5000-G Rev. 01

Net federal tax

Federal logging tax credit

If you paid logging tax to a province for logging operations you performed in the province, you may be able to claim a logging tax credit. To calculate your credit, use whichever of the following two amounts is less for each province in which you had a logging operation:

• 66.6667% of the logging tax paid for the year to the province; or
• 6.6667% of your net logging income for the year in the province.

Your allowable credit is the total of the credits for the year for all provinces, up to 6.6667% of your taxable income (line 260) not including any amounts on lines 208, 209, 214, 215, 219, and 220.

There is no line on the return to claim your tax credit. To claim this credit, write "federal logging tax credit" and the allowable amount below line 15 on Schedule 1. Subtract it from the amount on line 15, and use the result to calculate your net federal tax. If the result is negative, and you do not have to pay minimum tax enter "0" on line 17 of Schedule 1.

Lines 409 and 410 - Federal political contribution tax credit

Enter on line 409 the total you contributed during 2001 to a registered federal political party or a candidate for election to the House of Commons. Complete the chart for line 410 on the Federal Worksheet in the forms book to calculate your credit. However if your total political contributions are $1,075 or more, enter $500 on line 410.

Receipts - If you are filing a paper return, include your official receipts. You do not have to attach receipts for amounts shown in box 36 of your T5013 slips, or on financial statements showing an amount a partnership allocated to you. If you are filing electronically keep all of your documents in case we ask to see them.

Line 412 - Investment tax credit

You may be eligible for this credit if any of the following applies. You:

• bought certain new buildings, machinery, or equipment and they were used in certain areas of Canada in qualifying activities such as farming, fishing, logging, manufacturing, or processing;
• have unclaimed credits from the purchase of qualified small business property from December 3, 1992, to December 31, 1993;
• have an amount shown in box 41 of your T3 slip;
• have an amount shown in box 38 or 138 of your T5013 slip;
• have an amount shown in box 128 of your T101 slip;

• have an investment in a mining operation that allocates certain exploration expenditures to you; or

• have a partnership statement that allocates to you an amount that qualifies for this credit.

How to claim

Attach to your paper return a completed copy of Form T2038(IND), Investment Tax Credit (Individuals). For more information on the investment tax credit, see the information sheet attached to Form T2038(IND).

The time to submit a completed Form T2038(IND) for a qualifying expenditure is limited. To be able to claim a credit for such an expenditure, you have to send the completed form to us no later than 12 months after the due date of your return for the year the expenditure arises.

Tax Tip
You may be able to claim a refund of your unused investment tax credit (see line 454).

Lines 413 and 414 - Labour-sponsored funds tax credit

You may be able to claim a credit if you became the first registered holder to acquire, or irrevocably subscribe to and pay for, an approved share of the capital stock of a prescribed labour-sponsored venture capital corporation (LSVCC) from January 1, 2001, to March 1, 2002.

If you became the first registered holder of an approved share from January 1, 2001, to March 1, 2001, and did not claim the whole credit for it on your 2000 return, you can claim the unused part on your 2001 return. If you became the first registered holder of an approved share from January 1, 2002, to March 1, 2002, you can claim any part of the credit for that share on your return for 2001, and the unused part on your return for 2002.

Enter your net cost on line 413. Net cost is the amount you paid for your shares, minus any government assistance (other than federal or provincial tax credits) on the shares. Enter the amount of the credit on line 414. The allowable credit cannot be more than 15% of the net cost, to a maximum of $750.

Note
If the first registered holder of the share is an RRSP for spouse or common-law partner, either the RRSP contributor or the annuitant may claim this credit for that share.

Receipts - If you are filing a paper return, include your T5006 slips, Statement of Registered Labour-Sponsored Venture Capital Corporation Class A Shares, (or official provincial or territorial slips). If you are filing electronically keep them in case we ask to see them.

Tax Tip
Your province or territory may offer a similar tax credit. For details, see the provincial or territorial forms in the forms book, unless you were a resident of Quebec. In that case, see the guide for your provincial return.

Line 418 - Additional tax on RESP accumulated income payments

You may have received an accumulated income payment from a registered education savings plan (RESP) in 2001. If so, you may have to pay an additional tax on all or part of the amount in box 40 of your T4A slip. Enter the amount from line 10, 13, or 16 (whichever applies) on Form T1172, Additional Tax on Accumulated Income Payments From RESPs. For more details, get the Registered Education Savings Plans (RESPs) information sheet.

