1996 General income tax guide for non-residents and deemed residents of Canada

Archived

This page has been archived on the Web.

WHAT'S NEW FOR 1996?

We list the major changes below. For more details on these and other changes, see the areas outlined in red in this guide.

EMPLOYMENT INSURANCE - Throughout this guide, we refer to the new "Employment Insurance" (EI) program. These references also include the previous program, called "Unemployment Insurance" (UI).

REPAYMENT OF EI BENEFITS (LINE 235) - The income level above which you may have to repay all or part of your EI benefits has been reduced to $48,750.

DISABILITY AMOUNT (LINE 316) - If you are making a new application for this amount, we will now review your claim before we assess your return to determine whether you are eligible. Once approved, you will be able to claim this amount, as long as your circumstances do not change.

LINE-BY-LINE CHANGES

This guide and return package includes the following income tax changes that have been announced, but were not law at the time of printing. If they become law as proposed, they will be effective for 1996, or as of the dates indicated.

FOREIGN PROPERTY - There are new rules for reporting ownership of foreign property. See page 11 for details.

CHILD SUPPORT PAYMENTS (LINES 128 and 220) - New rules, which do not affect your 1996 tax return, may apply to child support payable after April 30, 1997.

REGISTERED PENSION PLANS (RPPS), REGISTERED RETIREMENT SAVINGS PLANS (RRSPS), AND DEFERRED PROFIT-SHARING PLANS (DPSPS) - The latest allowable maturity date for your RPP (line 207), RRSP (line 208), or DPSP has changed.

UNUSED RRSP DEDUCTION ROOM (LINE 208) - You can now carry forward indefinitely your unused RRSP deduction room accumulated after 1990.

CHILD CARE EXPENSES (LINE 214) - You may be able to claim expenses for a child under 16 at any time in the year. There are also new circumstances under which you can claim expenses for child care.

RRSP AND REGISTERED RETIREMENT INCOME FUND (RRIF) ADMINISTRATION FEES (LINE 221) - You cannot deduct amounts you paid after March 5, 1996, for administration services for any RRSP or RRIF.

AMOUNT FOR INFIRM DEPENDANT AGE 18 OR OLDER (LINE 306) - The maximum amount you can claim has been increased to $2,353. In addition, the dependant's net income can now be up to $4,103, without reducing the amount of your claim. If you are claiming an amount on line 305 for a dependant, you may also be able to claim part of the line 306 amount for that dependant.

EDUCATION AMOUNT (LINE 322) - The monthly amount has been increased to $100.

TUITION FEES AND EDUCATION AMOUNT TRANSFERRED FROM A CHILD (LINE 324) OR SPOUSE (LINE 326) - The transfer limit has been increased to $5,000.

CHARITABLE DONATIONS (LINE 340) - The maximum amount you can claim has been increased to 50% of your net income, plus 50% of the taxable capital gains included in your taxable income from capital property you donated in the year. For deceased individuals, the limit for both the year of death and the year before death has been increased to 100% of net income.

LABOUR-SPONSORED FUNDS TAX CREDIT (LINES 413 AND 414) - The calculation of the maximum credit has changed for shares acquired, or irrevocably subscribed to and paid for, after March 5, 1996.

Visually impaired persons can get information on services available to them, and can order publications in braille or large print, or on audio cassette or computer diskette. In Canada, call 1-800-267-1267 weekdays between 8:15 a.m. and 5:00 p.m. (Eastern Time), for details. From outside Canada, call the International Tax Services Office.

DIRECT DEPOSIT

Why not have your income tax refund, your goods and services tax (GST) credit, and your Child Tax Benefit payments deposited directly into your account at a financial institution in Canada? For details, see page 40 of this guide.

La version française de cette publication est intitulée Guide d'impôt général pour les non-résidents et les résidents réputés du Canada

WHERE DO YOU FIND …

Accounting fees
After you file
Age amount
Alimony or maintenance
Amounts for infirm dependants age 18 or older
Amounts transferred from your spouse
Annuity payments
Attendant care expenses
At your service

Balance owing
Basic federal tax
Basic personal amount
Before you start

Canada or Quebec Pension Plan benefits
Canada or Quebec Pension Plan contributions
Canada Savings Bonds
Capital gains and capital gains deduction
Carrying charges
Changing your return
Charitable donations
Child care expenses
Child Tax Benefit
Commission income
Cultural gifts

Death benefits (other than Canada or Quebec Pension Plan death benefits)
Deceased persons, filing for
Deemed resident
Direct deposit
Disability amount
Dividends and dividend tax credit
Do you have to file a tax return?

Ecological gifts
Education amount
Employment expenses
Employment income
Employment Insurance benefits
Employment Insurance premiums
Equivalent-to-spouse amount

Federal individual surtax
Federal logging tax credit
Federal tax
Filing date
Filing your return
Foreign property
Foreign tax credit

Goods and services tax (GST) credit
Government gifts

Home Buyers' Plan

Identification
Income that is not taxed
Instalments
Interest and other investment income
Interest expenses
Interest on refunds and balances owing
Internet access
Investment tax credit

Labour-sponsored funds tax credit
Late-filing penalty
Legal fees
Loans and transfers of property
Losses

Maintenance or alimony
Medical expenses
Minimum tax
Moving expenses

Net federal supplements
Non-refundable tax credits
Non-residents
Non-residents electing under section 217
Northern residents deductions

Old Age Security pension
Overseas employment tax credit

Partnership income - Limited or non-active
Pension income amount
Pension or superannuation income
Pensions from a foreign country
Political contributions
Provincial tax

Refunds
Registered education savings plan income
Registered pension plan contributions
Registered retirement income fund (RRIF) income
Registered retirement savings plan (RRSP) contributions and income
Rental income
Repaying income amounts
Research grants
Residential ties
Retiring allowances (severance pay)

Safety deposit box charges
Saskatchewan Pension Plan contributions and income
Scholarships
Self-employment income
Severance pay
Social assistance payments
Social benefits repayment
Spousal amount
Spouse - defined
Surtax for non-residents and deemed residents
Symbols

Tax deducted per information slips
Tax shelters
Territorial tax
Transfer of amounts from dependants
Tuition fees

Union, professional, or like dues
United States social security benefits

Vow of perpetual poverty

Wage-loss replacement plans
War veterans' allowances
Workers' Compensation benefits

LET OUR SYMBOLS BE YOUR GUIDE…

This guide gives information on the income you need to report and the deductions and credits you are entitled to claim when completing your 1996 income tax return. It will also help you determine your taxes payable and any refund to which you are entitled.

YOU DON'T NEED TO READ THE WHOLE GUIDE!

Beginning on page 12 with "Line 101 - Employment Income" our symbols will lead you directly to the information in this guide that may apply to you. Before you start, it is important that you:

• read "Is this tax package for you?" on page 6;
• read the general information on pages 5 to 11;
• determine whether you are a non-resident, a non-resident electing under section 217 of the Income Tax Act, or a deemed resident;
• locate the symbol (see below) that applies to your situation; and
• follow that symbol through the guide as you complete your return.

JUST FOLLOW THE SYMBOL THAT APPLIES TO YOU…

CIRCLE = deemed residents

VERTICAL BAR = non-residents

TRIANGLE = non-residents electing under section 217 of the Income Tax Act

Each line number in this guide corresponds to the same line number on your tax return. If the symbol that applies to you appears, the information for that line number may apply to you. If the symbol is not shown, the information does not apply to you.

NOTE
The symbols are for reference only. If your symbol appears at a line number, it does not mean that all the information for that line number applies to you. Also, keep in mind that the information in this guide applies only to individuals listed on page 6 under the heading "Is this tax package for you?"

YOUR OPINION COUNTS!

We review our publications every year. If you have any comments or suggestions that would help us improve them, we would like to hear from you. Please send your comments on our publications to:

Client Services Directorate
Revenue Canada
400 Cumberland Street
Ottawa ON K1A 0L5

AT YOUR SERVICE

WHAT IF YOU NEED HELP?

In this guide, we use plain language to explain the most common tax situations. If you need more help after reading this guide, we have other services available.

You can use our Tax Information Phone Service (T.I.P.S.) Info-Tax service to get recorded information on many tax topics. For more details, see the T.I.P.S. information at the end of this guide.

We have other income tax guides and pamphlets you may find helpful. Some of these contain the related forms you may need. We will send you some of these guides in the mail by late February, depending on the type of income you reported and the deductions or credits you claimed on your 1995 tax return.

We mention the relevant guides or pamphlets for a particular topic in the related line instructions of this guide. We also refer to interpretation bulletins and information circulars that give more details on specific tax topics.

INTERNET ACCESS

If you have access, you can find many of our publications at http://www.rc.gc.ca/ on the Internet.

Confidentiality procedures prevent us from providing personal tax information over the Internet. Therefore, you should direct any enquiries to the International Tax Services Office.

CONTACTING US

We want to provide you with the best service possible. You can help us answer your questions more quickly if you have all of your information ready. Before contacting us you should:

• read the appropriate sections of this guide;
• read the appropriate sections of other publications we mention in this guide;
• prepare all the details of your situation and question; and
• have on hand the working copy of your return, any related papers or receipts, a pencil, and some paper.

Being prepared helps us both!

You will find the address and telephone numbers of the International Tax Services Office included with this package.

HOURS OF SERVICE

REGULAR HOURS - You can call or visit us Monday to Friday, from 8:15 a.m. to 5:00 p.m. (except holidays). For faster service, call or visit us before 10:00 a.m. or after 2:00 p.m.

EVENING HOURS - Evening telephone service is available February 24 through April 30 (Monday to Thursday only) from 5:00 p.m. to 9:00 p.m.

GETTING PERSONAL TAX INFORMATION

Your personal tax information is confidential. Therefore, we follow certain procedures before giving personal information to you or your representative, including your spouse. See "Authorizing your representative" below.

IN PERSON - If you visit us, we will ask you for one piece of signed identification with your picture. You can also provide two pieces of signed identification and a copy of your Notice of Assessment, Notice of Reassessment, or information about the contents of your return.

If your representative visits us, he or she must show two pieces of identification, and a copy of Form T1013, Consent Form, that you completed.

