At your service

• What if you need help?
• Internet access
• Before you contact us
• Hours of service
• Teletypewriter (TTY) users
• Getting personal tax information
• Authorizing your representative
• Social insurance number (SIN)

Before you start

• Do you have to file a tax return?
• Child Tax Benefit (CTB)
• Which tax package should you use?
  • Other publications you may need
• Where can you get the tax package you need?

Filing your return

• Getting started
• Income tax and benefit return
• What date is your 1997 return due?
  • Self-employed persons
  • Deceased persons
• What are the penalties if you file your return late?
• When will we pay or charge interest?
• What do you include with your return and what records do you keep?
• What if you are missing information?
• How do you report foreign income and other amounts?

After you file

• When can you expect your refund?
• What happens to your return after we receive it?
• How do you change your return?
• Can you file a return to claim a refund for a previous year?
• WhatIsVoluntaryDisclosure?
• If you move, what should you do?
• Should you be paying your 1998 taxes by instalments?

At your service

What if you need help?

In this guide, we use plain language to explain the most common tax situations. If you need more help after reading this guide, we have other services available.

You can use our Tax Information Phone Service (T.I.P.S.) Info-Tax service to get recorded information on many tax topics. See the T.I.P.S. information in the forms booklet.

We have other income tax guides and pamphlets you may find helpful. Some of these contain the related forms you may need. We will send you some of these guides in the mail by late February, depending on the type of income you reported and the deductions or credits you claimed on your 1996 tax return.

We mention the relevant guides or pamphlets for a particular topic in the related line instructions of this guide. We also refer to interpretation bulletins and information circulars that give more details on specific tax topics. All publications mentioned in this guide are available at your tax services office or tax centre.

Internet access

If you have access, you can find many of our publications at on the Internet.

Confidentiality procedures prevent us from providing personal tax information over the Internet. Therefore, you should direct any enquiries to your tax services office.

Before you contact us

We want to provide you with the best service possible. You can help us answer your questions more quickly if you have all of your information ready. Before contacting us you should do all of the following:

• read the appropriate sections of this guide;
• read the appropriate sections of other publications we mention in this guide;
• prepare all the details of your situation and question; and
• have on hand the working copy of your return, any related papers or receipts, a pencil, and some paper.

Being prepared helps us both!

For our addresses and telephone numbers, see the telephone listings under "Revenue Canada" in the Government of Canada section of your telephone book.

Hours of service

Regular hours - You can call or visit us Monday to Friday, from 8:15 a.m. to 5:00 p.m. (except holidays). For faster service, call or visit us before 10:30 a.m. or after 1:00 p.m.

Evening hours - Evening telephone service is available from February 23 to April 30 (Monday to Thursday only) from 5:00 p.m. to 9:00 p.m.

Saturday service - Telephone service is available from February 28 to April 25 (not including April 11) from 9:00 a.m. to 1:00 p.m.

Teletypewriter (TTY) users

If you have a hearing impairment and use a TTY, you can call our toll-free, bilingual enquiry service at 1-800-665-0354 during regular and evening hours of service.

Getting personal tax information

Your personal tax information is confidential. Therefore, we follow certain procedures before giving personal information to you or your representative, including your spouse. See "Authorizing your representative" below.

In person - If you visit us, we will ask you for one piece of signed identification with your picture. You can also provide two pieces of signed identification and your Notice of Assessment, Notice of Reassessment, or information about the contents of your return.

If your representative visits us, he or she must show two pieces of identification, a Form T1013, Consent Form, that you completed and signed, and your Notice of Assessment, Notice of Reassessment, or information about the contents of your return.

By phone - If you telephone your tax services office and you want information about your account, we will ask you for your social insurance number, your date of birth, and the total income from line 150 of your return. If you are enquiring about your assessment, we may ask for additional information from your return.

By fax - You can send us correspondence by facsimile. However, because of the nature of facsimile services, we are not responsible for misdirected, incomplete, or illegible documents.

Authorizing your representative

You can authorize a representative, including your spouse, to get information on your tax matters by completing and signing Form T1013, Consent Form.

We will only give information to your representative after we are satisfied that you have authorized us to do so.

Social insurance number (SIN)

You have to give your SIN to anyone who prepares a tax information slip (such as a T3, T4, T5, or T600 slip) for you. If you do not give your SIN, you may have to pay a $100 penalty each time you do not provide it.

