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ARCHIVED - 1997 General Income Tax Guide

Net income

Line 206 - Pension adjustment

Enter on line 206 the total of all amounts in box 52 of your T4 or T4 Short slips, or box 34 of your T4A slips. Generally, this total represents the value of the benefits you earned in 1997 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 1998 registered retirement savings plan (RRSP) deduction limit, which we will show on your Notice of Assessment for 1997. 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 1997, you may have to enter an amount on this line. For details, contact us.

Line 207 - Registered pension plan (RPP) deduction

Enter the total of all deductible amounts you contributed to your RPPs. These amounts are included in box 20 of your T4 or T4 Short slip, in box 32 of your T4A slip, or on your union or RPP receipt. Generally, you cannot claim contributions to pension plans in foreign countries.

You can deduct the total amount unless it is more than $3,500 and your information slip shows a past-service amount. If this is the case, get the income tax guide called RRSPs and Other Registered Plans for Retirement for information on how much you can deduct. You should also get that guide if you contributed to an RPP in a previous year and could not deduct part of the amount.

Generally you have to start receiving a pension from your RPP by the end of the year you turn 69. However, if, before March 6, 1996, your RPP already provided a specific starting date for your pension benefits, that date will remain in effect.

Receipts - With the exception of your T4, T4 Short, and T4A slips, do not include your receipts with your paper return. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider. In either case, you have to keep them in case we ask to see them.

Line 208 - Registered retirement savings plan (RRSP) deduction

This section gives general information on RRSPs. If you need more information after reading this section, get the income tax guide called RRSPs and Other Registered Plans for Retirement.

Receipts -Attach to your paper return official receipts for all amounts you contributed from March 2, 1997, to March 1, 1998, including those you are not deducting on your 1997 return and those you are designating as Home Buyers' Plan repayments. See "Home Buyers' Plan (HBP) repayments" on page 23. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider, and keep them in case we ask to see them.

Also attach Schedule 7 if you have to complete it. See "Schedule 7, RRSP Contributions, Transfers, and Designations of Repayments Under the Home Buyers' Plan " on page 22.

You may have made contributions from January 1, 1997, to March 1, 1997, that you did not deduct on your 1996 return. If you did not attach the receipts and a properly completed Schedule 7 to your 1996 return, see "Undeducted RRSP contributions" on page 22.

We will accept a photocopy of a receipt only if the issuer certifies that it is a true copy. If you contributed to your spouse's plan, the receipt has to show your name as the contributor and your spouse's name as the annuitant.

Maximum you can deduct

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

• your "1997 RRSP deduction limit" plus income eligible for transfer that you received in 1997 and transferred to your RRSP on or before March 1, 1998, (see "Transfers" later in this section); or
• the total of your RRSP contributions made from March 2, 1997, to March 1, 1998, plus the undeducted RRSP contributions shown on your 1996 Notice of Assessment or Notice of Reassessment.

Your RRSP contributions - This includes amounts you contributed to your own RRSP or an RRSP for your spouse based on your "1997 RRSP deduction limit." They also include transfers and amounts you are designating as Home Buyers' Plan (HBP) repayments. For more information about these subjects, see later in this section.

Note
Your RRSP contributions do not include the following amounts:

• Any RRSP contribution you made on or after March 2, 1997, that was refunded to you or your spouse in 1997 because it was an undeducted contribution. Report the refund on line 129 of your 1997 return. If you have Form T3012A, Tax Deduction Waiver on the Refund of Your Undeducted RRSP Contributions, that we have approved for that amount, attach it to your return and claim a deduction on line 232. Otherwise, attach a completed Form T746, Calculating Your Deduction for Refund of Undeducted or Excess RRSP Contributions, to find out if you can claim this deduction.
• Part or all of the contributions you made to your RRSP or an RRSP for your spouse less than 90 days before you or your spouse withdrew funds from that RRSP under the Home Buyers' Plan. For more details, get the pamphlet called Home Buyers' Plan (HBP).
• Any payments directly transferred to your own RRSP for which you did not receive an information 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 1997 return, and deducting on line 232. You can complete Form T1043, Calculating Your Deduction to Offset RRSP or RRIF Income if an Excess Amount from an RPP Has Been Transferred to an RRSP or a RRIF, to calculate the deductible amount.