BY PHONE - If you telephone us, we will ask for your name, address, date of birth, and social insurance number or temporary taxation number. If you are enquiring about your assessment, we will also ask for information from your return. If you are enquiring about your refund, we will ask the amount of the refund you claimed.

BY FAX - You can send us correspondence by facsimile. However, because of the nature of facsimile services, we are not responsible for misdirected, incomplete, or illegible documents.

AUTHORIZING YOUR REPRESENTATIVE

You can authorize a representative, including your spouse, to get information on your tax matters by completing Form T1013, Consent Form. You can get a copy of this form from us.

We will only give information to your representative after we are satisfied that you have authorized us to do so.

IF YOU MOVE, WHAT SHOULD YOU DO?

If you move, let us know your new address as soon as possible. This will ensure that you keep getting any goods and services tax (GST) credit or Child Tax Benefit payments to which you may be entitled. If you use direct deposit, and your move has resulted in a change to your account at your financial institution, be sure to advise us of your new account. We also need to know your new address to mail you your tax package for next year.

You can change your address by calling, writing, or visiting us. If you are writing, send your letter to the International Tax Services Office. Make sure you sign it and include your social insurance number or temporary taxation number, your new address, and the date of your move. If you are writing for other people, include their social insurance numbers or temporary taxation numbers, and have each of them sign the letter authorizing the change to his or her records.

BEFORE YOU START

DO YOU HAVE TO FILE A TAX RETURN?

You have to file a 1996 income tax return if any of the following applies to you:

• You have a balance owing for 1996.
• You want to claim a refund.
• You want to apply for the goods and services tax (GST) credit.
• You or your spouse want to continue receiving Child Tax Benefit payments. If so, each spouse must file a tax return.
• We sent you a request to file a return.
• You sold or disposed of capital property, such as real estate or shares, in 1996.
• You claimed a capital gains reserve on your 1995 return.
• You have to pay back all or part of your Old Age Security or Employment Insurance benefits. If you are a non-resident, you will use the Old Age Security Return of Income to pay back all or part of your Old Age Security benefits.
• You have to contribute to the Canada Pension Plan because you earned more than $3,500 in net self-employment income, other pensionable income, or both in 1996. See line 310 for details.
• You filed Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent From Real Property or Receiving a Timber Royalty, for 1996. If this is your situation, you have to file a return electing under section 216 of the Income Tax Act.
• You filed Form NR5, Application by a Non-Resident of Canada for a Reduction in the Amount of Non-Resident Tax Required to Be Withheld, for 1996. If this is your situation, you have to file a return electing under section 217 of the Income Tax Act.

NOTE
Even if none of these requirements applies, you can still file a return. For example, you may have received income for which you could contribute to your registered retirement savings plan (RRSP). To keep your RRSP deduction limit up to date, you would have to file a return.

IS THIS TAX PACKAGE FOR YOU?

Use this package if any of the following apply to you:

• You were a non-resident (see definition on this page) during 1996, and you are reporting Canadian-source income other than from employment in Canada or from a business with a permanent establishment in Canada.
• You were a non-resident during 1996, who received certain types of Canadian-source income, and you are filing a return to elect under section 217 to pay tax on the income at the same rate that residents of Canada pay. See the next page for details.
• You were a deemed resident of Canada (see definition on the next page) during 1996. For exceptions, see the following section "What if you can't use this package?"

WHAT IF YOU CAN'T USE THIS PACKAGE?

• If you were a non-resident in 1996 who is not filing a return to elect under section 217, and you are reporting income from employment in Canada, or from a business with a permanent establishment in Canada, use the tax package for the province or territory where you earned the income.
• If you were a non-resident during 1996 who received Canadian-source rental income or timber royalties, and you are filing a return to pay tax on this income at the same rate that residents of Canada pay, use the new Income Tax Guide for Non-Resident Individuals Electing Under Section 216.
• If you were a deemed resident who is reporting only Canadian-source income from a business with a permanent establishment in a province or territory, use the package for that province or territory.
• If you were a deemed resident who returned to Canada during 1996, use the tax package for the province or territory where you lived on December 31, 1996.
• If you lived outside Canada during 1996, but you maintained residential ties (see definition on the next page) in Canada, we consider you to be a factual resident of Canada. Use the tax package for the province or territory where you kept your residential ties.
• If you were a newcomer to Canada in 1996, use the tax package for the province or territory where you lived on December 31, 1996. You should also get the pamphlet called Newcomers to Canada for the special rules that apply to you.
• If you emigrated from Canada during 1996, use the tax package for the province or territory where you lived on the day you left. You should also get the pamphlet called Emigrants and Income Tax for the special rules that apply to you.

WHERE CAN YOU GET THE TAX PACKAGE YOU NEED?

If after reading the above information, you cannot use this package, contact the International Tax Services Office for the package you need. You will find the address and telephone numbers included with this package.

ARE YOU A NON-RESIDENT?

You are a non-resident of Canada for tax purposes if you have not established residential ties (see definition on the next page) in Canada, and you:

• stayed in Canada for less than 183 days in 1996; or
• lived outside Canada throughout 1996 (except if you are a deemed resident as defined on the next page).

WHAT INCOME SHOULD YOU REPORT? - On your return, include only your Canadian-source income. If you received income from employment in Canada or from a business with a permanent establishment in Canada, use the tax package for the province or territory where you earned the income.

WHAT ARE RESIDENTIAL TIES? - Residential ties include a home in Canada, a spouse or dependants who stayed in Canada while you were living outside Canada, and personal property in Canada. Other ties that may be relevant include social ties in Canada, a Canadian driver's licence, Canadian bank accounts or credit cards, and provincial or territorial hospitalization insurance coverage. For more details, contact the International Tax Services Office.

ARE YOU A NON-RESIDENT ELECTING UNDER SECTION 217?

Certain types of Canadian-source income you receive as a non-resident are subject to withholding tax. This withholding tax usually represents your final Canadian tax liability on the income. However, under section 217 of the Income Tax Act, you can elect to file a Canadian tax return and report certain types of your Canadian-source income. The filing of this return is called "electing under section 217."

By filing a section 217 return, you may be able to claim non-refundable tax credits and pay tax on this income at the same rates that residents of Canada pay. You claim the tax withheld as a credit on line 437 of the return. If this tax withheld is more than the amount you have to pay, we will refund the difference to you.

Section 217 may apply to you if you were a non-resident of Canada at any time in 1996 and you received any of the following types of Canadian-source income:

• Old Age Security pension (line 113);
• net federal supplements (line 146);
• Canada Pension Plan or Quebec Pension Plan benefits (line 114);
• alimony or maintenance payments (line 128);
• Auto Pact benefits (line 130);
• prescribed benefits under a government assistance program (line 130);
• certain pension benefits (lines 115 and 130);
• death benefits (lines 113 and 130);
• Employment Insurance benefits (line 119);
• certain retiring allowances (line 130);
• registered supplementary unemployment benefit plan payments (line 104);
• registered retirement savings plan payments (line 129);
• deferred profit-sharing plan payments (line 130);
• registered retirement income fund payments (lines 115 and 130); and
• amounts from a retirement compensation arrangement, or the purchase price of an interest in a retirement compensation arrangement (line 130).

Section 217 also applies to you if you were a non-resident of Canada at any time in 1996 and you filed Form NR5, Application by a Non-Resident of Canada for a Reduction in the Amount of Non-Resident Tax Required to Be Withheld, for 1996. If you filed Form NR5, you have to file a section 217 return.

WHAT INCOME SHOULD YOU REPORT? - On your return, include any of the above-listed incomes that were paid or credited to you in 1996, plus your 1996 Canadian-source business and employment income, and taxable capital gains from disposing of taxable Canadian property.

ARE YOU A DEEMED RESIDENT?

You are a deemed resident of Canada for tax purposes if you stayed in Canada for 183 days or more during 1996, and you did not establish residential ties (see definition on this page) in Canada.

You are also a deemed resident if you lived outside Canada during 1996, you did not have residential ties in Canada, and you were:

• a member of the Canadian Forces at any time in 1996;
• a member of the Canadian Forces overseas school staff who chooses to file a return as a deemed resident (if you left Canada during 1996, see "Were you a member of the overseas Canadian Forces school staff who left Canada in 1996?" in this section);
• a federal or provincial government employee who either lived in Canada just before being posted abroad or who received a representation allowance for 1996;
• a person working under a Canadian International Development Agency (CIDA) assistance program, if you were a resident of Canada at any time during the three-month period just before you began your duties abroad;
• a resident of Canada in a previous year, and you lived with and were the spouse of, a person described above at any time during 1996; or
• a dependent child of one of the first four persons described above, and your net income in 1996 was less than $6,457.

WHAT INCOME SHOULD YOU REPORT? - On your return, include your world income, which includes all Canadian and foreign income you received or earned in 1996.

WERE YOU A MEMBER OF THE OVERSEAS CANADIAN FORCES SCHOOL STAFF WHO LEFT CANADA IN 1996?

If you were and you severed your residential ties, you are an emigrant. If this is your situation, you should use the income tax package for the province or territory where you lived just before you left Canada. You should also get the pamphlet called Emigrants and Income Tax, for the special rules that apply to you.

However, if you wish, you can file as a deemed resident of Canada while you are serving abroad. If you make this choice, you should use the income tax package for the province or territory where you lived just before you left Canada. In future years, you will use the income tax package for non-residents and deemed residents of Canada.

DID YOU LIVE IN QUEBEC JUST BEFORE YOU LEFT CANADA?

If so, even though we may consider you to be a deemed resident of Canada, under Quebec law you may be considered to be a factual resident of that province. If this is

the case, you may be subject to Quebec income tax while you are serving abroad.

To avoid double taxation (federal non-resident and deemed resident surtax plus Quebec income tax), attach a note to your return telling us that you are filing a Quebec provincial tax return, and that you are asking for relief from the federal non-resident and deemed resident surtax.

FILING YOUR RETURN

First, gather everything you will need to complete your return. This includes all the information slips (such as T3, T4, T4A, and T5 slips) you received, as well as receipts for any deductions or credits you plan to claim.

As you prepare your return, and you come to a line that applies to you, look it up in this guide or see the back of your information slips.

WHAT DATE IS YOUR 1996 RETURN DUE?

Generally, your 1996 income tax return is due on or before April 30, 1997. Mail or deliver each return separately, using the envelope included in this package.

