5001-N (E)

Table of Contents

• Form NL428, Newfoundland and Labrador Tax and Credits
• Step 1 - Newfoundland and Labrador tax on taxable income
• Step 2 - Newfoundland and Labrador non-refundable tax credits
• Newcomers to Canada and emigrants
• Transferring and carrying forward amounts
• Step 3 - Newfoundland and Labrador tax
• How to claim

Completing Your Newfoundland and Labrador Form

The information in this section will help you complete Form NL428, Newfoundland and Labrador Tax and Credits .

The terms spouse and common-law partner are defined in the
General Income Tax and Benefit Guide.

The term end of the year means December 31, 2002, the date you left Canada if you emigrated in 2002, or the date of death for a person who died in 2002.

Tax Tip
A growing number of Newfoundland and Labrador tax measures are distinct from corresponding federal measures. However, many rules for calculating Newfoundland and Labrador tax are still based on the federal Income Tax Act. As a result, you may find it easier to calculate your federal tax first. Your total taxes payable will be the same, no matter which tax you calculate first.

Form NL428, Newfoundland and Labrador Tax and Credits

Complete Form NL428 if you were a resident of Newfoundland and Labrador at the end of the year.

If you had income from a business with a permanent establishment outside Newfoundland and Labrador, complete Form T2203, Provincial and Territorial Taxes for 2002 - Multiple Jurisdictions , instead of completing Form NL428.

You also have to complete Form NL428 if you were a non-resident of Canada in 2002 and you earned income from employment in Newfoundland and Labrador, or received income from a business with a permanent establishment only in Newfoundland and Labrador.

Step 1 - Newfoundland and Labrador tax on taxable income

Enter, on line 1, your taxable income from line 260 of your return. Use this amount to determine which one of the three columns you have to complete. Enter this amount on line 2 of the applicable column and complete the calculation.

Step 2 - Newfoundland and Labrador non-refundable tax credits

The eligibility criteria and rules for claiming the Newfoundland and Labrador non-refundable tax credits are the same as for the federal non-refundable tax credits. However, the value and calculation of some Newfoundland and Labrador non-refundable tax credits are different from the corresponding federal credits.

To calculate many of the non-refundable tax credits, you will need to use the Provincial Worksheet .

Newcomers to Canada and emigrants

If you prorated any of the amounts you claimed on lines 300 to 306, 315, 316, 318, 324 and 326 of your federal Schedule 1, you have to prorate the corresponding provincial amounts at lines 5804 to 5820, 5840, 5844, 5848, 5860 and 5864.

Line 5804 - Basic personal amount

Claim the basic personal amount of $7,410.

Line 5808 - Age amount

You can claim this amount if you were 65 or older on December 31, 2002, and your net income (line 236 of your return) is less than $49,134.

If your net income is:

• $25,921 or less, enter $3,482 on line 5808; or
• more than $25,921 but less than $49,134, complete the calculation for line 5808 on the Provincial Worksheet to determine your claim.

Line 5812 - Spouse or common-law partner amount

You can claim this amount if the rules are met for claiming it on line 303 of federal Schedule 1, and your spouse or common-law partner's net income (line 236 of his or her return, or the amount that it would be if he or she filed a return) is less than $6,661.

If your spouse or common-law partner's net income is:

• $606 or less, enter $6,055 on line 5812; or
• more than $606 but less than $6,661, complete the calculation on Form NL428 to determine your claim and enter the result on line 5812.

Note
Enter your marital status and the information about your spouse or common-law partner (including his or her net income, even if it is zero) in the Identification area of page 1 on your return.

Line 5816 - Amount for an eligible dependant

You can claim this amount if the rules are met for claiming it on line 305 of federal Schedule 1 and your dependant's net income (line 236 of his or her return, or the amount that it would be if he or she filed a return) is less than $6,661.

If your dependant's net income is:

• $606 or less, enter $6,055 on line 5816; or
• more than $606 but less than $6,661, complete the calculation for line 5816 on the Provincial Worksheet to determine your claim.

If you have not already completed federal Schedule 5, complete and attach it to your return.

Line 5820 - Amount for infirm dependants age 18 or older

You can claim this amount if the rules are met for claiming it on line 306 of federal Schedule 1 and your dependant's net income (line 236 of his or her return, or the amount that it would be if he or she filed a return) is less than $7,410.

Complete the calculation for line 5820 on the Provincial Worksheet to determine your claim.

Line 5824 - Canada Pension Plan or Quebec Pension Plan contributions through employment

Enter on this line the amount you claimed on line 308 of federal Schedule 1.

Line 5828 - Canada Pension Plan or Quebec Pension Plan contributions on self-employment and other earnings

Enter on this line the amount you claimed on line 310 of federal Schedule 1.