Check your information slips carefully. If your SIN is not shown on your slip or is incorrect, please advise the slip preparer. If you do not have a SIN, apply for one at any Human Resources Centre of Canada.

Before you start

Do you have to file a tax return?

You have to file a 1997 income tax return if any of the following applies to you:

• You have a balance owing for 1997.
• You want to claim a refund.
• You want to apply for the goods and services tax/harmonized sales tax (GST/HST) credit.
• You or your spouse wants to continue receiving Child Tax Benefit payments. If so, each spouse must file a tax return. For more information, see the next section.
• We sent you a request to file a return.
• You sold or disposed of capital property, such as real estate or shares, in 1997.
• You claimed a capital gains reserve on your 1996 return.
• You have to pay back all or part of your Old Age Security or Employment Insurance benefits.
• You have to contribute to the Canada Pension Plan (CPP). This applies if you earned more than $3,500 in net self-employment income, other pensionable income, or both in 1997. See line 310 for details. In addition, most individuals who earned employment income have to pay a supplementary amount to the CPP for 1997. See line 309 for details.
• You want to carry forward the unused portion of your tuition and education amounts. See line 323 for details.
• You want to claim the new refundable medical expense supplement. See line 452 for details.

Note
Even if none of these requirements applies, you can still file a return. For example, you may have received income for which you could contribute to your registered retirement savings plan (RRSP). To keep your RRSP deduction limit (see page 22) up to date, you have to file a return.

Child Tax Benefit (CTB)

If you are responsible for the care of a child who is under 18, you can apply for the CTB for that child.

To apply for the CTB, submit a completed Form RC66, Child Tax Benefit Application, as soon as possible after your child is born or begins to live with you. If you are a landed immigrant or Convention refugee, you should apply as soon as possible after you and your child arrive in Canada.

After we process your CTB application, we will send you a Child Tax Benefit Notice, telling you the amount to which you are entitled (if any) and how we calculated it. If you qualify, you will receive the payments no later than the 20th of every month. However, if your total benefit for the year is less than $120, we will send it, in most cases, all in one payment.

The CTB is based on the income shown on your tax return and your spouse's (if applicable, see page 10) tax return. Therefore, to qualify for the credit, you both have to file a return every year, even if there is no income to report.

Once you have applied for the CTB, you have to advise us immediately of any of the following changes (as well as the date it happened or will happen):

• the child is no longer in your care;
• the child stops living with you;
• the child dies;
• you move;
• your marital status changes;
• you or your spouse is no longer a resident of Canada; or
• your immigration status changes.

The pamphlet called Your Child Tax Benefit has more details. For more information about the CTB, call us at 1-800-387-1193.

Which tax package should you use?

Generally, you have to use the income tax package for the province or territory where you resided on December 31, 1997. The information for your province or territory is located in the forms booklet.

If you resided in Quebec on December 31, 1997, use the package for residents of Quebec to calculate your federal tax only. You will also need to file a Quebec provincial return.

You may have to consider factors other than where you resided on December 31, 1997, to determine which package you should use:

• If, on December 31, 1997, you were living in a province or territory other than the one you usually reside in, use the package for your usual province or territory of residence. For example, a student who goes to school in Alberta but usually lives in Ontario would use an Ontario package.
• If you are filing a return for a person who died in 1997, use the package for the province or territory where that person lived at the time of death.
• If you emigrated from Canada in 1997, use the package for the province or territory in which you lived on the date you left.

• Under proposed changes, if property you owned had a value of more than $25,000 when you emigrated, you may have to complete Form T1161, List of Properties by an Emigrant of Canada, and attach it to your return. For details, see Form T1161 and its information sheet.

• If, on December 31, 1997, you lived outside Canada, but you maintained residential ties (as defined on page 7) with Canada, you may be considered a factual resident of a province or territory. Use the package for the province or territory where you kept your residential ties.
• You may have been a non-resident (as defined on page 7) of Canada on December 31, 1997.If you were a non-resident and you earned income from employment in a province or territory, or received income from a business with a permanent establishment in a province or territory, use the package for that province or territory. Otherwise, use the package for non-residents and deemed residents of Canada.
• You may have been a deemed resident (as defined below) of Canada on December 31, 1997. If you were a deemed resident and you are reporting only Canadian-source income from a business with a permanent establishment in a province or territory, use the package for that province or territory. Otherwise, use the package for non-residents and deemed residents of Canada.

