ARCHIVED - Line 400 - Taxable income

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Generally, the tax you have to pay is based on your taxable income (line 260).

We have replaced the tax tables with a simplified tax calculation. Use Schedule 1, Federal Tax Calculation, to determine your federal income tax and federal individual surtax. For details, see the section called "Schedule 1, Federal Tax Calculation," on page 39.

Minimum tax

Read the following information to determine if minimum tax applies to you and whether you will need to complete Form T691, Calculation of Minimum Tax.

Minimum tax limits the tax advantage you can receive in a year from certain incentives. You have to pay minimum tax if this tax is more than the federal tax you calculate in the usual manner. You are allowed a basic exempt amount of $40,000 in calculating your taxable income for this tax. Minimum tax does not apply to people who died in 1995.

You may have to pay minimum tax if any of the following situations apply to you:

A. You claimed any of the following tax credits:

• an investment tax credit on line 412;
• an overseas employment tax credit;
• a federal political contribution tax credit on lines 409 and 410; or
• a labour-sponsored funds tax credit on line 414.

B. You reported a taxable capital gain on line 127.

C. You claimed any of the following:

• a deduction on line 207 for RPP contributions;
• a deduction on line 208 for RRSP contributions which were based on your 1995 RRSP deduction limit;
• a deduction for transferring retiring allowances to an RRSP (line 208) or an RPP (line 207);
• a deduction on line 248 for an employee home relocation loan;
• a loss (including your share of a partnership loss) resulting from, or increased by, claiming capital cost allowance on certified films and videotapes;
• a loss from resource properties resulting from, or increased by, claiming a depletion allowance, exploration expenses, development expenses, or Canadian oil and gas property expenses; or
• a deduction on line 249 for employee stock option and shares.

In most cases, you can determine whether you have to pay this tax by totalling the deductions mentioned in paragraph C above and one-third of the taxable capital gain amount on line 044 of Schedule 3. If the total is $40,000 or less, you probably do not have to pay minimum tax. If the total is more than $40,000, you may have to pay this tax. To calculate if you have to pay minimum tax, get Form T691, Calculation of Minimum Tax, from us.

Example

Josh claimed a deduction in 1995 for transferring $50,000 of his retiring allowance to his registered retirement savings plan. Since the deduction he claimed for transferring his retiring allowance to an RRSP is more than $40,000, Josh will probably have to pay minimum tax. To be certain, he should complete Form T691, Calculation of Minimum Tax.

Tax Tip

If you paid minimum tax for any years from 1988 to 1994, but you do not have to pay minimum tax for 1995, you may be able to apply the minimum tax you paid in those years against your 1995 taxes. See line 504 for details.

Date modified:

2002-02-04