Generally neither you nor your spouse can contribute to your RRSP after the end of the year you turn 69. However, if you were 70 or 71 at the end of 1997, you and your spouse were allowed to make contributions to your RRSP until the end of 1997. If an RRSP annuity contract you purchased before March 6, 1996, already specifies the amount, frequency, and specific starting date, that date will remain in effect.

You may no longer be able to contribute to your own RRSP, but still have an RRSP deduction limit that you have not used. If so, you can still contribute to an RRSP for your spouse (and deduct the contributions) as long as your spouse's age allows.

Transfers - You may have received certain types of income and reported them on line 115, 129, or 130 of your 1997 return. If you contributed any of these amounts to your own RRSP on or before March 1, 1998, you can deduct this contribution, called a transfer, in addition to any RRSP contribution you make based on your "1997 RRSP deduction limit." Include the amounts you are transferring on lines 240 and 245 of Schedule 7.

For example, if you received a retiring allowance in 1997, you would report it on line 130 of your return. You can contribute to your RRSP up to the eligible part of that income, and deduct it as a transfer.

If you transfer amounts to an RRSP, you may have to pay minimum tax. See "Minimum tax" on page 40 for details.

Overcontributions - If you contribute to an RRSP more than you can deduct, you may have to pay a special tax.

The income tax guide called RRSPs and Other Registered Plans for Retirement gives more details on contributions, deductions, transfers, and overcontributions.

1997 RRSP deduction limit

We will show your 1997 RRSP deduction limit on your latest Notice of Assessment or Notice of Reassessment for 1996, or on Form T1028, Your RRSP Deduction Limit Statement for 1997.

If you do not have your notice or Form T1028, you can find out your limit for 1997 by calling our automated T.I.P.S. (RRSP) service, or by contacting your tax services office. See the T.I.P.S. information in the forms booklet.

If you would like to calculate your 1997 RRSP deduction limit, get the income tax guide called RRSPs and Other Registered Plans for Retirement.

Note
You can carry forward the part of your RRSP deduction limit that you do not use. The amount you can carry forward is called your unused RRSP deduction room. Your RRSP deduction limit includes any unused RRSP deduction room accumulated after 1990.

You can carry forward indefinitely your unused RRSP deduction room accumulated after 1990.

You may have earned income in a previous year for which you did not file a return. In order to update your RRSP deduction limit, you would have to file a return for that year.

Schedule 7, RRSP Contributions, Transfers, and Designations of Repayments Under the Home Buyers' Plan

You have to complete this schedule and attach it to your return if any of the following applies. You:

• contributed amounts to your own RRSP or your spouse's RRSP from March 2, 1997, to March 1, 1998, which you will not be claiming in full on your 1997 return;
• reported eligible income on line 115, 129, or 130 of your return, transferred all or part of these amounts to your RRSP, and claimed a deduction on line 208 for these transferred amounts; or
• want to designate all or part of your RRSP contributions as a 1997 repayment under the Home Buyers' Plan (HBP).

There is an example of how to complete Schedule 7 on page 23. It is important that you complete this schedule, because the information you provide allows us to verify any claim for undeducted RRSP contributions on your future returns. This information will also enable us to tell you, on your Notice of Assessment or Reassessment for 1997, your undeducted RRSP contributions available for you to deduct on your 1998 return.

Undeducted RRSP contributions - You may have made a contribution to your own RRSP or an RRSP for your spouse that you did not deduct on any income tax return. This could happen if you made a contribution to your RRSP that is more than your RRSP deduction limit for the year. It could also happen if you chose not to claim an RRSP contribution you made in a year.

If you made contributions in the first 60 days of 1998 (January 1, 1998, to March 1, 1998) that you are not deducting on your 1997 return, be sure to complete Schedule 7 and include the contributions on line 245. Otherwise, we may reduce or disallow any claim for these contributions you may make on your return for a future year.

Note
If you made RRSP contributions from March 1, 1996, to March 1, 1997, that you did not deduct on your 1996 return, you should have filed a completed Schedule 7 with your 1996 return. If you did not, you should submit a completed copy of a 1996 Schedule 7 to your tax centre. See "How do you change your return?" on page 9 for details. However, if either of the following applies, contact us:

• You made a contribution from January 1, 1991, to March 1, 1995, and you did not show it on Schedule 7 for 1994.
• You made a contribution from March 2, 1995, to February 29, 1996, and you did not show it on Schedule 7 for 1995.