Non-resident - You were a non-resident for tax purposes if you did not have residential ties (as defined below) in Canada, and you temporarily stayed here for less than 183 days during 1997, or you lived outside Canada throughout 1997. Contact us to find out the special rules that apply to you.

Deemed resident - You were a deemed resident for tax purposes if you did not establish residential ties (as defined below) in Canada, but you stayed here for 183 days or more in 1997.

Generally, you were also a deemed resident if you lived outside Canada during 1997, you did not maintain residential ties (as defined below) in Canada, and you were a government employee; a member of the Canadian Forces or their overseas school staff; or working under a Canadian International Development Agency program. This also applies to your spouse who was living with you in 1997, and your dependent children.

Residential ties - Residential ties include a home in Canada, a spouse or dependants who stayed in Canada while you were living outside Canada, and personal property in Canada. Other ties that may be relevant include social ties in Canada, a Canadian driver's licence, Canadian bank accounts or credit cards, and provincial or territorial hospitalization insurance. For more details, see Interpretation Bulletin IT-221, Determination of an Individual's Residence Status.

Other publications you may need

Unless you resided in Canada all year, you may also need one of the following publications:

• If you were a non-resident or a deemed resident, and you earned income from employment or a business with a permanent establishment in Canada, get the guide called Non-Residents and Temporary Residents of Canada.
• If you were a newcomer to Canada in 1997, get the pamphlet called Newcomers to Canada.
• If you emigrated from Canada during 1997, get the pamphlet called Emigrants and Income Tax.
• If you expect to be outside Canada for an extended period, get the pamphlet called Canadian Residents Abroad.

Where can you get the tax package you need?

You should have received the income tax package that you need based on our records. However, if after reading the above information, you cannot use this package, you can get the one you need from us. You can also get an income tax package for the province or territory where you resided on December 31, 1997, from any postal outlet in that province or territory. You can get the income tax package for non-residents and deemed residents of Canada from Canadian embassies and consulates, or from us.

Filing your return

You can file a paper return, or you can use the electronic filing system known as "EFILE."

EFILE is a paperless, accurate, and fast way of filing your return. Even if you prepare your own return, you can take it to an EFILE service provider, who will submit it for you electronically.

Getting started

Whether you are filing a paper return, or using EFILE, gather all the documents you will need to complete your return. This includes your information slips (such as T3, T4, T4A, and T5 slips) and receipts for any deductions or credits you plan to claim. As you prepare your return, and you come to a line that applies to you, look it up in this guide, or see the back of your information slips for more instructions.

If you are using EFILE, and:

• your EFILE service provider will be preparing your return, take your personal identification label and all of your documents with you; or
• you prepare the diskette yourself, for an EFILE service provider who accepts client-prepared returns, show all of your documents to the EFILE service provider.

If you are filing a paper return, mail or deliver it in the envelope included in the forms booklet. If you are preparing other people's returns, mail or deliver each person's return in a separate envelope.

Note
If you have a farming business and you are participating in the net income stabilization account (NISA) program, use the envelope contained in the guide called Farming Income and NISA.

Income tax and benefit return

The income tax return has a new look. We have redesigned it to make it easier for you to calculate your taxes, and to apply for any credits and benefits to which you may be entitled.

We have set aside page 1 of the return for items not related to calculating your taxes. First complete the Identification area. Then you can help keep up to date the National Register of Electors and apply for the GST/HST credit.

On pages 2 and 3, you enter all of your income and deductions, in order to calculate your net income (line 236) and taxable income (line 260). Your net income is used to calculate amounts such as personal and GST/HST tax credits. You also claim your non-refundable tax credits on page 3.

On page 4, you claim your refundable tax credits, and calculate your refund or balance owing.

What date is your 1997 return due?

Generally, your 1997 income tax return has to be filed on or before April 30, 1998.

Note
If you file your return after April 30, 1998, your goods and services tax/harmonized sales tax (GST/HST) credit and Child Tax Benefit payments may be delayed.