SELF-EMPLOYED PERSONS - If you were carrying on a business in 1996 (unless the expenditures of the business are primarily in connection with a tax shelter), your 1996 income tax return is due on or before June 15, 1997. In addition, if you are the spouse of an individual carrying on such a business, your 1996 income tax return will also be due on or before June 15, 1997. However, if you have a balance owing for 1996, you still have to pay it by April 30, 1997.

NON-RESIDENTS ELECTING UNDER SECTION 217 - Your 1996 section 217 return is due on or before June 30, 1997. However, if you are including Canadian-source business and employment income, or taxable capital gains from disposing of taxable Canadian property on the return, be sure to file it by April 30, 1997.

DECEASED PERSONS - As the legal representative (executor or administrator) of a person's estate, you may have to file a 1996 return for that person or the estate. For more information about your filing requirements, and the dates for filing, payments, penalties, and interest for that return or for that of a surviving spouse (which may be different from those mentioned in this guide), get the income tax guide called Preparing Returns for Deceased Persons, and the T3 Guide and Trust Return.

NOTE
If you received income in 1996 for a person who died in 1995 or earlier, do not file a 1996 return for that income on behalf of that person. However, you may have to file a return for the estate.

WHAT HAPPENS IF YOU FILE YOUR RETURN LATE?

If you owe tax for 1996, and do not file your 1996 return by the due date, we will charge you a late-filing penalty. The penalty is 5% of your balance owing for 1996, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months. Your late-filing penalty may be higher if we charged you a late-filing penalty on a return for any of the three previous years. Even if you cannot pay the full amount you owe by April 30, 1997, you can avoid this penalty by filing your return on time.

We may waive this penalty and any interest if you file your return late because of circumstances beyond your control. If this happens, include a letter with your return giving the reasons why you filed your return late. Information Circular 92-2, Guidelines for the Cancellation and Waiver of Interest and Penalties, gives details on the circumstances.

NON-RESIDENTS ELECTING UNDER SECTION 217 - If you file your 1996 return after June 30, 1997, your election is not valid.

WHEN WILL WE PAY OR CHARGE INTEREST?

We will pay you compound daily interest on your 1996 income tax refund, starting on the latest of:

• June 15, 1997;
• the 46th day after you file your return; and
• the date you overpaid your taxes.

If you have a balance owing for 1996, we charge compound daily interest after April 30, 1997, on any unpaid amount owing for 1996. This includes any balance owing if we reassess your return, and any penalty we may charge you.

WHAT DO YOU INCLUDE WITH YOUR RETURN AND WHAT RECORDS DO YOU KEEP?

Include one copy of each of your information slips when you file your return. Your return, the guide explanations, the forms, or the schedules will tell you when to attach other supporting documents, such as certificates, forms, schedules, or official receipts.

If you make a claim without the required receipt, certificate, schedule, or form, we may disallow your claim. This could also delay the processing of your return.

Even if you do not have to attach certain receipts to your return, keep them in case we select your return for review. Generally, you should keep your receipts for six years.

You should also keep a copy of your 1996 return, the related Notice of Assessment, and any Notice of Reassessment. These can help you complete your 1997 return. For example, your Notice of Assessment for 1996 will tell you:

• your 1997 RRSP deduction limit;
• your unclaimed RRSP contributions for 1997; and
• your non-capital loss carry-forward balance.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - You also need to include a statement of your world income for 1996 (i.e., income you earned from sources inside and outside Canada). Although you do not have to pay tax in Canada on income from outside Canada, we need to know this income to determine your non-refundable tax credits.

WHAT IF YOU ARE MISSING INFORMATION?

You should receive most of your information slips by early April. Wait until you get all your receipts and information slips before filing your return.

However, if you have to file a 1996 return, as explained on page 6, be sure to file it by the due date, even if some slips or receipts are missing. Include the income, and attach a note to your return, stating which slips or receipts are missing and what you are doing to get them.

MISSING INFORMATION SLIP - If you have not received an information slip by early April, contact the issuer. However, you may not receive a T5 slip for an amount under $50.

Even if you do not have an information slip, you still have to report the income when you file your return. For example, if you know that you will not be able to get your T4 or T4 Short slip by April 30, use your pay stubs to calculate your income and the amounts your employer has deducted (such as Canada or Quebec Pension Plan contributions, Employment Insurance premiums, union dues, and income tax).

Attach to your return a note explaining the problem and, if possible, attach a photocopy of your pay stubs. The note should also give the payer's name and address, and the amounts you have calculated.

HOW DO YOU REPORT FOREIGN INCOME AND OTHER AMOUNTS?

If you are a deemed resident, report foreign income and other amounts (such as foreign taxes and expenses paid) in Canadian dollars. Calculate how much to report by multiplying your foreign income or expense by the exchange rate that was in effect on the day you received the income or paid the expense. If the amount was paid at various times throughout the year, you can contact us to get an average annual rate.

AFTER YOU FILE

WHEN CAN YOU EXPECT YOUR REFUND?

We can usually process your return in four to six weeks. If you filed your return on or before April 15, wait four weeks before you call. If you filed your return after April 15, wait six weeks before you call.

To find out about your refund, call our automated T.I.P.S. (Telerefund) service. Telerefund will tell you the status of your 1996 refund. You will find more information about T.I.P.S. at the end of this guide.

WHAT HAPPENS TO YOUR RETURN AFTER WE RECEIVE IT?

When we receive your return, we usually review it based on the information you provided, and send you a Notice of Assessment based on that review. However, in some cases, we may select your return for a more detailed review before we assess it. Therefore, we may contact you to provide documentation to verify the deductions or credits you claimed. In other cases, after we have assessed your return, we may select your return to verify the income you reported, or the deductions or credits you claimed.

HOW DO YOU CHANGE YOUR RETURN?

If you need to make a change to any return you have sent us, send any supporting documents and one of the following to the International Tax Services Office:

• a completed Form T1-ADJ, T1 Adjustment Request, which you can get from us; or
• a signed letter providing all the details, including your social insurance number or temporary taxation number, address, a telephone number where we can reach you during the day, and the taxation years you want us to adjust.

Do not file another return for the taxation year you want adjusted. Do not send your Form T1-ADJ or letter with your 1996 return. You can ask for a refund for taxation years as far back as 1985. It usually takes eight weeks before we mail you a Notice of Reassessment.

NOTE
If you did not provide supporting documentation for your original claim, you have to submit this documentation for both your original claim and the changes you want to make.

CAN YOU FILE A RETURN TO CLAIM A REFUND FOR A PREVIOUS YEAR?

If you have not already filed one, you can file a return (other than to make an election under section 217) to claim a refund for the 1985 taxation year or any year after that. If you are filing a return for a year before 1996, make sure you attach receipts for all the deductions or credits you are claiming.

WHAT IS A VOLUNTARY DISCLOSURE?

If you have never filed an income tax return, stopped filing a return for two or more years, or sent us a return that was incomplete, we encourage you to voluntarily file or correct your return. We will then assess or reassess your return without applying a penalty. You will only have to pay the tax you owe, with interest. For more information, get Information Circular 85-1, Voluntary Disclosures, from us.

SHOULD YOU BE PAYING YOUR 1997 TAXES BY INSTALMENTS?

Estimate your tax payable (line 435 of your return) excluding Canada Pension Plan contributions payable (line 421 of your return) for 1997. If your tax payable will be more than the total of your income tax deducted at source and your refundable tax credits by more than $2,000 ($1,200 if you resided in Quebec) and this situation also applied for either of 1996 or 1995, you may have to pay your 1997 taxes by instalments. If our records show that you should pay your taxes by instalments, we will send you an advance Instalment Reminder suggesting the amount you should pay and telling you the date the payment is due.

For more information about instalment payments, or instalment interest charges, get the pamphlet called Paying Your Income Tax by Instalments. If you would like to calculate your instalment payments, get Form T1033-WS, Worksheet for Calculating 1997 Instalment Payments.

STEP 1 - IDENTIFICATION

It is important that you complete the entire identification area of your return. We need this information to calculate your goods and services tax (GST) credit, and any benefit to which you may be entitled under the Child Tax Benefit Program. If you provide incomplete or incorrect information, the processing of your return, and any refund, credit, or benefit to which you may be entitled, will be delayed.

NON-RESIDENTS ELECTING UNDER SECTION 217 - Write "section 217" at the top of page 1 of your return.

LABEL - If you have a personalized label, attach it to your return. If your name, your address, your social insurance number (SIN), or your spouse's SIN is incorrect, put a line through the wrong information, and print your changes clearly on the label.

We work closely with Canada Post to keep our postage costs down, while still making sure you get the mail that we send you as quickly as possible. As a result, when we process your income tax return, we may have to modify part of your address to meet Canada Post's requirements. Therefore, the address on your tax package, Notice of Assessment, or any other correspondence we send you may be different from the one you indicated on your return.

SOCIAL INSURANCE NUMBER (SIN) - We need your SIN so that we can assess your return. If you do not have a SIN, apply for one through any Human Resource Centre of Canada. If you are a non-resident who cannot get a SIN, attach a note to your return to let us know, and we will assign you a temporary taxation number (TTN).

You have to give your SIN to anyone who prepares a tax information slip (such as a T3, T4, T5, or T600 slip) for you. If you do not give your SIN, you may have to pay a $100 penalty each time you do not provide it.

Check your information slips carefully. If your SIN is not shown on your slip or is incorrect, please advise the slip preparer.

SPOUSE - The term spouse used throughout this guide applies to a legally married spouse and a common-law spouse. A common-law spouse is a person of the opposite sex who, at that particular time in 1996, lived with you in a common-law relationship, and:

• had been living with you in such a relationship for at least 12 continuous months, or had previously lived with you in such a relationship for at least 12 continuous months (when you calculate the 12 continuous months, include any period of separation of less than 90 days); or
• is the natural or adoptive parent (legal or in fact) of your child.

Once either of these two situations applies, we consider you to have a common-law spouse, except for any period that you were separated for 90 days or more because of a breakdown in the relationship.

EXAMPLE 1 On May 1, 1993, Bruce and Brenda, who have no children, began to live together in a common-law relationship. On July 15, 1995, they separated because of a breakdown in their relationship. On February 27, 1996, they began to live together again. We consider Bruce and Brenda to be spouses as of February 27, 1996, the date they reconciled. This is because they once lived together in a common-law relationship for 12 continuous months.