If you do not have your 1996 Notice of Assessment or Notice of Reassessment, you can find out if you have undeducted RRSP contributions for 1996 by calling our automated T.I.P.S. (RRSP) service. See the T.I.P.S. information in the forms booklet.

Income transferred - Include on line 245 of Schedule 7 all eligible amounts you reported on lines 115, 129, or 130 of your 1997 return and contributed to your own RRSP on or before March 1, 1998. Enter this amount on line 240 of Schedule 7 as well. See "Transfers" earlier in this section.

Home Buyers' Plan (HBP) repayments - If you withdrew funds from your RRSP under the HBP in 1995, you have to make your first annual repayment on or before March 1, 1998. If you withdrew funds in 1996, you have to make your first annual repayment on or before March 1, 1999. If you withdrew funds in 1997, you have to make your first annual repayment on or before February 29, 2000. Do not make the repayment to us.

If you participated in the HBP and withdrew funds in 1995 or earlier, you should have received a Home Buyers' Plan Statement of Account for 1997 from us in the fall of 1996. The statement will show the amount you have to repay to your RRSP for 1997. Your statement will also confirm the total amount you have repaid to date.

Note
If you have not repaid the amount indicated on your statement of account on or before March 1, 1998, you have to include an amount in income. See line 129 for details.

Enter on line 246 of Schedule 7 the total of the RRSP contributions you made to your own RRSP from January 1, 1997, to March 1, 1998, that you want to designate as repayments under the HBP for 1997. Do this only if you did not deduct them or designate them as repayments on your 1996 return, and they were not refunded to you. You cannot deduct on your return any RRSP contribution you designate as an HBP repayment on Schedule 7.

If you would like more information, get the pamphlet called Home Buyers' Plan (HBP).

Example
Kristen made contributions of $1,000 to her RRSP on August 14, 1997, and $100 on January 19, 1998, February 11, 1998, and March 1, 1998. Kristen's 1997 RRSP deduction limit, shown on her 1996 Notice of Assessment, is $900. She did not have any undeducted RRSP contributions from 1996.

In addition, Kristen did not transfer any eligible income to her RRSP, and she did not have to designate a Home Buyers' Plan repayment for 1997. Kristen completes her Schedule 7 as follows:

Undeducted RRSP contributions from your 1996 Notice of Assessment or Notice of Reassessment							0	00	1
RRSP contributions made from March 2, 1997, to March 1, 1998					245	+	1,300	00	2
Add lines 1 and 2						=	1,300	00	3
RRSP contributions made from January 1, 1997, to March 1, 1998, you are designating as your HBP
repayment (do not include any amounts that you will be including on lines 6 and 7 below)					246	-	0	00	4
RRSP contributions available to deduct for 1997 (line 3 minus line 4)						=	1,300	00	5
Deduction you are claiming for 1997 for contributions you made to your RRSP or your spouse's RRSP based on your 1997 RRSP deduction limit			900	00	6
Eligible income reported on line 115, 129, or 130 that you transferred to your RRSP	240	+	0	00	7
Add lines 6 and 7 (the total cannot exceed the amount on line 5) Enter this total on line 208 of your return.		=	900	00		-	900	00	8
Undeducted RRSP contributions available to carry forward to 1998: Line 5 minus line 8						=	400	00	9

Kristen enters $900 on line 208 of her 1997 return, and attaches all $1,300 worth of her receipts and the completed Schedule 7 to her return. Kristen also has undeducted RRSP contributions of $400 that will be shown on her 1997 Notice of Assessment.

Note
When Kristen completes her 1998 income tax return, she will enter $400 on line 1 of the Schedule 7 that she will file with that return, in order to claim a deduction for those contributions.

Line 209 - Saskatchewan Pension Plan deduction

You may be able to deduct contributions for 1997 to the Saskatchewan Pension Plan (SPP). You can deduct whichever of the following three amounts is least:

• $600;
• the total amount you contributed (or your spouse contributed for you) to the SPP from January 1, 1997, to March 1, 1998, (not including any contributions that you deducted on your 1996 return); or
• your 1997 RRSP deduction limit minus your RRSP deduction from line 208 (not including transfers to your RRSP).