Self-employed persons - If you were carrying on a business in 1997 (unless the expenditures of the business are primarily in connection with a tax shelter), your 1997 income tax return has to be filed on or before June 15, 1998. In addition, if you are the spouse of an individual carrying on such a business, your 1997 income tax return also will have to be filed on or before June 15, 1998. However, if you have a balance owing for 1997, you still have to pay it on or before April 30, 1998.

Deceased persons - As the legal representative (executor or administrator) of the estate of an individual who died in 1997 or before May 1, 1998, (June 16, 1998, for a self-employed individual or that individual's spouse) you may have to file a 1997 return for that individual (see "Do you have to file a tax return?" on page 6). If so, the 1997 return for the deceased individual (and for the individual's spouse) has to be filed on or before whichever of the following two dates is later:

• April 30, 1998, for most individuals (June 15, 1998, for a self-employed individualor that individual's spouse); or
• six months after the individual's date of death.

For details about your filing requirements and options, get the income tax guide called Preparing Returns for Deceased Persons.

Note
If you received income in 1997 for a person who died in 1996 or earlier, do not file a 1997 return for that income on behalf of that person. However, you may have to file a T3 Trust Income Tax and Information Return for the estate.

What are the penalties if you file your return late?

If you owe tax for 1997, and do not file your 1997 return within the dates we specify under "What date is your 1997 return due?" (see above) we will charge you a late-filing penalty. We will also charge you interest. For more information, see "When will we pay or charge interest?" on this page.

The penalty is 5% of your balance owing for 1997, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months. Your late-filing penalty may be higher if we charged you a late-filing penalty on a return for any of the three previous years. Even if you cannot pay the full amount you owe on or before April 30, 1998, you can avoid this penalty by filing your return on time.

We may waive this penalty and interest if you file your return late because of circumstances beyond your control. If this happens, include a letter with your return giving the reasons why you filed your return late. For details, get Information Circular 92-2, Guidelines for the Cancellation and Waiver of Interest and Penalties.

When will we pay or charge interest?

We will pay you compound daily interest on your 1997 income tax refund, starting on whichever of the following three dates is latest:

• June 15, 1998;
• the 46th day after you file your return; or
• the date you overpaid your taxes.

If you have a balance owing for 1997, we charge compound daily interest starting May 1, 1998, on any unpaid amount owing for 1997. This includes any balance owing if we reassess your return, and any penalty we may charge you.

What do you include with your return and what records do you keep?

If you are filing a paper return, include one copy of each of your information slips. Your tax return, the guide explanations, the forms, or the schedules will tell you when to attach other supporting documents, such as certificates, forms, schedules, or official receipts. If you are using EFILE, you have to show your EFILE service provider all of your supporting documents.

If you make a claim without the required receipt, certificate, schedule, or form, we may disallow your claim. It could also delay the processing of your return.

Even if you do not have to attach certain supporting documents to your return, or if you are using EFILE, keep them in case we select your return for review. Generally, you should keep your supporting documents for six years.

You should also keep a copy of your 1997 return, the related Notice of Assessment, and any Notice of Reassessment. These can help you complete your 1998 return. For example, your Notice of Assessment for 1997 will tell you:

• your 1998 RRSP deduction limit;
• your undeducted RRSP contributions for 1998;
• your non-capital loss carry-forward balance; and
• your tuition and education amounts carry-forward balance. For details, see line 323.

What if you are missing information?

You should receive most of your information slips by early April. Wait until you get all your receipts and information slips before filing your return.

However, if you have to file a 1997 return, as explained on page 6, be sure to file it even if some slips or receipts are missing. Include the income, and attach a note to your return, stating which slips or receipts are missing and what you are doing to get them.

Missing information slip - If you have not received an information slip by early April, contact the issuer. However, you may not receive a T5 slip for an amount under $50.

Even if you do not have an information slip, you still have to report the income when you file your return. For example, if you know that you will not be able to get your T4 slip on or before April 30, use your pay stubs to calculate your income and the amounts your employer has deducted (such as Canada or Quebec Pension Plan contributions, Employment Insurance premiums, union dues, and income tax).

Attach to your return a note explaining the problem and, if possible, attach a photocopy of your pay stubs. The note should also give the payer's name and address, and the amounts you have calculated.

How do you report foreign income and other amounts?