EXAMPLE 2 Hans and Sandra, who have no children, have been living together in a common-law relationship since April 13, 1995. However, for the months of July 1995 and October 1995, they lived apart because of a breakdown in their relationship. We consider Hans and Sandra to be spouses as of April 13, 1996. When calculating the 12 continuous months requirement, they have to include the two months they lived apart because each period of separation was less than 90 days.

PROVINCE OR TERRITORY OF RESIDENCE - Enter "other" on this line.

SELF-EMPLOYED - If you are either a deemed resident or a non-resident electing under section 217, and you were self-employed in 1996, enter the province or territory where your business was located. Only enter a province or territory if you had a permanent business established there.

STEP 2 - GOODS AND SERVICES TAX (GST) CREDIT

You can only receive the GST credit if you apply for it each year, even if you received it in the previous year. To apply for the payments, which we will mail out in July and October of 1997, and January and April of 1998, you have to complete Step 2 on your 1996 tax return.

Before you complete Step 2, be sure to read all of the information in this section. If you apply, we will let you know in July of 1997 the amount to which you are entitled, if any, and how we calculated your credit.

WHO CAN APPLY

You can apply for the GST credit if, at the end of 1996, you were a deemed resident of Canada and you:

• were 19 years of age or older;
• had a spouse; or
• were a parent.

NOTE
If you have a spouse, only one of you can apply for the credit. No matter which one of you applies, the credit will be the same.

WHO CANNOT APPLY

You cannot apply for the GST credit if, at the end of 1996, you:

• were a non-resident of Canada;
• were confined to a prison or a similar institution, and had been there for more than six months during 1996; or
• did not have to pay tax in Canada because you were an officer or servant of another country, such as a diplomat, or a family member or an employee of that diplomat.

NOTE
You cannot claim the credit for your spouse or child who met any of these conditions at the end of 1996.

NUMBER OF CHILDREN

You can claim a GST credit for each of your children who, at the end of 1996:

• was under 19 years of age;
• did not have a spouse;
• was not a parent; and
• either lived with you, or was claimed as a dependant (line 305 or 306) only by you or your spouse.

Only one person can claim a GST credit for a particular child.

NET INCOME OF SPOUSE

Your spouse's net income is the amount from line 236 of your spouse's return, or the amount that would appear on this line if your spouse completed a return.

INCOME LIMIT

In the chart that follows, look up the number of children you have. If your net family income is less than the income limit shown across from the number of your children, you should apply for the credit. Your net family income is the total of your net income and, if applicable, your spouse's net income.

Number of children	Income limit
0	$34,000
1	$36,000
2	$38,500
3	$40,500
4	$42,500
5 or more	apply

NOTE
These income limits are only guidelines to help you decide if you should apply. If you apply, we will send you a notice by the end of July 1997, to let you know the amount to which you are entitled, if any.

CALCULATING YOUR GST CREDIT

To find out how to calculate your GST credit, call our T.I.P.S. (Info-Tax) service. For more details, see the T.I.P.S. information at the end of this guide.

STEP 3 - TOTAL INCOME

If you are a deemed resident, most of the amounts you received in 1996 are taxable and you have to include them in income. This includes amounts from employment, pensions, self-employment, and other sources.

Whether you are a deemed resident, a non-resident, or a non-resident electing under section 217, some amounts you may have received in 1996 are not taxed. Do not include the following in your income:

• your GST credit and Child Tax Benefit payments;
• compensation received from a province or territory if you were a victim of a criminal act or a motor vehicle accident;
• any lottery winnings or an inheritance;
• any war veterans' allowance, or disability or dependants' pension payments; or
• allowances for newborn children received from the Régie des rentes du Québec, or Quebec family allowances.

NOTE
Earnings on any of the above amounts are taxable (such as interest you earn when you invest lottery winnings).

LOANS AND TRANSFERS OF PROPERTY

You may have to report any income, including dividends (see line 120) or interest (see line 121), from property (including money and any replacement property) you:

• loaned to your spouse, parent, or grandparent, or your child, grandchild, brother, or sister, or your niece or nephew who was under 18 at the end of 1996; or
• transferred to your spouse or to your child, grandchild, sister, brother, niece, or nephew who was under 18 at the end of 1996.

You may also have to report capital gains (see line 127) or losses from the disposition of property you loaned or transferred to your spouse.

For details, get Interpretation Bulletin IT-510, Transfers and Loans of Property made after May 22, 1985 to a Related Minor, or IT-511, Interspousal and Certain Other Transfers and Loans of Property.

FOREIGN PROPERTY

If you are a deemed resident and you earned income or realized capital gains from foreign property in 1996, include these amounts in calculating your 1996 income. Make sure you complete the three questions on page 2 of your return.

Under proposed changes, if you are a deemed resident and the total of the cost amounts of all foreign property you owned or had an interest in was more than $100,000 in Canadian dollars at any time in 1996, complete and file Form T1135, Information Return Relating to Foreign Property, on or before the date your 1996 tax return is due. File it separately from your tax return. Foreign property includes:

• funds held outside Canada (including a foreign bank account), a security held outside Canada, and a share of a Canadian company deposited with a foreign broker;
• tangible property located outside Canada, including real estate and equipment;
• shares in non-resident corporations;
• non-resident trusts, including foreign mutual fund trusts;
• intangible property located outside Canada, such as rights to royalties; and
• a debt (such as a note, bond, or debenture) owed or issued by a non-resident.

However, foreign property does not include:

• property held in registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs), or registered pension plans (RPPs);
• property you used or held exclusively in the course of carrying on your active business; or
• your personal-use property.

Form T1135 contains more information about filing, and a list of the different kinds of foreign property.

BENEFICIARIES OF NON-RESIDENT TRUSTS

At some point in 1996, you may have received funds or property from, or been indebted to, a non-resident trust in which you had or will have absolute or conditional rights as a beneficiary, either directly or indirectly. If so, you have to complete and file Form T1142, Information Return in Respect of Distributions From and Indebtedness Owed to a Non-resident Trust, on or before the date your 1996 tax return is due. File it separately from your tax return.

Form T1142 contains more information about filing.

PENALTIES

There are substantial penalties for failing to complete and file Forms T1135 and T1142 by the due date.

TAX SHELTERS

To claim deductions or losses from tax shelter investments, attach to your return a completed Form T5004, Statement of Tax Shelter Loss or Deduction. Make sure your form shows the tax shelter identification number.

LINE 101 - EMPLOYMENT INCOME (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the total of amounts shown in box 14 of all your T4 or T4 Short slips. If you have not received your T4 or T4 Short slip by early April, or if you have any questions about an amount on a slip, contact your employer.

If you have employment expenses, see line 229 for details.

TAX TIP Your contributions to the Canada or Quebec Pension Plan (box 16 or 17 of your T4 or T4 Short slips) determine the amount of benefits you will receive under either of these plans. If there are no contributions in box 16 or 17 of your T4 or T4 Short slips, or if you have any questions about the amount of your contributions, contact your employer.

LINE 102 - COMMISSIONS (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the total commissions you received as an employee from box 42 on all your T4 or T4 Short slips. This amount is already included in your income on line 101, so do not add it again when you calculate your total income on line 150. If you have commission expenses, see line 229 for details.

If you are a self-employed commission salesperson, get the income tax guide called Business and Professional Income to determine how to report your commission income and claim your expenses.

LINE 104 - OTHER EMPLOYMENT INCOME (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

Include your total employment income not reported on a T4 or T4 Short slip, such as tips, directors' fees, and foreign employment income (in Canadian dollars).

If you are a deemed resident and you have employment income from the United States, the amount on your W-2 slip may have been reduced by contributions to a "401(k) plan." Those contributions are not deductible on your Canadian return. Therefore, you have to add this amount into your income as well.

TAX TIP You may be able to contribute to the Canada or Quebec Pension Plan for tips you received through employment See line 308 for details.

Also, enter on this line the total of:

• royalties you received from a work or invention of yours;
• amounts you received under a supplementary unemployment benefit plan (a guaranteed annual wage plan);
• the taxable benefit included in box 28 of your T4A slip for premiums paid to cover you under a group term life-insurance plan;
• amounts allocated to you under a profit-sharing plan (box 35 of your T4PS slip);
• any cleric's housing allowance you received (which you may be able to deduct on line 232);
• net research grants you received (as explained below);
• the taxable part of income-maintenance insurance-plan payments you received, such as income from a wage-loss replacement plan (as explained below); and
• certain goods and services tax (GST) and Quebec sales tax (QST) rebates you received (as explained below).

RESEARCH GRANTS - Subtract your expenses from any research grant you received and enter the net amount on this line. Your expenses cannot be more than the grant you received. Attach to your return a list of your expenses. For details, get Interpretation Bulletin IT-75, Scholarships, Fellowships, Bursaries, Prizes, and Research Grants.

WAGE-LOSS REPLACEMENT PLANS - Box 28 of your T4A slip shows the payments you received from these plans. There should also be a note on the slip identifying them. You may not have to report the full amount on your tax return. You can reduce the payments you received by the contributions you made to the wage-loss replacement plan after 1967, if you did not use the contributions on a previous year's return to reduce the income you had to report. For more information, get Interpretation Bulletin IT-428, Wage Loss Replacement Plans.

GST AND QST REBATES - If you are an employee who received a GST or QST rebate in 1996 for employment expenses you paid and deducted in 1995 or earlier, include on line 104 the rebate you received. A rebate for a vehicle or musical instrument you bought is treated differently. The income tax guide called Employment Expenses contains instructions on how to report such a rebate.

LINE 113 - OLD AGE SECURITY PENSION (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Include the amounts from box 18 of your T4A(OAS) slip, and box 24 of your T4A(P) slip, if applicable.

Do not include on line 113 the amount in box 21 of your T4A(OAS) slip. For details on how to report this income, see line 146.

If you do not have your T4A(OAS) or T4A(P) slip, contact the nearest Income Security Programs office of Human Resources Development Canada.

NOTE
If your net income before adjustments (line 234) is more than $53,215, you may have to repay all or a part of your OAS benefits. See line 235 for details.