Receipts - Attach your receipts to your paper return. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider, and keep them in case we ask to see them.

Note
You can only claim amounts you contributed (or your spouse contributed for you) to your own plan. Only your spouse can claim amounts you or your spouse contributed to your spouse's plan.

Line 212 - Annual union, professional, or like dues

Enter the total of the following amounts:

• annual membership dues you paid to a trade union or an association of public servants;
• professional or malpractice liability insurance premiums or professional membership dues you paid if you had to pay them to keep a professional status recognized by law; and
• dues you paid to a parity or advisory committee (or similar body) that you had to pay under provincial law.

Annual membership dues do not include initiation fees, 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 you paid, as shown in box 44 of your T4 or T4 Short slip or on your receipt, includes any goods and services tax/harmonized sales tax (GST/HST).

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

Receipts - With the exception of your T4 or T4 Short slip, do not include your receipts with your paper return. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider. In either case, you have to keep them in case we ask to see them.

Line 214 - Child care expenses

You may be able to claim expenses you (or your spouse, if you have one) paid for someone to look after your children who, at any time in 1997, either were under 16 or had a mental or physical infirmity. The expenses must have been paid so that you (or your spouse) could do one of the following in 1997:

• earn income from employment or self-employment;
• spend at least 10 hours per week for at least 3 consecutive weeks studying in an educational program at a secondary school, or a college, university, or other designated educational institution;
• take an occupational training course for which you or your spouse received a training allowance under the National Training Act; or
• conduct research or similar work for which you or your spouse received a grant.

To make your claim, get Form T778, Child Care Expenses Deduction for 1997. However, if you claimed child care expenses on your 1996 return, the tax package we mailed to you should include this form. Attach a completed Form T778 to your return.

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

Line 215 - Attendant care expenses

Under proposed changes, the $5,000 limit has been eliminated on claims for expenses you paid for attendant care that allowed you to earn certain income. This includes income from employment or self-employment, a training allowance you received under the National Training Act for taking an occupational training course, and a research grant you received for conducting research. To calculate the amount you can claim, complete Form T929, Attendant Care Expenses.

For more information, call our T.I.P.S. (Info-Tax) service. See the T.I.P.S. information in the forms booklet. You also can get the guide called Information Concerning People with Disabilities. which contains Form T929.

Receipts - Do not include your receipts or Form T929 with your paper return. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider. In either case, you have to keep them in case we ask to see them.

Line 217 - Business investment loss

A business investment loss is a special type of capital loss. For instance, such a loss can occur when you dispose of shares or certain debts of a small business corporation.

If you incurred a business investment loss, get the income tax guide called Capital Gains for details on how to complete line 217 and line 228. This line is located to the left of line 217.

If you have a tax shelter, see "Tax shelters" on page 12.

Line 219 - Moving expenses

If you moved in 1997, you may be able to deduct your moving expenses from income you earned at the new location. You can deduct your expenses if all of the following apply:

• You moved to start a job or a business, or to study full-time at an educational institution that offers post-secondary courses.
• Your new home is at least 40 kilometres (by the shortest normal public route) closer than your previous home to your new workplace or school.
• Your move was from one place in Canada to another place in Canada. However, if you were a deemed resident (as described on page 7) or factual resident (as described on page 6) you may be able to claim expenses for a move outside Canada.

How to claim

Get Form T1-M, Claim for Moving Expenses. You have to complete Form T1-M to determine how much you can deduct.

Note
If you moved in 1996 but could not claim all your moving expenses in that year, you can claim the remaining expenses against income you earned in 1997 at the new location.

Receipts - Do not include your receipts or Form T1-M with your paper return. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider. In either case, you have to keep them in case we ask to see them.

Line 220 - Support payments

The term "support" used in this section replaces the former references to "alimony" and "maintenance." It refers to both spousal and child support.

Enter on line 230 the total amount of spousal and child support you paid in 1997. Enter on line 220 the deductible amount. For information about non-deductible amounts, see "Child support" later in this section.

Generally, you can deduct support payments, if all of the following conditions are met:

• When you made the payments, you and the person to whom or for whom you made the payments were living apart because of a breakdown in the relationship.
• You made the payments under a court order or written agreement.
• You made the payments to maintain your spouse or former spouse, your children, or both.
• The payments were an allowance to be paid periodically, such as monthly, quarterly, semi-annually, or annually.