Line 5832 - Employment Insurance premiums

Enter on this line the amount you claimed on line 312 of federal Schedule 1.

Line 5836 - Pension income amount

You can claim this amount if you met the rules for claiming it on line 314 of federal Schedule 1. Enter on line 5836 the same amount that you entered on line 314.

Line 5840 - Caregiver amount

You can claim this amount if the rules are met for claiming it on line 315 of federal Schedule 1 and your dependant's net income (line 236 of his or her return, or the amount that it would be if he or she filed a return) is less than $13,853.

Complete the calculation for line 5840 on the Provincial Worksheet to determine your claim.

Line 5844 - Disability amount

You can claim this amount if you met the rules for claiming it on line 316 of federal Schedule 1. In calculating Newfoundland and Labrador tax, there is no supplement to the disability amount for individuals under the age of 18. If you qualify for this amount, enter $4,233 on this line, regardless of your age.

Line 5848 - Disability amount transferred from a dependant
(other than your spouse or common-law partner)

You can claim this amount if the rules are met for claiming it on line 318 of federal Schedule 1. Complete the calculation for line 5848 on the Provincial Worksheet to determine your claim.

Line 5852 - Interest paid on your student loans

Enter on this line the amount you claimed on line 319 of federal Schedule 1.

Line 5856 - Your tuition and education amounts

The tuition and education amounts that you claimed on line 323 of your federal Schedule 1 may be different than the provincial amounts you calculate.

Complete Part 1 of Schedule NL(S11), Provincial Tuition and Education Amounts , to calculate your claim.

Receipts - If you are filing a paper return, attach the completed Schedule NL(S11). Whether you are filing a paper return or electronically, keep your forms and official tuition fees receipts in case we ask to see them.

Transferring and carrying forward amounts

You may not need all of your 2002 tuition and education amounts to reduce your provincial income tax to zero. In this case, you may transfer all or part of the unused portion to one person, either your spouse or common-law partner (who would claim it on line 5864), or your parent or grandparent, or your spouse or common-law partner's parent or grandparent (who would claim it on line 5860).

You can only transfer an amount to your parent or grandparent, or your spouse or common-law partner's parent or grandparent, if your spouse or common-law partner does not claim an amount for you on line 5812 or 5864.

Complete Part 2 of Schedule NL(S11) to calculate the provincial amount available to transfer, as well as the back of Form T2202, Education Amount Certificate , or T2202A, Tuition and Education Amounts Certificate , to designate who can claim it and the amount the person can claim. This amount may be different from the amount calculated for the same person on your federal Schedule 11. You must enter the provincial amount you are transferring on line 20 of your Schedule NL(S11).

Tax Tip
If you are transferring an amount to a designated person, do not transfer more than the person can use. That way, you can carry forward as much as possible to use in a future year.

Complete Part 2 of Schedule NL(S11) to calculate the amount you can carry forward to a future year. This amount corresponds to the part of your tuition and education amounts you do not need to use (and do not transfer) for the year.

Line 5860 - Tuition and education amounts transferred from a child

You can claim this amount if the rules are met for claiming it on line 324 of federal Schedule 1.

Enter on line 5860 the total of all provincial amounts transferred to you that each student designated on the back of form T2202 or T2202A.

Notes
The student must have entered this amount on line 20 in Part 2 of his or her Schedule NL(S11). He or she may have chosen to transfer an amount that is less than the available provincial amount. The student cannot transfer to you any unused tuition and education amounts carried forward from a previous year.

If the student was a resident of another province or territory on December 31, 2002, contact your tax services office to determine the amount to claim at line 5860.

See other rules for line 324 in the General Income Tax and Benefit Guide that may apply if the student has a spouse or a common-law partner.

Receipts - If you are filing a paper return, do not include the student's Schedule NL(S11), forms or official tuition fees receipts. Whether you are filing a paper return or electronically, keep all of your documents in case we ask to see them.

Line 5864 - Amounts transferred from your spouse or common-law partner

You can claim these amounts if the rules are met for claiming them on line 326 of federal Schedule 1. Complete Schedule NL(S2), Provincial Amounts Transferred From Your Spouse or Common-law Partner , to calculate your claim. Attach this schedule to your return.

Line 5868 - Medical expenses

The allowable medical expenses you can claim on line 5868 are the same as those you can claim on line 330 of your federal Schedule 1. They have to cover the same 12-month period ending in 2002 and must not have been claimed on a 2001 return. Your total expenses have to be more than either 3% of your net income (line 236 of your return) or $1,614, whichever is less.