If you are a non-resident electing under section 217 and you received OAS benefits, you also have to complete an Old Age Security Return of Income.

NON-RESIDENTS ELECTING UNDER SECTION 217 - Your Old Age Security benefits may be shown in box 16 of your NR4-OAS slip.

LINE 114 - CANADA OR QUEBEC PENSION PLAN BENEFITS (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the total Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits shown in box 20 of your T4A(P) slip. This amount is the total of the amounts in boxes 14 to 18. If your T4A(P) slip has an amount in box 16, 17, or 18, read the part of this section that applies to you.

NON-RESIDENTS ELECTING UNDER SECTION 217 - Your CPP or QPP benefits may be shown in box 16 or 26 of your NR4 slip if income code 46 is located in box 14 or 24 of the slip.

CPP OR QPP DISABILITY BENEFIT (BOX 16)

Enter on line 152, located below and to the left of line 114, the amount of your CPP or QPP disability benefits from box 16. This amount is already included in your income on line 114, so do not add it again when you calculate your total income on line 150.

If you received a lump-sum CPP or QPP disability benefit in 1996, you have to enter the full amount on line 114. The benefit or part of the benefit you received may be for a year or years before 1996. If the part that relates to a previous year or years is $300 or more, it may be more beneficial for you to have this income taxed as if you had received it in the previous year or years. We will automatically apply the tax calculation that benefits you most. We will tell you the results on your Notice of Assessment or Notice of Reassessment.

CPP OR QPP CHILD BENEFIT (BOX 17)

Report a child benefit only if you received it because you were the child of a deceased or disabled contributor. Any benefits paid for your children are their income, even if you received the payment.

CPP OR QPP DEATH BENEFIT (BOX 18)

You can choose to report this amount either on line 114 of your own return, or on a Trust Income Tax and Information Return for the estate of the deceased person. Do not report it on the deceased person's individual return. The taxes payable may be different depending on which return you use. For more information, get the income tax guide called T3 Guide and Trust Return.

LINE 115 - OTHER PENSIONS OR SUPERANNUATION (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Include on this line any other pensions or superannuation you received (box 16 on T4A slips and box 31 on T3 slips). If there is a lump-sum amount shown in box 18 of your T4A slip or box 22 of your T3 slip, report it on line 130.

You may also have to report on this line other amounts that you received. Read the parts of this section that correspond to the type of income you have.

TAX TIP If you have to report your pension or annuity payments on line 115, you may be able to claim the pension income amount. See line 314 for details.

ANNUITY AND REGISTERED RETIREMENT INCOME FUND (RRIF) PAYMENTS

If you have an amount in box 24 of your T4A slip, box 16 or 20 of your T4RIF slip, or box 19 of your T5 slip, report the amount as follows:

• If you were 65 or older on December 31, 1996, or you received it at any age because your spouse died, include it on line 115.
• Otherwise, report the amount in box 24 of your T4A slip, or box 16 or 20 of your T4RIF slip on line 130. Report the amount in box 19 of your T5 slip on line 121.

NOTE
If there is an amount in box 18 or 22 of your T4RIF slip, see the instructions on the back of the slip.

PENSIONS FROM A FOREIGN COUNTRY

If you are a deemed resident, report in Canadian dollars the total amount of your 1996 foreign pension income. Do not deduct from your foreign income the amount of tax the foreign country withheld. See "How do you report foreign income and other amounts?" on page 9.

Attach a note identifying the type of pension you received and where it came from.

You may have to report amounts you received from United States individual retirement accounts (IRAs). For details, contact us.

TAX TIP You can claim a deduction on line 256 for the part of your foreign pension income that is tax-free under a tax treaty. If you do not know whether any part of your foreign pension is tax-free in Canada, contact us.

UNITED STATES SOCIAL SECURITY - If you are a deemed resident, include on line 115 the full amount, in Canadian dollars, of your U.S. social security benefits. However, you can claim a deduction on line 256 for this amount. Benefits paid for your children are their income, even if you received the payments.

LINE 119 - EMPLOYMENT INSURANCE BENEFITS (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the amount shown in box 14 of your T4U slip. If you repaid to Human Resources Development Canada excess benefits you received, you may be entitled to a deduction. See line 232 for details.

NOTE
If your net income before adjustments (line 234) is more than $48,750, you may have to repay some of the EI benefits you received. See line 235 for details.

LINE 120 - TAXABLE AMOUNT OF DIVIDENDS FROM TAXABLE CANADIAN CORPORATIONS (for deemed residents)

Enter on line 120 the taxable amount of all dividends from taxable Canadian corporations, as shown in box 11 on T5 slips, box 31 on T4PS slips, box 32 on T3 slips, and in the details area on T5013 slips.

If you received foreign dividends, see the section called "Foreign interest and dividend income" at line 121 for details on how to report this income.

HOW TO REPORT

Enter the taxable amount of your dividends from taxable Canadian corporations in Part I of Schedule 4. You have to report your dividends even if you did not receive an information slip. If you did not receive one, you can calculate the taxable amount of dividends you received by multiplying the dividends you actually received by 125%.

Taxable dividends received from taxable Canadian corporations qualify for the federal dividend tax credit. This credit reduces the amount of tax you owe. Complete Method B of Schedule 1 to claim this credit. See line 502 for details.

NOTE
Special rules apply for income from property (including shares) one family member lends or transfers to another. See "Loans and transfers of property" on page 11 for more information.

TAX TIP In some cases, it may be better for you to report all the taxable dividends your spouse received from taxable Canadian corporations. You can only do this if, by including the dividends in your income, you will be able to claim or increase your claim for the spousal amount (see line 303).

If you use this option, you may be able to take better advantage of the dividend tax credit. Also, do not include these dividends in your spouse's income when you calculate claims such as the spousal amount on line 303 or amounts transferred from your spouse on Schedule 2.

LINE 121 - INTEREST AND OTHER INVESTMENT INCOME (for deemed residents)

Include on this line your interest from Canadian sources, and interest and dividend income from foreign sources. You also include the interest on any income tax refund you received in 1996, which is shown on your Notice of Assessment or Notice of Reassessment.

Report the amounts you actually received, as well as amounts that were credited to you in the year. The interest you report depends on the type of investment and when you made it.

NOTE
Special rules apply for income from most property (including money) one family member lends or transfers to another. See "Loans and transfers of property" on page 11 for more information.

However, if you deposited Child Tax Benefit payments into a bank account in your child's name or a trust in your child's name, the interest earned on those payments is your child's income.

HOW TO REPORT

Use Part II of Schedule 4 to list your investments, and attach copies of any information slips. Generally, you have to report all the interest from a joint investment in which you deposited all of the money. Report your share of interest from a joint investment based on how much you contributed to the investment.

PAGE 15

EXAMPLE Karen and Pavel received a T5 slip from their joint bank account showing the $400 interest they earned in 1996. Karen had deposited $4,000 and Pavel had deposited $1,000 into the account.

Karen reports $320 interest, calculated as follows:

$4,000 (her share) x $400 (total interest) = $320
-----------------
$5,000 (total)

Pavel reports $80 interest, calculated as follows:

$1,000 (his share) x $400 (total interest) = $80
-----------------
$5,000 (total)

To determine the amounts you have to report, read any of the following sections that apply to you:

• Bank accounts
• Term deposits, guaranteed investment certificates (GICs), and other similar investments
• Canada Savings Bonds (CSBs)
• Treasury bills (T-Bills)
• Earnings on life insurance policies
• Foreign interest and dividend income

BANK ACCOUNTS

Report interest paid or credited to you in 1996, even if you did not receive an information slip. You may not receive a T5 slip for amounts under $50.

TERM DEPOSITS, GUARANTEED INVESTMENT CERTIFICATES (GICS), AND OTHER SIMILAR INVESTMENTS

On these investments, interest builds up over a period of time, usually longer than one year. Generally, you do not receive the interest until the investment matures, or you cash it in. For more information on CSBs, see the heading "Canada Savings Bonds (CSBs)" on this page.

In most cases, you have to report annually the interest you earned on all investments you made after 1989.

The amount of income you report is based on the interest you earned during each complete investment year. For example, if you made a long-term investment on July 1, 1995, calculate the first year's interest to the end of June 1996 and report it on your 1996 tax return. Report the interest from July 1996 to June 1997 on your 1997 return.

NOTE
Your investment agreement may specify a different interest rate each year. If so, report the amount on your T5 slip, even if it is different from what the agreement specifies, or what you received. The issuer of your investment can tell you how this amount was calculated.

If you have investments, including CSBs, that you made before 1990, you can use the cash, receivable, or annual accrual method to report the interest you earned. For information about these three options, or to find out about changing your method, call our T.I.P.S. (Info-Tax) service. For more details, see the T.I.P.S. information at the end of this guide.

CANADA SAVINGS BONDS (CSBS)

Interest on CSBs designated by the letter "R," for regular interest, is paid annually. Interest on bonds designated by the letter "C," for compound interest, is not paid until the bond matures, or you cash it in.

TAX TIP If you bought bonds through your payroll savings plan, you can deduct the interest charges you paid to buy the bonds. See line 221 for details.

HOW TO REPORT

"R" bonds - Report the amount shown on the T5 slip.

"C" bonds, Series 45 and subsequent - Report the amount shown on the T5 slip.

"C" bonds, Series 42 to 44 - Use Chart 1 if you want to report your bond interest using the annual accrual method.

Chart 1: Interest to report for C bonds using the annual accrual method
For each series:	Series 42	Series 43	Series 44
A - Face value of bonds	-	-	-
B - Amount from line A divided by 100	=	=	=
C - Interest amount	x 12.69	x 11.64	x 10.57
Line B x Line C Report this amount on line 121	=	=	=

If you want to change to the annual accrual method, use Chart 2 to calculate the amount you should report.

Chart 2: Interest to report for "C" bonds if you want to change
For each series:	Series 42	Series 43	Series 44
A - Face value of bonds	-	-	-
B - Amount from line A divided by 100	=	=	=
C - Interest amount	x 32.57	x 21.98	x 10.57
Line B x Line C Report this amount on line 121	=	=	=

If you use the cash or receivable method, you have to report the interest at least every three years. Using this method, you should have reported the following amounts of interest for each $100 of bonds:

• for Series 42 bonds, $33.19 on your 1990 return, $34.90 on your 1993 return, and $32.57 on your 1996 return;
• for Series 43 bonds, $35.33 on your 1991 return and $26.78 on your 1994 return; and
• for Series 44 bonds, $32.05 on your 1992 return and $24.48 on your 1995 return.