Note
There are exceptions to these conditions. If you separated in 1997, or if you do not know whether the payments you made are deductible, get the pamphlet called Support Payments.

You may have to report as income any reimbursement you received under a court order for alimony or maintenance payments. For details, get the pamphlet called Support Payments.

Child support

Generally, you cannot deduct from your income child support that becomes payable after April 30, 1997, under a court order or written agreement dated May 1, 1997, or later. There may be an exception if your order or agreement recognizes such payments you made before May 1, 1997. For more information, see the pamphlet called Support Payments.

You can deduct from your income amounts paid that became payable under orders and agreements dated before May 1, 1997, unless one of the following applies:

• The order or agreement provides that the amounts payable on or after a specific date (May 1, 1997, or later) will not be deductible by you.
• The order or agreement is amended after April 30, 1997, to vary the amounts payable on or after a specific date (May 1, 1997, or later).
• You and the recipient jointly elect, using Form T1157, Election for Child Support Payments, that the new rules will apply as of a specific date (May 1, 1997, or later). For more information, see the pamphlet called Support Payments, which includes this form.

Note
You may have to pay both child support that is not deductible under the new rules and deductible spousal support. If so, and your child support is in arrears, you will not be able to deduct any support payments until you pay all of the required child support.

You may have to register your court order or written agreement by using Form T1158, Registration of Family Support Payments. For more information, see the pamphlet called Support Payments, which includes this form.

Receipts - Do not include your receipts or cancelled cheques, or your court order with your paper return. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider. In either case, you have to keep them in case we ask to see them.

Tax Tip
If your court order or written agreement was signed in 1997, and it mentions the payments you made in 1996, you can ask us to adjust your 1996 return to claim those payments. See "How do you change your return?" on page 9 .

Line 221 - Carrying charges and interest expenses

You may be able to claim carrying charges and interest you paid to earn income from investments. To make your claim, complete Part IV of Schedule 4.

Carrying charges

Carrying charges include any of the following:

• fees for the management or safe custody of investments (other than administration fees you paid for your registered retirement savings plan or registered retirement income fund);
• safety deposit box charges;
• fees for certain investment advice (see Interpretation Bulletin IT-238, Fees Paid to Investment Counsel) or for recording investment income; and
• fees to have someone complete your tax 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).

You cannot deduct on line 221 any 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 the income tax guide called Capital Gains.

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.

Interest expenses

You can usually deduct the interest you paid on money you borrowed to earn investment income (such as interest or dividends, but not including capital gains). Generally, if you no longer use the borrowed money to earn income, you can no longer deduct the interest you paid on that money. However, if you no longer use the borrowed money to earn investment income in 1997, and any part of the borrowed money has been lost because the value of the property has declined, you may be able to deduct all or a part of the interest you paid on that money. For details, contact us.

Note
You cannot deduct the interest you paid on money you borrowed to contribute to a registered retirement savings plan (RRSP).

Canada Savings Bonds (CSBs) - When you buy bonds through payroll deductions, you pay an interest charge. You can claim this amount on line 221.

Example
Michael bought $1,000 of Series 51 CSBs through payroll deductions. The total amount deducted from his pay for the bond was $1,013.32 (composed of the $1,000 face value of the bond plus $13.32 he paid in interest). Michael can claim the $13.32 on line 221.

Policy loan interest - To claim interest you paid during 1997 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, 1998.

Receipts - Do not include your receipts or Form T2210 with your paper return. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider. In either case, you have to keep them in case we ask to see them.

If you have a tax shelter, see "Tax shelters" on page 12.

Line 224 - Exploration and development expenses

If you invested in a petroleum, natural gas, or mining venture in 1997, 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 Part V of Schedule 4 using the information that the principals of the venture give you.
• Attach to your return either a T5013 slip, Statement of Partnership Income, or a statement that gives details of the deduction.

The statement has to identify you as a participant in the venture, 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 a tax shelter, see ";Tax shelters" on page 12.

Renounced resource expenses - If you received a T101 or T102 slip, use the instructions on the back of the slip to calculate your deduction. Attach to your return your slip and a note showing how you calculated your deduction.