Line 421 - CPP contributions payable on self-employment and other earnings

See page 42.

Line 422 - Social benefits repayment

See page 42.

Line 424 - Federal tax on split income

Certain income of a child who was born in 1984 or later is treated differently (see "Split income of a child under 18"). If this tax applies, calculate it on Form T1206, Tax on Split Income, and enter the amount from line 4 on line 424 on Schedule 1.

Line 425 - Federal dividend tax credit

If you reported dividends on line 120, enter on line 425 on Schedule 1 the total of the dividend tax credits from taxable Canadian corporations shown on your information slips. If you did not receive dividend information slips, this is 13.3333% of the taxable amount of dividends from taxable Canadian corporations (see line 120).

Note
Foreign dividends do not qualify for this credit.

Line 426 - Overseas employment tax credit

You may be able to claim this credit if both of the following apply for 2001:

• You were a resident or deemed resident of Canada at any time in the year.
• You have employment income from certain kinds of work you did in another country.

To make your claim, use Form T626, Overseas Employment Tax Credit. For details, get Interpretation Bulletin IT-497, Overseas Employment Tax Credit, and Form T626.

Line 427 - Minimum tax carry-over

If you paid minimum tax on any of your 1994 to 2000 returns, but you do not have to pay minimum tax for 2001, you may be able to claim credits against your taxes for 2001 for all or part of the minimum tax you paid in those years.

To calculate your claim, complete the parts of Form T691, Alternative Minimum Tax, that apply. Attach the completed form to your paper return.

Line 428 - Provincial or territorial tax

See page 42.

Lines 431 and 433 - Federal foreign tax credit

This credit is for foreign income or profits taxes you paid on income you received from outside Canada and reported on your Canadian return. Tax treaties with other countries may affect whether you are eligible for this credit.

Note
You may have deducted an amount on line 256 for income that is not taxable in Canada under a tax treaty. In that case, do not include that income, or any tax withheld from it, in your foreign tax credit calculation.

If you paid tax to more than one foreign country, and the total non-business income tax you paid to all foreign countries is more than $200, you have to do a separate calculation for each country for which you claim a foreign tax credit. In that case, enter the total of your allowable federal foreign tax credit on line 14 of Schedule 1.

You also have to do a separate calculation for business income taxes paid to each foreign country. In that case, use Form T2209, Federal Foreign Tax Credits, to calculate your credit. You can carry unclaimed foreign business income taxes back three years and forward seven years.

In most cases, the foreign tax credit you can claim for each foreign country is whichever of the following two amounts is lower:

• the foreign income tax you actually paid; or
• the tax due in Canada on your net income from that country.

Note
If you paid tax on income from foreign property (other than real property) your foreign tax credit for the income from that property cannot be more than 15% of your net income from that property. However, you may be able to deduct on line 232 the part of the foreign taxes you paid over 15%.

For details on how to calculate your claim, get Interpretation Bulletin IT-270, Foreign Tax Credit.

How to claim

• Complete the federal foreign tax credit area on Schedule 1. Do all of your calculations in Canadian dollars. See "How do you report foreign income and other amounts?".
• If you were a member of a partnership and are entitled to claim a part of the foreign taxes the partnership paid, include in your calculations the amount shown in the financial statements or in box 33 of your T5013 slip.

Receipts - If you are filing a paper return, include Schedule 1 (and Form T2209, if you use it). Also include a note showing your calculations, and documents, such as official receipts, that show the foreign taxes you paid. If you paid taxes to the U.S., attach your W-2 information slip, U.S. 1040 return, and any other supporting documents that apply. If you are filing electronically keep these documents in case we ask to see them.

Tax Tips
Your federal foreign tax credit on non-business income may be less than the tax you paid to a foreign country. If so, and you were not a resident of Quebec, you may be able to claim a provincial or territorial foreign tax credit. Get Form T2036, Provincial Foreign Tax Credit, to help you calculate the credit. Attach a completed copy of the form to your paper return. If you were a resident of Quebec, see the guide for your provincial return.

Also, on line 232, you can deduct the amount of net foreign taxes you paid for which you have not received a federal, provincial, or territorial foreign tax credit. This does not include certain taxes you paid, such as those on amounts you could have deducted under a tax treaty on line 256. For details, get Interpretation Bulletin IT-506, Foreign Income Taxes as a Deduction From Income.