If you have not reported any interest on your Series 42, 43, or 44 "C" bonds, you should write and ask us to adjust

your return. For more details on how to do this, see the section called "How do you change your return?" on page 9 of this guide.

If you cashed Series 42, 43, or 44 "C" bonds in 1996, report the amount shown on the T600 slip minus any part of that amount that you have already reported in previous years. Use Chart 3 below to calculate the amount you should have reported for each $100 of bonds:

Chart 3: Interest already reported for eash $100 of "C" bonds chased before maturity
For each series:	Series 42	Series 43	Series 44
Annual accrual method	87.97	72.45	56.53
Cash or receivable method	68.09	62.11	56.53

TREASURY BILLS (T-BILLS)

If you disposed of a T-Bill in 1996, you will receive either a T5008 slip, Statement of Securities Transactions, or an account statement.

If you disposed of a T-Bill at maturity, you have to report as interest the difference between the price you paid for it and the proceeds of disposition shown on the T5008 slip or account statement.

If you disposed of a T-Bill before maturity, you may also have to report a capital gain or loss. For details, get the income tax guide called Capital Gains.

EARNINGS ON LIFE INSURANCE POLICIES

Report the earnings which have accumulated on certain life insurance policies in the same way as you do for other investments. In all cases, your insurance company will send you a T5 slip.

For policies bought before 1990, you can choose to report accumulated earnings annually by telling your insurer in writing that you choose to do so.

FOREIGN INTEREST AND DIVIDEND INCOME

Report gross foreign interest and dividend income in Canadian dollars. Do not deduct from your foreign income the amount of tax the foreign country withheld. For more information on how to convert your foreign income into Canadian dollars, see the section called "How do you report foreign income and other amounts?" on page 9.

TAX TIP If you paid foreign taxes on foreign investment income that you received, you may be able to claim a foreign tax credit. See lines 507 and 508 for details.

LINE 122 - NET PARTNERSHIP INCOME: LIMITED OR NON-ACTIVE PARTNERS ONLY (for deemed residents)

If you were a limited partner of a partnership that did not include a rental or farming operation, enter your share of the partnership's net income or loss on line 122.

If you were a partner (other than a limited partner) of a partnership that did not include a rental or farming operation, enter your share of the partnership's net income or loss on line 122 only if you were:

• not actively involved in the partnership; and
• not otherwise involved in a business or profession similar to that carried on by the partnership.

Report your net rental income or loss from a partnership on line 126. Report your net farming income or loss from a partnership on line 141.

If none of the above applies to you, enter your share of the partnership's net income or loss on the applicable self-employment line of your return (see lines 135 to 143).

NOTE
If the partnership has a loss, the amount you can claim could be limited. For details, contact us.

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

HOW TO REPORT

• Complete Part III of Schedule 4.
• Attach to your return a T5013 slip, Statement of Partnership Income. If you did not receive this slip, attach a copy of the partnership's financial statement. See lines 135 to 143 for more details.

NOTE
You may have to make Canada Pension Plan contributions on the net income you report on line 122. See line 310 for details.

CERTIFIED FEATURE FILMS AND CERTIFIED PRODUCTIONS

You may have invested in a Canadian certified feature film or certified production for reasons other than to earn income from a business. If so, and if you want to claim capital cost allowance, you have to file with your return a T1-CP slip, 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.

LINE 126 - RENTAL INCOME (for deemed residents)

Report your rental income for the 1996 calendar year. You have to include with your return a statement showing your rental income and expenses for the year. You can get Form T776, Statement of Real Estate Rentals, from us to help you calculate your net rental income.

Enter your gross rental income on line 160 and your net rental income or loss from real estate rentals on line 126. If you have a rental loss, show the amount in brackets. You should also include any amount in box 20 of your T5013 slip, or that a partnership allocated to you in its financial statements. The income tax guide called Rental Income contains Form T776, as well as details on rental matters.

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

LINE 127 - TAXABLE CAPITAL GAINS (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

A capital gain or a capital loss usually occurs when you sell or dispose of property, such as real estate or shares. If you are a non-resident, or a non-resident electing under section 217, a capital gain or a capital loss occurs when you

dispose of taxable Canadian property. The taxable part of a capital gain is 75% of the net amount of your capital gains minus your capital losses for the year.

Under proposed changes, if you realized a capital gain after 1991, as a result of a mortgage foreclosure or conditional sales repossession, the capital gain is excluded from income when calculating your claim for the GST credit, Child Tax Benefit payments, age amount, and child tax credit.

In addition, do not include such a gain in the calculation of your social benefits repayment on line 235. If this applies to you, contact us for more details.

HOW TO REPORT

Use Schedule 3 to calculate your taxable capital gains or allowable capital losses and attach the completed schedule to your return. If you receive a T5008 slip, an account statement showing your securities transactions, or a financial statement from a partnership, use the information on these statements to help you complete Schedule 3. If you need more information on capital gains or capital losses, get the income tax guide called Capital Gains.

If you have a taxable capital gain, transfer the amount from line 044 on Schedule 3 onto line 127 of your return. If you have a net capital loss, do not claim it on line 127. You can only use it to reduce your taxable capital gains of other years. See the "Note" at line 253 for details on how to carry back your loss.

TAX TIP If you are a deemed resident, you may be able to claim a deduction for the taxable capital gain you report. See line 254 for details.

LINE 128 - ALIMONY OR MAINTENANCE INCOME (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the taxable alimony or maintenance payments you received or are considered to have received in 1996.

Generally, the alimony or maintenance payments you received are taxable, if all of the following conditions are met:

• When you received the payments, you and the person making the payments were living apart and you continued to live apart for the rest of the year.
• The payments were made under a court order or written agreement.
• The payments were made to maintain you, your children, or both.
• The payments were an allowance to be paid periodically, such as monthly, quarterly, semi-annually, or annually.
• The payments were made to you or to someone else on your behalf.

NOTE
There are exceptions to these conditions. If you separated in 1996, or if you do not know whether the payments you received are taxable, get the pamphlet called Alimony or Maintenance.

Under proposed changes, if you are a deemed resident you will not have to include in your income child support that becomes payable after April 30, 1997, under a court order or written agreement dated May 1, 1997, or later. You will have to include in your income amounts received that become payable under orders and agreements dated before May 1, 1997, unless:

• the order or agreement provides that the amounts payable on or after a specific date (May 1, 1997, or later) will not be taxable to 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); or
• you and the payer 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 Form T1156, Support Payments Information Sheet.

You may have to register your court order or written agreement by using Form T1158, Registration of Family Support Payments. For more information, see Form T1156.

TAX TIP If you are a deemed resident, you may have to report alimony or child support payments you received from a resident of another country. However, if the alimony or child support payments are tax-free in Canada because of a tax agreement between Canada and the other country, you can claim a deduction for the payments on line 256. To find out if the payments you received are tax-free, contact the International Tax Services Office.

You may be able to claim a deduction for alimony or maintenance income you repaid under a court order. For details, call the International Tax Services Office.

NON-RESIDENTS ELECTING UNDER SECTION 217 - Enter on line 128 alimony or maintenance payments you received or are considered to have received from Canadian sources only.

LINE 129 - REGISTERED RETIREMENT SAVINGS PLAN (RRSP) INCOME (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Generally, you have to enter on line 129 the total amount shown in boxes 16, 18, 20, 22, 26, 28, and 34 of all your T4RSP slips. This is the case unless your spouse made a contribution to your RRSP. See the heading "Spousal RRSPs" below for more details.

TAX TIP Annuity payments shown in box 16 of your T4RSP slip may qualify for the pension income amount. See line 314 for more details.

SPOUSAL RRSPS

Your spouse may have to report some or all of the RRSP income shown in boxes 20, 22, or 26 of your T4RSP slips if:

• your spouse has contributed to any of your RRSPs in 1994, 1995, or 1996; or
• you received a T4RSP slip that shows a yes in box 24 and either your spouse's name in box 38 or your spouse's social insurance number in box 36.

If, at the time of the withdrawal, you and your spouse were living apart because of a breakdown in the relationship, you have to report the whole amount shown on your T4RSP slips.

Complete Form T2205, Calculating Amounts From a Spousal RRSP or RRIF to Include in Income, to calculate the amount from a spousal RRSP that each of you has to report. Both you and your spouse should include a copy of this form with your returns. Attach the T4RSP slip to your return.

For more details on RRSP income, get the income tax guide called RRSPs and Other Registered Plans for Retirement.

REPAYMENTS UNDER THE HOME BUYERS' PLAN (HBP)

If you withdrew funds from your RRSP under the HBP before 1995, you should have received a Statement of Account - Home Buyers' Plan from us in the fall of 1995, indicating the amount of your annual repayment for 1996. You have to make this repayment by contributing to your RRSP before March 2, 1997, and designating it using line 246 of Schedule 7. Do not make the repayment to us.

If you have not made a repayment for 1996, you have to include the required repayment, as indicated on your repayment statement, on line 129 of your return. You also have to include an amount on line 129 if you repay less than the required repayment. For more details, get the pamphlet called Home Buyers' Plan (HBP) for the year you made your withdrawal.

LINE 130 - OTHER INCOME (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

Use this line to report taxable income that is not reported anywhere else on the return. Identify the type of income you are reporting in the space to the left of line 130 on your return. This will support any deductions you are entitled to claim against this income. If you have more than one type of income, attach a note to your return giving the details.

NOTE Special rules apply for income from property one family member lends or transfers to another. See "Loans and transfers of property" on page 11 for more information.

SCHOLARSHIPS, FELLOWSHIPS, BURSARIES, STUDY GRANTS, AND ARTISTS' PROJECT GRANTS

Total all the amounts you received in 1996 (box 28 of your T4A slips).

• If they total $500 or less, do not report them.
• If they total more than $500, report on line 130 only the amount that is more than $500.

EXAMPLE Kimiko received a $1,500 scholarship to attend university. She subtracts the $500 tax-free amount and reports $1,000 on line 130.

