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ARCHIVED - Taxable income

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• Line 244 - Canadian Forces personnel and police deduction
• Line 248 - Employee home relocation loan deduction
• Line 249 - Security options deductions
• Line 250 - Other payments deduction
• Line 251 - Limited partnership losses of other years
• Line 252 - Non-capital losses of other years
• Line 253 - Net capital losses of other years
• Line 254 - Capital gains deduction
• Line 255 - Northern residents deductions
• Line 256 - Additional deductions
  • Income exempt under a tax treaty
  • Vow of perpetual poverty
  • Adult basic education tuition assistance
  • Employees of prescribed international organizations
• Federal tax and credits (Schedule 1)
  • Schedule A, Statement of World Income
  • Minimum tax

Line 244 - Canadian Forces personnel and police deduction

Enter the total of amounts shown in box 43 of all your T4 slips.

Under proposed legislation, this new deduction applies to 2004 and subsequent years. For certain members of the Canadian Forces and Canadian police services, an amount will be shown in box 43 only if you were deployed outside Canada on a high-risk or current moderate-risk operational mission. For more information, contact your employer.

Line 248 - Employee home relocation loan deduction

Enter the total of the amounts shown in box 37 of your T4 slips.

Line 249 - Security options deductions

Enter the total of the amounts shown in boxes 39 and 41 of your T4 slips. In addition, if you disposed of securities for which you had previously deferred the taxable benefit (see "Security option benefits"), claim 50% of the amount from line 4 of Form T1212, Statement of Deferred Security Options Benefits .

You may be able to claim a deduction for donating securities you acquired through your employer's security options plan. For details, see "Gifts of securities acquired under a security option plan" in pamphlet P113, Gifts and Income Tax .

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 $59,790 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 this year. For details, contact us.

You can carry forward limited partnership losses indefinitely. If you claim these losses, attach to your return a statement showing a breakdown of your total losses, the year of each loss, and the amounts deducted in previous years. You cannot use the amount in box 31 of your T5013 slip for 2004 on your return for 2004.

Line 252 - Non-capital losses of other years

Deemed residents - Previously, you would enter the amount of the unapplied non-capital losses you reported on your 1997 to 2003 returns that you want to apply in 2004. Under proposed legislation, the loss carry-forward period for non-capital losses arising in tax years ending after March 22, 2004, has been extended from seven to ten years.

Also, enter any unapplied farming and fishing losses you reported on your 1994 to 2003 returns that you want to apply in 2004. Your available losses are shown on your Notice of Assessment or Notice of Reassessment for 2003.

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 either guide T4003, Farming Income , RC4060, Farming Income and CAIS Program , or T4004, Fishing Income , 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 .

Non-residents and non-residents electing under section 217 - Contact the International Tax Services Office for the special rules that apply to you.

Line 253 - Net capital losses of other years

Deemed residents - Within certain limits, you can deduct your net capital losses of previous years that you have not already claimed. Your available losses are shown on your Notice of Assessment or Notice of Reassessment for 2003. You probably will have to adjust any losses you incurred after 1987 and before 2001. For details, get guide T4037, Capital Gains .

Non-residents and non-residents electing under section 217 - Contact us for the special rules that apply to you.

Line 254 - Capital gains deduction

You may be able to 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 guide T4037, Capital Gains .

Line 255 - Northern residents deductions

To make your claim, use Form T2222, Northern Residents Deductions . You can get a copy of this form in the forms book for residents of the Northwest Territories, Nunavut, and Yukon. You can also get a copy from us. For a list of the areas that qualify, get T4039, Northern Residents Deductions - Places in Prescribed Zones .

Receipts - If you are filing a return, include a completed Form T2222, but not your receipts. Keep them in case we ask to see them.

Line 256 - Additional deductions

In the space to the left of line 256, specify the deduction you are claiming. If you have more than one amount, or you want to explain your deduction more fully, attach a note to your return.

Income exempt under a tax treaty

Deemed residents - If you included foreign income on your return (such as support payments you received from a resident of another country and reported on line 128) that is tax-free in Canada because of a tax treaty, you can claim a deduction for it.

Note
Under the Canada-U.S. tax treaty, you can claim a deduction equal to 15% of the U.S. social security benefits included in your income on line 115.

Non-residents and non-residents electing under section 217 - You can claim a deduction for Canadian-source income you included on your return if it is tax-free in Canada because of a tax treaty. If you do not know whether any part of the foreign income is tax-free, contact us.

Vow of perpetual poverty

If you have taken a vow of perpetual poverty as a member of a religious order, you can deduct the amount of earned income and pension benefits that you have given to the order. Attach to your return a letter from your order or your employer stating that you have taken a vow of perpetual poverty. For more information, see Interpretation Bulletin IT-86, Vow of perpetual poverty .

Adult basic education tuition assistance

You may have received (and included in your income) assistance to cover all or part of the tuition fees you paid for primary or secondary school courses. If so, you can claim a deduction for the amount of qualifying assistance shown in box 21 of your T4E slip.

Employees of prescribed international organizations

If, in 2004, you were employed by a prescribed international organization, such as the United Nations, you can claim a deduction for net employment income you report from that organization. Net employment income is your employment income minus the related employment expenses that you are claiming.

Federal tax and credits (Schedule 1)

Attach a completed Schedule 1 to your return.

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. 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, Statement of World Income). In addition, you may be entitled to the section 217 tax adjustment. For more information, see line 445.

Schedule A, Statement of World Income

Schedule A is used to report your world income. World income is income from Canadian sources and sources outside Canada. Your foreign source income is reported only on your Schedule A.

Non-residents - You have to complete Schedule A. Your net world income is used to determine your allowable non-refundable tax credits on Schedule B, Allowable Amount of Non-Refundable Tax Credits.

Non-residents electing under section 217 - You have to complete Schedule A. The income you indicate is used to calculate your federal tax on Schedule 1, the allowable non-refundable tax credits on Schedule B, and the section 217 tax adjustment on Schedule C, Electing Under Section 217 of the Income Tax Act.

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 2004, you are allowed a basic exempt amount of $40,000.

Generally, to find out if you have to pay this tax, add the amounts in section B below and 60% of 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 . If applicable, you also have to calculate your additional provincial or territorial tax for minimum tax purposes by completing Form 428.

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 security options.

C. You claimed any of the following tax credits on Schedule 1:

• 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 line 426.

Example
Sergio claimed a $50,000 deduction in 2004 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 .

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Date modified:

2006-01-04