Note
If the total of expenses claimed is more than $1,614 but less than $1,728, it is important that you enter the amount on line 5868 and on line 330 of your federal Schedule 1.

Line 5872 - Medical expenses adjustment

If you claimed, on line 5868, medical expenses for a dependant, other than your spouse or common-law partner, whose net income (line 236 of his or her return, or the amount that it would be if he or she filed a return) is more than $7,410, complete the calculation for line 5872 on the Provincial Worksheet .

Tax Tip
The provincial adjustment that you calculate for a dependant will be different than the federal adjustment. If the provincial adjustment you calculate is less than the total medical expenses paid for that dependant, it will be to your benefit to include these expenses at line 5868.

Line 5896 - Donations and gifts

To calculate your claim for line 5896, enter the amounts from lines 345 and 347 of federal Schedule 9 and multiply them by the rates on lines 33 and 34 of Form NL428.

Step 3 - Newfoundland and Labrador tax

Line 38 - Newfoundland and Labrador tax on split income

If you have to pay federal tax on split income on line 424 of your federal Schedule 1, complete Part 2 of Form T1206, Tax on Split Income , to calculate the provincial tax that applies to this income. Form T1206 also contains a special rule that applies to the amount you enter on line 428 of your return. You can find more information on tax on split income on page 13 of the General Income Tax and Benefit Guide .

Lines 42 to 45 - Newfoundland and Labrador dividend tax credit

The rate for the Newfoundland and Labrador dividend tax credit changed on March 22, 2002. This year two different rates are used to calculate the Newfoundland and Labrador dividend tax credit depending on the date the dividends were paid during 2002.

The taxable dividends from taxable Canadian corporations may be shown in box 11 on T5 slips, box 31 on T4PS slips, box 32 on T3 slips, or in the details area of T5013 slips. If applicable, the issuer of the information slips will indicate the amount of taxable dividends paid before March 22, 2002, in a letter or in the note or details area of the information slip.

Enter this amount beside box 6173 and use line 43 to calculate a credit of 9% of all the taxable dividends paid before March 22, 2002.

Use line 44 to calculate a credit of 5% of all the taxable dividends paid on or after March 22, 2002.

Receipts - If you are filing a paper return, attach the related slips, letters, or statements. If you are filing electronically, keep all of your documents.

Line 50 - Newfoundland and Labrador additional tax for minimum tax purposes

If you have to pay minimum tax as calculated on Form T691, Alternative Minimum Tax , you will also have to determine your Newfoundland and Labrador additional tax for minimum tax purposes. To do this, complete Form T1219, Provincial and Territorial Alternative Minimum Tax , and enter the calculated amount on line 50 of Form NL428. You can find information about minimum tax on page 29 of the General Income Tax and Benefit Guide .

Lines 56 and 57 - Political contribution tax credit

You can claim a credit for the contributions you made in 2002 to registered Newfoundland and Labrador political parties or district associations, or to registered Newfoundland and Labrador independent political candidates during an election period.

How to claim

Enter your total contributions on line 56 of Form NL428. Determine the amount to enter on line 57 as follows:

• For contributions of more than $1,150, enter $500 on line 57.
• For contributions of $1,150 or less, complete the calculation for line 57 on the Provincial Worksheet .

Receipts - Attach to your paper return official receipts signed by an official of the recognized political party or constituency association, or the candidate's agent. If you are filing electronically, keep your receipts in case we ask to see them.

Lines 59 to 61 - Direct Equity Tax Credit

You can claim this credit for investments in eligible shares you acquired in 2002 (that you did not claim on your 2001 return) or in the first 60 days of 2003. On line 59 of Form NL428, enter the credit shown on Form NLDETC-1, Newfoundland and Labrador Direct Equity Tax Credit, issued by the Newfoundland and Labrador Department of Finance.

The maximum credit that you can claim is $50,000 per year, including unused amounts.

You can carry forward unused Newfoundland and Labrador direct equity tax credits for seven years, or back three years. However, you cannot carry back credits to a year before 2000. Any unused direct equity tax credit is shown on your most recent Notice of Assessment or Notice of Reassessment.

On line 60 of Form NL428, enter any unused credit from previous years.

You may not need all of your credit to reduce your 2002 provincial income tax to zero. Use the calculation for lines 63 and 64 on the Provincial Worksheet to determine your 2002 unused credit available for carry back to 2000 or 2001. Enter on line 63 of Form NL428, the amount you want to carry back and apply against your 2001 Newfoundland and Labrador tax. Enter on line 64 the amount you want to carry back and apply against your 2000 Newfoundland and Labrador tax.

Receipts - Attach Form NLDETC-1 to your paper return. If you are filing electronically, keep it in case we ask to see it.