Report prizes and awards you received as a benefit from your employment or in connection with a business. However, these are not eligible for the $500 tax-free amount. If you received a research grant, see line 104.

For more information, get Interpretation Bulletin IT-75, Scholarships, Fellowships, Bursaries, Prizes, and Research Grants.

NOTE
If you received an artists' project grant, you can subtract the $500 or your expenses, whichever you prefer, but not both. However, the expenses you claim cannot be more than the grant. You cannot claim personal living expenses while at your usual place of residence.

LUMP-SUM PAYMENTS

Include lump-sum payments from pensions and deferred profit-sharing plans (box 18 of your T4A slips and box 22 of your T3 slips).

RETIRING ALLOWANCES (SEVERANCE PAY)

A retiring allowance includes an amount paid as severance pay. Include the amount shown in box 26 of your T4A slips.

Also, include any retiring allowance included in the amount in box 26 of your T3 slips. Details regarding the retiring allowance will be shown in box 36 and in the footnotes area of the slips.

NOTE
You may be able to deduct legal fees you paid to get a retiring allowance. See line 232 for details.

TAX TIP You may be able to transfer part or all of your retiring allowances to your registered retirement savings plan (RRSP). See the heading "Income eligible for transfer" on page 21. However, if you make this transfer, you may have to pay minimum tax. See the heading "Minimum tax" on page 37 for details.

DEATH BENEFITS (OTHER THAN CANADA OR QUEBEC PENSION PLAN DEATH BENEFITS)

A death benefit is an amount you receive, after a person's death, for that person's employment service. It is shown in box 28 of your T4A slips or box 35 of your T3 slips. You may not have to pay tax on up to $10,000 of the benefit you received.

If you are the only one to receive a death benefit, report the amount you receive that is more than $10,000. Even if you do not receive all of the death benefit in one year, the total tax-free amount for all years cannot be more than $10,000.

To find out what to report if anyone else also received a death benefit for the same person, call our T.I.P.S. (Info-Tax) service. You will find T.I.P.S. information at the end of this guide.

Attach a note to your return stating the amount of death benefits you received but did not include in your income.

OTHER INCOME

Also report the following amounts on line 130:

• the total taxable payments from a registered education savings plan (box 26 of your T3 slips);
• amounts distributed from a retirement compensation arrangement;
• training allowances, Saskatchewan Pension Plan payments, or any other amount shown in box 28 of your T4A slips;
• amounts from a trust (including an amateur athlete trust) shown in box 26 of your T3 slips;
• certain annuity payments (see line 115);
• income assistance payments you received as an employee under The Atlantic Groundfish Strategy (but if you received these payments because you were a self-employed fisherman, report them on line 143); and
• any other type of taxable income that you are not reporting anywhere else. If you are not sure whether it is taxable, contact us.

LINES 135 TO 143 - SELF-EMPLOYMENT INCOME (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter on the appropriate line your gross and net income or loss from self-employment. If you have a loss, show it in brackets. Include with your return a statement showing your income and expenses.

If your fiscal period does not end on December 31, 1996, the guide called Reconciliation of Business Income for Tax Purposes will help you calculate the business income to report on your 1996 return.

The following income tax guides contain additional information and forms you may need to help you calculate your self-employment income:

• Business and Professional Income (Form T2124, Statement of Business Activities, and Form T2032, Statement of Professional Activities)
• Farming Income (Form T2042, Statement of Farming Activities)
• Fishing Income (Form T2121, Statement of Fishing Activities)

If you are using your home for day care, you may also want to get the pamphlet called Using Your Home for Day Care.

You can get these or any other publications from us.

If you were a limited or non-active partner, enter your net income or loss on line 122, unless the following applies. If your net income or loss is from a rental operation, enter it on line 126. If it is from a farming operation, enter it on line 141.

If you were an active partner and received a T5013 slip, Statement of Partnership Income, report the amount from box 18 on the line of your return shown in box 12. This is your share of the partnership's income or loss. Also report the partnership's gross income as shown in box 31.

Attach a copy of the T5013 slip to your return. If you did not receive this slip, you should attach a copy of the applicable self-employment form indicated above.

NOTE
If you are a deemed resident, you may have to make Canada Pension Plan contributions on your self-employment earnings. See line 310 for details.

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

LINE 144 - WORKERS' COMPENSATION BENEFITS (for deemed residents)

Enter the amount shown in box 10 of your T5007 slip. If you did not receive a T5007 slip, report the amount from the information slip you did receive.

Claim a deduction on line 250 for the benefits you entered on line 144.

LINE 145 - SOCIAL ASSISTANCE PAYMENTS

Enter the amount shown in box 11 of your T5007 slip, or shown on any other slip you may have received, unless you lived with your spouse at the time either of you received the social assistance payments. In that case, the spouse with the higher net income (line 236) has to report these payments.

If the slip shows both your and your spouse's name, the spouse with the higher net income (line 236) has to report the total amount. If you received a Relevé 5 slip, the instructions on the back of the slip explain how to report this income.

NOTE
Generally, you do not include social assistance payments you or your spouse received for being a foster parent or for caring for a disabled adult who lived with you. However, if the payments are for caring for your spouse or an individual related to you or your spouse, you do include them.

Claim a deduction on line 250 for the social assistance payments you entered on line 145.

LINE 146 - NET FEDERAL SUPPLEMENTS (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the amount shown in box 21 of your T4A(OAS) slip.

If your net income before adjustments (line 234) is $53,215 or less, claim a deduction on line 250 for the net federal supplements you entered on line 146. If line 234 of your return is more than $53,215, contact us to find out how much you can deduct on line 250.

NON-RESIDENTS ELECTING UNDER SECTION 217 - Your net federal supplement amount may be shown in box 16 or 26 of your NR4 slip if income code 45 is located in box 14 or 24 of the slip.

STEP 4 - TAXABLE INCOME

LINE 206 - PENSION ADJUSTMENT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

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 1996 under registered pension plans or deferred profit-sharing plans.

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 1997 registered retirement savings plan (RRSP)

deduction limit, which we will show on your Notice of Assessment for 1996. See line 208 for details.

If you have any questions about how your PA was calculated, ask your employer.

NOTE
If you are a deemed resident and you participated in a foreign pension plan in 1996, you may have to enter an amount on this line. For details, contact us.

LINE 207 - REGISTERED PENSION PLAN CONTRIBUTIONS (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the total of all deductible amounts you contributed to your registered pension plans (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.

You can deduct the total amount unless it is more than $3,500 and your information slip shows a past-service amount for a period before 1990. 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.

Under proposed changes, you have to start receiving a pension from your RPP by the end of the year you turn 69. However, if you were 69 or 70 at the end of 1996, you can wait until the end of 1997. 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 return. However, you have to keep them in case we ask to see them.

NOTE
You cannot deduct contributions you made to pension plans in other countries, with two exceptions. Under the Canada-France Income Tax Convention and the Canada-Netherlands Income Tax Convention, you may be able to deduct, under certain circumstances, contributions to a pension plan. If you have contributed to a pension plan in either France or the Netherlands, contact us to find out if you can deduct the amount.

LINE 208 - REGISTERED RETIREMENT SAVINGS PLAN (RRSP) CONTRIBUTIONS (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

This section gives general information on RRSPs. It is divided into the following parts:

• Maximum you can deduct
• 1996 RRSP deduction limit
• Income eligible for transfer
• Repayments under the Home Buyers' Plan (HBP)
• Schedule 7, RRSP Unclaimed Contributions, Transfers, and Designations of Repayments Under the Home Buyers' Plan

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 return official receipts that confirm all amounts you contributed, including those you are designating as HBP repayments. See the heading "Repayments under the Home Buyers' Plan (HBP)" on page 21.

We will only accept a photocopy of a receipt 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 "1996 RRSP deduction limit" plus "income eligible for transfer" that you received in 1996 and transferred to an RRSP before March 2, 1997; or
• the total of your RRSP contributions from March 1, 1996, to March 1, 1997, plus the RRSP contributions you made from January 1, 1991, to February 29, 1996, that were not allowed as a deduction on your returns for the years 1990 to 1995.

Your RRSP contributions include amounts you contributed to your own RRSP or an RRSP for your spouse based on your "1996 RRSP deduction limit." They also include eligible amounts from lines 115, 129, and 130 of your 1996 return that you transferred to your own RRSP. However, your RRSP contributions do not include any of the amounts mentioned in the "Note" at the top of page 22. For more information on eligible amounts you can transfer, see the heading "Income eligible for transfer" on page 21.

Under proposed changes, neither you nor your spouse can contribute to your RRSP after the end of the year you turn 69. However, if you were 69 or 70 at the end of 1996, you and your spouse can still contribute until the end of 1997. If an RRSP annuity contract you purchased before March 6, 1996, already provides a specific starting date, that date will remain in effect.

Even if you cannot contribute to your own RRSP, you can still contribute to an RRSP for your spouse, as long as your spouse's age allows.

OVERCONTRIBUTIONS - If you overcontribute to an RRSP, you may have to pay a special tax. For more details, get a copy of the income tax guide called RRSPs and Other Registered Plans for Retirement.

1996 RRSP DEDUCTION LIMIT

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

If you do not have your notice or Form T1028, you can find out your limit for 1996 by calling our automated T.I.P.S. (RRSP) service, or by calling the International Tax Services Office.

If you would like to calculate your 1996 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.

Under proposed changes, you can carry forward indefinitely your unused RRSP deduction room accumulated after 1990.

You may have had 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.

INCOME ELIGIBLE FOR TRANSFER

You can claim an RRSP deduction for eligible amounts you received and included in income on your 1996 return, and that you contributed to your own RRSP before March 2, 1997. You can deduct this contribution, called a transfer, in addition to any RRSP contribution you make based on your "1996 RRSP deduction limit."

You can transfer to your own RRSP only certain types of income you received and reported on lines 115, 129, or 130 of your 1996 return. For example, if you received a retiring allowance in 1996, you can contribute to your RRSP up to the eligible part of that income, and deduct it as a transfer. The income tax guide called RRSPs and Other Registered Plans for Retirement gives more details on the income that is eligible for transfer.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - You can transfer certain Canadian-source amounts otherwise subject to withholding tax, to an RRSP, a registered pension plan (RPP), or a registered retirement income fund (RRIF) without having tax withheld. These amounts include payments out of an RPP, deferred profit-sharing plan, RRIF, or RRSP. The transfers have to be direct transfers, and you have to complete Form NRTA1, Authorization for Non-Resident Tax Exemption. For more information, contact us.