Report foreign income and other amounts (such as foreign taxes and expenses paid) in Canadian dollars. Calculate how much to report by multiplying your foreign income or expense by the exchange rate that was in effect on the day you received the income or paid the expense. If the amount was paid at various times throughout the year, you can contact us to get an average annual rate.

After you file

When can you expect your refund?

We can usually process your return in four to six weeks. If you filed your return before April 16, wait four weeks before you call. If you filed your return after April 15, wait six weeks before you call.

To find out about your refund, call our automated T.I.P.S. (Telerefund) service. Telerefund will tell you the status of your 1997 refund. See the T.I.P.S. information in the forms booklet.

What happens to your return after we receive it?

When we receive your return, we usually review it based on the information you provided, and send you a Notice of Assessment based on that review. However, in some cases, we may select your return for a more detailed review before we assess it. Therefore, we may ask you to give us documents to verify the deductions or credits you claimed. In other cases, after we have assessed your return, we may select your return to verify the income you reported, or the deductions or credits you claimed.

How do you change your return?

If you need to make a change to any return you have sent us, do not file another return for that taxation year. Instead, send both of the following to your tax centre:

• a completed Form T1-ADJ, T1 Adjustment Request, or a signed letter providing the details of your request (including the taxation years you want us to adjust), your social insurance number, your address, and a telephone number where we can reach you during the day; and
• supporting documents for the changes you want to make and, if you have not sent them to us before, supporting documents for your original claim.

Note
Do not send your Form T1-ADJ or letter with your 1997 return.

You can ask for a refund for taxation years as far back as 1985. It usually takes eight weeks before we mail you a Notice of Reassessment.

Can you file a return to claim a refund for a previous year?

If you have not already filed one, you can file a return to claim a refund for the 1985 taxation year or any year after that. If you are filing a return for a year before 1997, make sure you attach receipts for all the deductions or credits you are claiming.

WhatIsVoluntaryDisclosure?

If you have never filed an income tax return, stopped filing returns for two or more years, or sent us a return that was incomplete, we encourage you to voluntarily file or correct your return. We will then assess or reassess your return without applying a penalty. You will only have to pay the tax you owe, with interest. Information Circular 85-1, Voluntary Disclosures, has more details.

If you move, what should you do?

If you move, let us know your new address as soon as possible. This will ensure that you keep getting any goods and services tax/harmonized sales tax (GST/HST) credit or Child Tax Benefit (and similar provincial program) payments to which you may be entitled. If you use direct deposit, and your move has resulted in a change to your account at your financial institution, be sure to advise us of your new account. We also need to know your new address to mail you your tax package for next year.

You can change your address by calling, writing, or visiting us. If you are writing, send your letter to your tax centre. Make sure you sign it, and include your social insurance number, your new address, and the date of your move. If you are writing for other people, include their social insurance numbers, and have each of them sign the letter authorizing the change to his or her records.

Note
Because an individual's personal information is confidential, generally we will not provide a change of address to other government departments or Crown corporations, such as Human Resources Development Canada or Canada Post. Similarly, they do not provide such information to us. An exception is if you allow us to give certain information to Elections Canada. See page 4 for more details.

Should you be paying your 1998 taxes by instalments?

If our records show that you may have to pay your taxes by instalments, we will send you an Instalment Reminder in advance, showing the amount we suggest you pay and the date the payment is due. To find out if you should pay your 1998 taxes by instalments, estimate your 1998 tax and credits. Use those amounts to complete the chart below, which contains the most common factors to consider. If you would like to know all of the factors, or if you want to calculate your instalment payments, get Form T1033-WS, Worksheet for Calculating 1998 Instalment Payments.

1998 Instalment requirements

Total payable (line 435) not including amounts on lines 421 and 424			$	______	1
Tax credits (line 482)		______	2
Total of amounts on lines 448, 450, 457, and 476	-	______	3
Line 2 minus line 3			-	______	4
Line 1 minus line 4			$	______	5

You may have to pay your 1998 taxes by instalments if both of the following apply:

• the amount on line 5 above is more than $2,000 ($1,200 if you live in Quebec) for 1998; and
• using the same calculation, the amount on line 5 above was more than $2,000 ($1,200 if you lived in Quebec) for 1997 or 1996.

For more information about instalment payments, or instalment interest charges, get the pamphlet called Paying Your Income Tax by Instalments.

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