us".

If you have a tax shelter, see "Tax shelters."

Line 229 - Other employment expenses

You can deduct certain expenses (including any GST/HST) you paid to earn employment income. You can claim the expenses only if your employment contract required you to pay them, and either you did not receive an allowance for the expenses, or the allowance you received is included in your income.

Note
 Most employees cannot claim employment expenses. You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing.

Attach to your paper return a completed Form T777, Statement of Employment Expenses , to give us details of your expenses and to calculate how much you can deduct. Guide T4044, Employment Expenses , contains Form T777 and other forms you may need. The guide also explains the limits and conditions that apply when you claim these expenses.

Repayment of salary or wages - You can deduct salary or wages you included in income for 2005 or a previous year, if you repaid them in 2005. This includes amounts you repaid for a period when you were entitled to receive wage-loss replacement benefits or workers' compensation benefits. However, you cannot deduct more than the income you received when you did not perform the duties of your employment.

Legal fees - You can deduct legal fees you paid to collect or establish a right to salary or wages. It is not necessary for you to be successful; however, the amount sought must be for salary or wages owed. You must reduce your claim by any amount awarded to you in respect of those fees, or any reimbursement you received for your legal expenses.

Under proposed changes you can deduct legal fees you paid to collect or establish a right to collect other amounts, such as wage loss replacement plan benefits, which are included as employment income.

Receipts - If you are filing a paper return, include Form T777 but not your receipts or other forms. Keep them in case we ask to see them. If you are filing electronically, keep all of your documents.

Tax Tip
You may be eligible for a rebate of any GST/HST you paid as part of your expenses (see line 457).

Line 231 - Clergy residence deduction

If you are a cleric, use this line to claim a deduction for your residence. Your employer has to certify that you qualify for this deduction. Complete Form T1223, Clergy Residence Deduction , to find out what you can deduct.

Receipts - If you are filing a paper return, do not include Form T1223, but keep it in case we ask to see it. If you are filing electronically, keep all of your documents.

Line 232 - Other deductions

Use this line to claim allowable amounts not deducted anywhere else on this return. For clarification of your request, specify the deduction you are claiming in the space to the left of line 232. If you have more than one amount, or you want to explain your deduction more fully, attach a note to your paper return.

Receipts - If you are filing electronically, keep all supporting documents for amounts you claim on this line in case we ask to see them.

Note
 A child who was born in 1988 or later can claim a deduction for certain income he or she reports. For more details, see "Split income of a child under 18".

If you have a tax shelter, see "Tax shelters."

Income amounts paid back

In 2005, you may have paid back amounts that you received and included in income (other than salary or wages) for 2005 or a previous year. If this applies to you, you can deduct most of these amounts on line 232 of your return for 2005. However, if you repaid, under a court order, support payments that you included on line 128, deduct the repayment on line 220.

Attach to your paper return receipts or other documents showing the amounts you paid back, such as a T4A (OAS) slip that shows in box 20 any Old Age Security benefits you repaid.

Notes
 If you had an OAS repayment for 2004, tax may have been withheld from your OAS benefits for 2005. The amount deducted is included in box 22 of your T4A(OAS) slip for 2005. Do not deduct it on line 232. Claim it on line 437. To make sure the correct amount has been withheld, see line 235 and complete the chart for line 235 on the Federal Worksheet you will find in the forms book.

If you paid back employment income, see "Repayment of salary or wages" under line 229. If you paid back income tax refund interest, see "Refund interest" under line 221.

EI benefits - You may have received more benefits than you should have and already paid them back to Human Resources and Skills Development Canada (HRSDC). For example:

  • HRSDC may have reduced your EI benefits after discovering the mistake. In this case, your T4E slip will show only the net amount you received, so you cannot claim a deduction.
  • You may have repaid HRSDC. If so, box 30 of your T4E slip will show the amount you paid back. Include this amount on line 232. This is not the same as repaying a social benefit as explained at line 235.

Legal fees

You can deduct your expenses in any of the following situations:

  • You paid fees (including any related accounting fees) for advice or assistance in responding to us when we reviewed your income, deductions, or credits for a year, or in objecting to or appealing an assessment or decision under the Income Tax Act, the Unemployment Insurance Act, the Employment Insurance Act, the Canada Pension Plan Act, or the Quebec Pension Plan.
  • You paid fees to collect (or establish a right to) a retiring allowance or pension benefit. However, you can only claim up to the amount of retiring allowance or pension income you received in the year, minus any part of these amounts transferred to a registered retirement savings plan or registered pension plan. You can carry forward, for up to seven years, legal fees that you cannot claim in the year.
  • You paid fees to collect (or establish a right to) salary or wages. It is not necessary for you to be successful; however, the amount sought must be for salary or wages owed. You must reduce your claim by any amount awarded to you in respect of those fees, or any reimbursement you received for your legal expenses. (These fees must be deducted on line 229.)

    Under proposed legislation you can deduct legal fees you paid to collect or establish a right to collect other amounts, such as wage loss replacement plan benefits, which are included as employment income. (These fees must be deducted on line 229.)
  • You incurred certain fees relating to support payments that your current or former spouse or common-law partner, or the natural parent of your child, will have to pay. You cannot claim legal fees you incurred to get a separation or divorce or to establish custody or visitation arrangements of a child. For more information, get guide P102, Support Payments .

You have to reduce your claim by any award or reimbursements you received for these expenses. If you are awarded the cost of your deductible legal fees in a future year, you will have to include that amount in your income for that year.

For details of other legal fees you may be able to deduct, get Interpretation Bulletin IT-99, Legal and Accounting Fees .

Other deductible amounts

Here are some examples of other amounts that can be deducted at line 232:

Line 235 - Social benefits repayment

Employment Insurance (EI) benefits

You have to repay part of the EI benefits (line 119) you received in 2005 if there is an amount in box 15 of your T4E slip, the rate in box 7 is 30%, and your net income before adjustments (line 234) is more than $48,750.

Complete the chart on your T4E slip to calculate how much of your EI benefits you have to repay. If you also have to repay Old Age Security (OAS) benefits you received (see below), enter the EI benefits that you have to repay on lines 7 and 13 of the chart for line 235 on the Federal Worksheet in the forms book.

Old Age Security (OAS) benefits

You may have to repay all or a part of your OAS pension (line 113) or net federal supplements (line 146) if your net income before adjustments (line 234) is more than $60,806. Complete the chart for line 235 on the Federal Worksheet in the forms book to calculate how much you have to repay, even if tax was withheld by Social Development Canada.

Note
 If you had an OAS repayment for 2004, tax may have been withheld from your monthly OAS pension for 2005. The amount deducted is included in box 22 of your T4A(OAS) slip for 2005. Claim it on line 437. Similarly, if you have an OAS repayment for 2005, tax may be withheld starting with your July 2006 OAS payment. For more details, contact us.

Line 236 - Net income

We use this information to calculate amounts such as the Canada Child Tax Benefit, the GST/HST credit, the social benefits repayment, and certain non-refundable tax credits.

Notes
 Make sure you enter, if it applies, your spouse or common-law partner's net income in the "Information about your spouse or common-law partner" area on page 1 of your return. Enter this amount even if it is zero.

If the amount you calculate for line 236 is negative, you may have a non-capital loss. To find out, use Form T1A, Request for Loss Carryback . If you have a loss for 2005, you may want to carry it back to your 2002, 2003, or 2004 return. To do this, attach a completed Form T1A to your paper return (or send one to us separately). Do not file an amended return for the year or years to which you want to apply the loss.

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Date modified:
2006-02-28