Depletion allowances - Claim these amounts on line 232.

If you have any questions about these expenses, contact theBusiness Enquiries section of your tax services office. For the address and telephone number, see the listings under "Revenue Canada" in the Government of Canada section of your telephone book.

Line 229 - Other employment expenses

You may be able to deduct certain expenses you paid (including any goods and services tax/harmonized sales tax (GST/HST) you paid) to earn employment income if both of the following apply:

• under your employment contract, you had to pay the expenses; and
• you did not receive an allowance for the expenses, or the allowance you received is included in your income.

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

You have to include with your return certain details about your employment expenses. Form T777, Statement of Employment Expenses, lists these details and will also help you calculate how much you can deduct. Attach a completed copy of this form to your return.

The income tax guide called Employment Expenses contains Form T777 and other forms you will need. The guide also explains the limits and conditions that apply when you claim employment expenses.

Artists' employment expenses - If you are an artist who is an employee, you may be able to deduct expenses you paid to earn income from certain artistic activities. For details, get the income tax guide called Employment Expenses.

Repayment of salary or wages - You can deduct salary or wages you reported as income on this year's return (or on a previous year's return) and which you repaid in 1997. This includes amounts you repaid for a period when you were entitled to receive wage-loss replacement 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. However, you have to reduce your claim by any amount awarded to you, or any reimbursement you received for your legal expenses.

Receipts - Do not include your receipts or forms with your paper return, except for Form T777. If you are using EFILE (see "Filing your return" on page 7) show them to your EFILE service provider. In either case, you have to keep them in case we ask to see them.

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

Line 232 - Other deductions

Use this line to deduct the amounts explained in this section. Identify the deduction you are claiming in the space to the left of line 232. If you have more than one kind of deduction, or you want to explain your deduction more fully, attach a note to your return.

Repaying income amounts

If, in 1997, you repaid amounts (other than employment income, see "Repayment of salary or wages" under line 229) that you already reported as income, you may be able to deduct them on your 1997 return. Attach receipts or other documents showing the amounts you repaid. You can claim repayments of any of the following:

• Employment Insurance (EI) benefits (see the explanation later in this section);
• Old Age Security or Canada or Quebec Pension Plan benefits;
• retiring allowances (severance pay);
• refund interest (see the explanation later in this section);
• scholarships, fellowships, and bursaries;
• allowances under the National Training Act;
• research grants;
• benefits under the Labour Adjustment Benefits Act;
• loans under a life insurance policy up to the amount that you previously included in your income;
• amounts you received under the Program for Older Worker Adjustment; and
• income assistance payments you received under The Atlantic Groundfish Strategy.

EI benefits - You may have received more benefits than you should have, and already repaid them to Human Resources Development Canada (HRDC). For example:

• HRDC 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 HRDC. If so, your T4E slip will show the amount you repaid. Include this amount on line 232. This is not the same as repaying a social benefit as explained at line 235.

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 explained at line 121 in this guide. If we then reassessed your return and you repaid some of the refund interest in 1997, you can deduct the amount you repaid.

Legal fees

You can deduct any of the following:

• fees you paid for advice or assistance 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, or the Quebec Pension Plan, plus any related accounting fees (although you have to reduce your claim by any award or reimbursements you received for such expenses);
• fees you incurred to collect late support payments that you will include in your income or non-taxable child support payments;
• fees you incurred to get a court order when you have to sue your spouse or former spouse, or the natural parent of your child, for maintenance payments (including non-taxable child support payments) in a Family Court; and
• fees you paid 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 also have to reduce your claim by any award or reimbursement you got for these expenses. You can carry forward legal fees that you cannot claim in the year for up to seven years.

However, you cannot claim legal costs to obtain a divorce or separation, to establish or revise a right to support payments, or to establish custody of a child.

For information on whether you can deduct other legal fees, get Interpretation Bulletin IT-99, Legal and Accounting Fees.

