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ARCHIVED - General Income Tax and Benefit Guide for Non-Residents and Deemed Residents of Canada 2000

Fe deral ta x calculation

Generally, the federal tax you have to pay is based on your taxable income (line 260). Use Schedule 1 to determine your federal income tax (which includes the surtax for non-residents and deemed residents of Canada) and your federal individual surtax. For information about calculating your provincial or territorial tax, see line 428.

Non-residents electing under section 217 - Your federal tax is based on the greater of: your taxable income (line 260) or your net world income after adjustments (line 16 on the Schedule A). In addition, you may be entitled to the
section 217 tax adjustment, see Line 445.

Minimum tax

Minimum tax limits the tax advantage you can receive in a year from certain incentives. You have to pay minimum tax if it is more than the federal tax you calculate in the usual manner. When calculating your taxable income for this tax, which does not apply to a person who died in 2000, you are allowed a basic exempt amount of $40,000.

Generally, to find out if you have to pay this tax, add together the amounts in the following section B and the amount on line 127 of your return. 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 it. To calculate if you have to pay it, use Form T691, Alternative Minimum Tax.

Below are the most common reasons why you may have to pay minimum tax:

A.		You reported a taxable capital gain on line 127.
B.		You claimed any of the following: a loss (including your share of a partnership loss) resulting from, or increased by, claiming capital cost allowance on rental properties or certified feature films or productions; a loss from a limited partnership; most carrying charges (line 221) on certain investments; 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; a deduction on line 248 for an employee home relocation loan; or a deduction on line 249 for employee stock options and shares.
C.		You claimed any of the following tax credits: a federal political contribution tax credit on lines 409 and 410; an investment tax credit on line 412; a labour-sponsored funds tax credit on line 414; or an overseas employment tax credit on Schedule 1 (see "Line 426 - Overseas employment tax credit" on page 50).

Example
Sergio claimed a $50,000 deduction in 2000 for carrying charges. Because this deduction is more than $40,000, Sergio may have to pay minimum tax. To find out, he should complete Form T691, Alternative Minimum Tax.

Tax Tip
You may be able to claim a credit against your taxes for 2000 if you paid minimum tax on any of your 1993 to 1999 returns. See "Line 427 - Minimum tax carry-over" on page 49 for details.

Schedule 1, Federal Tax Calculation

Use either Method A or Method B, whichever applies, on Schedule 1 to calculate your federal tax. Attach a completed copy to your return. If you have a straightforward tax situation, use Method A. Otherwise, use Method B. The information in this section will help you complete Schedule 1.

Method A

Line 445 - Section 217 tax adjustment

Complete this line only if you have entered on line 1 of Schedule 1 the amount from line 16 of Schedule A.

If this is your situation, to determine the amount to enter on line 445, complete the "Section 217 tax adjustment" chart on page 59 of this guide.

Line D - Surtax f or no n-residents and deemed residents of Canada

You pay this tax instead of a provincial or territorial tax. If you did not have a business with a permanent establishment in Canada, follow the instructions on line D to calculate this surtax.

If you had income from a business with a permanent establishment in Canada, you have to pay provincial or territorial tax on that income. Use Form T2203, Provincial and Territorial Taxes for 2000 - Multiple Jurisdictions, to calculate your provincial or territorial tax (except for Quebec). Attach a copy of the form to your return.

Method B

Line 425 - Federal dividend tax credit

If you reported dividends on line 120, enter on line 425 of 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).

Line 426 - Overseas e mployment tax credit

You may be able to claim this credit if both of the following apply for 2000:

• You were a resident or deemed resident (see page 9) 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 1993 to 1999 returns, but you do not have to pay minimum tax for 2000, you may be able to claim a credit against your taxes for 2000 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 to your return a completed copy of the form.

Line 445 - Section 217 tax adjustment

Complete this line only if you have entered on line 1 of Schedule 1 the amount from line 16 of Schedule A.

If this is your situation, to determine the amount to enter on line 445, complete the "Section 217 tax adjustment" chart on page 59 of this guide.

Line 429 - Basic federal tax

Your basic federal tax is a subtotal you use for certain calculations. For example, the federal individual surtax is generally a percentage of your basic federal tax.

Line I - Surtax f or non-residents and deemed residents of Canada

You pay this tax instead of a provincial or territorial tax. If you did not have a business with a permanent establishment in Canada, follow the instructions on line I to calculate this surtax.

If you had income from a business with a permanent establishment in Canada, you have to pay provincial or territorial tax on that income. Use Form T2203, Provincial and Territorial Taxes for 2000 - Multiple Jurisdictions, to calculate your provincial or territorial tax (except Quebec). Attach a copy of the form to your return.

Lines 431 and 433 - Federal foreign tax credit

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

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 foreign tax credits on line 24 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 to Canada on your net income from that country.

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

Non-residents and non-residents electing under section 217 - Generally, a non-resident is not eligible for a foreign tax credit. However, if you were a former resident of Canada who disposed of certain taxable Canadian property in 2000, you may be able to claim a foreign tax credit. Contact the International Tax Services Office for the special rules that may apply to you.

How to claim

• Complete the federal foreign tax credit area on Schedule 1 and attach the schedule (and Form T2209, if you use it) to your return.
• Attach a note showing your calculations. Show all amounts in Canadian dollars. See "How do you report foreign income and other amounts?" on page 13.
• Attach to your return proof, such as an official receipt, showing the foreign taxes you paid. If you paid taxes to the U.S., attach a copy of your U.S. 1040 return, (State return, if applicable), W-2 information slip, and any other supporting documents that apply.
• 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 calculation the amount shown in the financial statements or in box 33 of your T5013 slip.

Tax Tip
Deemed residents - Your federal foreign tax credit on non-business income may be less than the tax you paid to a foreign country. If so, you may be able to claim a deduction on line 232. You can claim the amount of net foreign taxes you paid for which you have not received a federal 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.

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 25 in Method B on Schedule 1. Subtract it from the amount on line 25, and enter the result on line 406 of your return. If the result is negative, enter "0."

Line 419 - Federal individual surtax

You may have to pay a federal individual surtax on your basic federal tax. Use Schedule 1 to calculate your federal individual surtax, if any.

Tax Tip
You may be able to reduce the federal individual surtax you have to pay by using the unclaimed part of any foreign tax credit or investment tax credit you can claim. For details, get Form T2209, Federal Foreign Tax Credits, and Form T2038 (IND), Investment Tax Credit.

Line 464 - Additional federal foreign tax credit

If you claimed a foreign tax credit, you may be able to claim an additional federal foreign tax credit. Use Part 2 of Form T2209, Federal Foreign Tax Credits, to calculate this credit.

Line 468 - Additional investment tax credit

You may be able to reduce your individual surtax by part of the unused investment tax credit you earned for 2000. See Form T2038 (IND), Investment Tax Credit, for details.

Date modified:

2002-11-30