Other amounts you can deduct

You can also deduct any of the following on this line:

• depletion allowances (complete Part VI of Schedule 4, and attach a statement showing how you arrived at your claim);
• a refund to you or your spouse, in 1997, of an undeducted RRSP contribution that you made after 1990 (attach an approved Form T3012A, Tax Deduction Waiver on the Refund of Your Undeducted RRSP Contributions, or Form T746, Calculating Your Deduction for Refund of Undeducted or Excess RRSP Contributions);
• an amount for a cleric's residence (get Interpretation Bulletin IT-141, Clergymen's Residences, for details); and
• capital cost allowance on a Canadian certified feature film or certified production. You have to file with your return information slip T1-CP, Statement of Certified Productions, which the producer issues. Otherwise, we may disallow your claim. Use the back of the T1-CP slip to calculate your allowable claim. If you are a limited partner of a partnership, make your claim on line 122.

If you have a tax shelter, see "Tax shelters" on page 12.

Line 235 - Social benefits repayment

Employment Insurance (EI) benefits

You may have to repay part of the EI benefits (line 119) you received in 1997, if one of the following applies:

• There is an amount in box 15 of your T4E slip, the repayment rate in box 7 is 30%, and your net income before adjustments (line 234) is more than $48,750.
• There is an amount in box 16 of your T4E slip, and your net income before adjustments (line 234) is more than $48,750.
• There is an amount in box 15 of your T4E slip, the repayment rate in box 7 is more than 30%, and your net income before adjustments (line 234) is more than $39,000.

Beginning for 1997, you should complete one or both of the charts included with 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) pension benefits or net federal supplements that you received (see the next section) enter, on lines 7 and 13 of the chart on this page, the EI benefits that you have to repay.

Old Age Security (OAS) pension benefits and net federal supplements

If you received OAS pension (line 113) or net federal supplements (line 146) and your net income before adjustments (line 234) is more than $53,215, you may have to repay all or a part of these benefits. Complete the chart on this page to calculate how much you have to repay.

Note
Recovery tax may have been withheld from your monthly OAS amount if you had an OAS repayment for 1996. The amount deducted is shown as "income tax deducted" in box 22 of your 1997 T4A(OAS) or T4A(P) slip. Claim it on line 437, to reduce the amount of tax you owe when you file your 1997 return. Similarly, if you have an OAS repayment for 1997, tax may be withheld starting with your July 1998 OAS amount. For more details, contact us.

OAS pension and net federal supplements repayment
OAS pension from line 113	$	________		1
Net federal supplements from line 146	+	________		2
Line 1 plus line 2	$	________		3
OAS pension you repaid in 1997 and claimed on line 232	-	________		4
Line 3 minus line 4 (if negative, enter "0")	$	________		5
Net income before adjustments from line 234	$	________		6
EI benefits repayment from line 10 of chart 1 or line 14 of chart 2 included with your T4E slip (if any)	-	________		7
Line 6 minus line 7	$	________		8
Base amount	-	53,215.00		9
Line 8 minus line 9 (if negative, enter "0")		________		10
		× 15%
Multiply line 10 by 15% and enter the result on this line	$	________		11
OAS pension and net federal supplements repayment: Enter either line 5 or line 11, whichever is less.	$	________		12
Amount from line 7 above (if any)	+	________		13
Total social benefits repayment payable (line 12 plus line 13)	$	________		14

Enter the amount from line 14 on lines 235 and 422 of your return.

Taxable income

Line 237 - Accumulated forward-averaging amount withdrawal

If you made a forward-averaging election for 1987 or earlier, you may want to bring some or all of your accumulated averaging amount into income on your 1997 return. To do this, get Form T581, Forward Averaging Tax Credits. Attach a completed copy to your return. You have to file your return and Form T581 by the filing due date.

Note
The return for 1997 is the last return on which you will be able to withdraw previously averaged amounts.

Line 248 - Employee home relocation loan deduction

Generally, you enter the amount shown as "Home Loan $xxx" in the footnotes area of your T4 slip. However, there is a limit to the amount you can deduct. To find out this limit for 1997, contact the Business Enquiries section of your tax services office. For the address and telephone number, see the listings under "Revenue Canada" in the Government of Canada section of your telephone book.

Line 249 - Stock option and shares deductions

If you have an amount in box 38 of your T4 slip, enter on this line the amount shown as "Stock-Option 110(1)(d) $xxx" or "Stock-Option 110(1)(d.1) $xxx" in the footnotes area.

Line 250 - Other payments deduction

Generally, you can deduct the amount from line 147 of your return. This is the total of the Workers' Compensation payments, social assistance payments, and net federal supplements you entered on lines 144, 145, and 146.

Note
If your net income before adjustments (line 234) is more than $53,215 and you reported net federal supplements on line 146, you may not be entitled to claim the whole amount from line 147. Contact us to determine how much you can deduct.

Line 251 - Limited partnership losses of other years

If you had limited partnership losses in previous years that you have not already deducted, you may be able to claim part of these losses. For details, contact us.

You can carry forward limited partnership losses indefinitely. If you claim these losses, attach a statement showing a breakdown of your total losses and the year of each loss. You cannot use the amount in box 23 of your 1997 T5013 slip on your 1997 return.

Line 252 - Non-capital losses of other years

Enter the amount of your unapplied non-capital losses you reported on your 1990 to 1996 tax returns, or your unapplied farming and fishing losses you reported on your 1987 to 1996 tax returns, that you want to apply in 1997. There are restrictions on the amount of certain farm losses that you can deduct each year. If you have a farming or fishing business, get the Farming Income, Farming Income and NISA, or Fishing Income tax guide for details.

If you need more information on losses, get Interpretation Bulletin IT-232, Losses - Their Deductibility in the Loss Year or in Other Years.

Note
You may want to carry back your 1997 non-capital or farming and fishing loss to your 1994, 1995, or 1996 return. To do this, use the Form T1A, Request For Loss Carry-Back, that is in the Farming Income, Farming Income and NISA, and Fishing Income tax guides, or get one from us. Attach a completed copy to your return. Do not file an amended return for the year or years to which you want to apply the loss.

Line 253 - Net capital losses of other years

Within certain limits, you can deduct your net capital losses of previous years that you have not already claimed. For details, get the income tax guide called Capital Gains.

Note
If you incurred a net capital loss in 1997, and you want to apply it against taxable capital gains you reported on your 1994, 1995, or 1996 return, get Form T1A, Request for Loss Carry-Back. Attach a completed copy to your return. Do not file an amended return for the year or years to which you want to apply the loss.

Line 254 - Capital gains deduction

You can claim a capital gains deduction for gains realized on qualified small business corporation shares and qualified farm property. For more details on this deduction, get the income tax guide called Capital Gains.

Line 255 - Northern residents deductions

To make your claim, use Form T2222, Northern Residents Deductions - 1997. Residents of the Yukon Territory and the Northwest Territories will find this form in their forms booklet.

If you do not live in the Yukon Territory or the Northwest Territories, but you were allowed this claim on your 1996 return, we will mail the form to you at the address we have on file.

If you were not allowed these deductions last year, or if you do not receive Form T2222 by late February, you can get a copy from us. For a list of the areas that qualify, get Form T4039, Northern Residents Deductions - Places in Prescribed Zones.

Line 256 - Additional deductions

Income exempt under a tax treaty

You can claim a deduction for foreign income you included on your return (such as support payments you received from a resident of another country and reported on line 128) if it is tax-free in Canada because of a tax treaty. If you received foreign income and you do not know whether it is tax-free in Canada, contact us.

Note
You can deduct the amount of U.S. social security benefits you reported on line 115, because it is tax-free in Canada. However, see the next paragraph for new rules that will apply. You cannot claim any credit for U.S. tax withheld on these benefits.

Under proposed changes to the Canada-U.S. tax treaty, you will be able to claim a deduction for only 15% of your U.S. social security benefits. However, these payments will no longer be subject to U.S. withholding tax.

These changes will affect all payments made in 1996 and later taxation years, but will be applied to payments and returns only after the Canadian and U.S. governments approve the changes. After they have been approved, we will calculate and send you any refund for 1996 and 1997 to which you will be entitled.

For the 1996 and 1997 taxation years, we will not charge any additional tax that may result from these changes.

Vow of perpetual poverty

If you are a member of a religious order and have taken a vow of perpetual poverty, you can deduct the amount of earned income and pension benefits that you have given to the order. Attach a letter from your order or your employer stating that you have taken a vow of perpetual poverty.

Employment with a prescribed international organization

You can claim a deduction for your net employment income from certain international organizations, such as the United Nations and its Specialized Agencies, that you reported on this return. Net employment income is your employment income from these agencies minus the related employment expenses that you are claiming.

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Date modified:

2002-02-04