NOTE
If you are deducting an amount you transferred to your RRSP, you have to complete Schedule 7.

If you transfer amounts to an RRSP, you may have to pay minimum tax. See "Minimum tax" on page 37 for details.

REPAYMENTS UNDER THE HOME BUYERS' PLAN (HBP)

If you withdrew funds from your RRSP under the HBP after March 1, 1994, but before 1995, you have to make your first annual repayment before March 2, 1997. If you withdrew funds in 1995, you have to make your first annual repayment before March 2, 1998. If you withdrew funds in 1996, you have to make your first annual repayment before March 2, 1999. You cannot deduct on your return any RRSP contribution you designate as an HBP repayment on Schedule 7.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - If you ceased to be a resident of Canada after you bought or built a qualifying home with funds you withdrew under the Home Buyers' Plan, contact the International Tax Services Office for the repayment rules that apply to you.

REPAYMENTS FOR 1996 - You have to attach Schedule 7 to your 1996 return. Enter on line 246 of Schedule 7 the total of the RRSP contributions you made from January 1, 1996, to March 1, 1997, that you want to designate as repayments under the HBP for 1996, provided you did not deduct them or designate them as repayments on your 1995 return.

NOTE
If you have not repaid the amount indicated on your Statement of Account - Home Buyers' Plan for 1996 before March 2, 1997, you may have to include an amount in income. See line 129 for details.

If you participated in the HBP and withdrew funds before 1995, you should have received a repayment statement from us in the fall of 1995. The statement will show the amount you have to repay to your RRSP for 1996. Do not make the repayment to us. Your statement will also confirm the total amount you have repaid to date.

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

SCHEDULE 7, RRSP UNCLAIMED CONTRIBUTIONS, TRANSFERS, AND DESIGNATIONS OF REPAYMENTS

UNDER THE HOME BUYERS' PLAN

See Schedule 7 to determine if you have to complete this schedule and attach it to your return. It is important that you complete Schedule 7, because the information you provide allows us to verify any deduction for unclaimed RRSP contributions on your future returns. This information will also enable us to tell you, on your Notice of Assessment for 1996, your unclaimed RRSP contributions available for you to deduct on your 1997 return.

UNCLAIMED 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.

NOTE
If you had unclaimed RRSP contributions for 1995, you should have filed a completed Schedule 7 with your 1995 return. If you did not, you should submit a completed copy of a 1995 Schedule 7 to the International Tax Services Office. See "How do you change your return?" on page 9 for details.

If you made contributions to your own RRSP or an RRSP for your spouse from January 1, 1991, to February 29, 1996, that you have not deducted, and you did not file a 1995 return, contact us.

If you do not have your 1995 Notice of Assessment or Notice of Reassessment, you can find out if you have unclaimed RRSP contributions for 1995 by calling our automated T.I.P.S. (RRSP) service. You will find T.I.P.S. information at the end of this guide.

HOME BUYERS' PLAN - See the heading "Repayments under the Home Buyers' Plan (HBP)" on this page for more details.

TRANSFERS - For more information on transfers, see the heading "Income eligible for transfer" on this page.

NOTE
You cannot claim an RRSP deduction for certain RRSP contributions you made. When completing Schedule 7, do not include the following amounts:

• Any payments directly transferred to your own RRSP for which you did not receive an information slip.
• Any RRSP contribution you made after February 29, 1996, that was refunded to you or your spouse in 1996 because it was an undeducted contribution. Report the refund on line 129 of your 1996 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 a copy of it to your return and claim a deduction on line 232. Otherwise, complete and attach 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).
• The excess part of a direct transfer of a lump-sum payment from your registered pension plan (RPP) to an RRSP or registered retirement income fund (RRIF) that you withdrew and are including on line 129 or 130 of your 1996 return, and deducting on line 232. You may have completed 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.
• The part of an RRSP withdrawal that you recontributed to your RRSP and deducted on line 232. This would have happened if you accidentally withdrew more RRSP funds than necessary to obtain past-service benefits under an RPP.

LINE 209 - SASKATCHEWAN PENSION PLAN CONTRIBUTIONS (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

You may be able to deduct contributions for 1996 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, 1996, to March 1, 1997 (excluding any contributions that you deducted on your 1995 return); or
• your 1996 RRSP deduction limit minus your RRSP deduction from line 208 (not including transfers to your RRSP).

RECEIPTS - Attach your receipts to your return.

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 (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the total of the following:

• 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) if you had to pay them 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 (GST).

TAX TIP You may be eligible for a rebate of any GST 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 return. However, you have to keep them in case we ask to see them.

LINE 214 - CHILD CARE EXPENSES (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

You may be able to claim child care expenses you (or your spouse, if you have one) paid for someone to look after your children so that you (or your spouse) could:

• earn income from employment or self-employment;

under proposed changes, 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.

Under proposed changes, you can claim expenses for a child who was under 16 at any time in the year.

To make your claim, get Form T778, Calculation of Child Care Expenses Deduction for 1996, and Form T1065, Child Care Expenses Information Sheet for 1996. However, if you claimed child care expenses on your 1995 return, there should be a copy of this form and information sheet in the tax package we mailed to you. Attach a completed copy of 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 Forms T1065 and T778.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - You can only deduct child care expenses if you meet the criteria outlined on Form T1065 and the expenses were paid to a resident of Canada for services provided in Canada.

LINE 215 - ATTENDANT CARE EXPENSES (for deemed residents)

You may be able to claim up to $5,000 you paid for attendant care that allowed you to earn income. For more details, call the International Tax Services Office. The telephone listings are included with this package.

To calculate the amount you can claim, complete Form T929, Attendant Care Expenses.

RECEIPTS - Do not include your receipts or Form T929 with your return. However, you have to keep them in case we ask to see them.

LINE 217 - BUSINESS INVESTMENT LOSS (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

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, which is located to the left of line 217.

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

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - A business investment loss applies to you only if the loss arises from property which would have been taxable to you in Canada.

LINE 219 - MOVING EXPENSES (for deemed residents and non-residents)

DEEMED RESIDENTS - Generally, you cannot deduct moving expenses. However, if you were a full-time student during 1996, and you moved from one location to another to start a job or a business, or to attend a post-secondary educational institution, you may be able to deduct the expenses.

NON-RESIDENTS - You cannot deduct moving expenses unless you were a full-time student during 1996. If this is your situation, contact the International Tax Services Office for the special rules that apply to you.

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 1995 but could not claim all your moving expenses in that year, you can claim the remaining expenses against income you earned in 1996 at the new location.

RECEIPTS - Do not include your receipts or Form T1-M with your return. However, you have to keep them in case we ask to see them.

LINE 220 - ALIMONY OR MAINTENANCE PAID (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the deductible alimony or maintenance you paid in 1996. Generally, you can deduct these payments, if all of the following conditions are met:

• When you made the payments, you were living apart from the person to whom or for whom you made the payments, and you continued to live apart for the rest of the year.
• 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 1996, or if you do not know whether the payments you made are deductible, get the pamphlet called Alimony or Maintenance.

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 Alimony or Maintenance.

Under proposed changes, you will not be able to 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. You will be able to deduct from your income amounts paid that become payable under orders and agreements dated before May 1, 1997, unless:

• 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); or
• 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 Form T1156, Support Payments Information Sheet.

You may have to register your court order or written agreement by using Form T1158, Registration of Family Support Payments. For more information, see Form T1156.

RECEIPTS - Do not include your receipts or cancelled cheques, or your court order with your return. However, you have to keep them in case we ask to see them.

TAX TIP If your court order or written agreement was signed in 1996, and it mentions the payments you made in 1995, you can ask us to adjust your 1995 return to claim those payments. See "How do you change your return?" on page 9 .

LINE 221 - CARRYING CHARGES AND INTEREST EXPENSES (for deemed residents)

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:

• fees for the management or safe custody of investments;
• safety deposit box charges;
• fees for certain investment advice (see Interpretation Bulletin IT-238, Fees Paid to Investment Counsel) or for recording investment income;
• fees to have someone complete your tax return, but only if you have income from a business or property, accounting is a normal 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); and

administration fees for your self-administered RRSP or RRIF that you had to pay to the trustee of your RRSP or RRIF (see the income tax guide called RRSPs and Other Registered Plans for Retirement).

Under proposed changes, you cannot deduct amounts you paid after March 5, 1996, for administration services for any RRSP or RRIF.

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. 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 1996, 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.

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 50 CSBs through payroll deductions. The total amount deducted from his pay for the bond was $1,025.64 (composed of the $1,000 face value of the bond plus $25.64 he paid in interest). Michael can claim the $25.64 on line 221.

POLICY LOAN INTEREST - To claim interest you paid during 1996 on a policy loan made to earn income, have your insurer complete Form T2210, Verification of Policy Loan Interest by the Insurer, before May 1, 1997. Keep the completed form in case we ask to see it.

RECEIPTS - Do not include your receipts or Form T2210 with your return. However, 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 (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

If you invested in a petroleum, natural gas, or mining venture in 1996, but did not participate actively, you can deduct your expenses on this line. If you participated actively, claim your expenses on 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 or a copy of the statement that gives details of the deduction.

The statements have 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 schedule showing how you calculated your deduction.

DEPLETION ALLOWANCES - Claim these amounts on line 232.

If you have any questions about these expenses, call the International Tax Services Office. See the telephone listings included with this package.

LINE 229 - OTHER EMPLOYMENT EXPENSES (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

You may be able to deduct certain expenses you paid (including any goods and services tax (GST) you paid) to earn employment income if:

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

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.

(PLEASE SEE PRINTED COPY FOR FORMS 5013-S1, 5013-R, 5006-S2, 5006-S3, 5006-S4, 5006-S6, 5006-S7 AND 5006-S8)

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 1996. 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 return, except for Form T777. However, you have to keep them in case we ask to see them.

TAX TIP You may be eligible for a rebate of any GST you paid as part of your expenses. See line 457 for details.

LINE 232 - OTHER DEDUCTIONS (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

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 you repaid amounts in 1996 that you already reported as income, you may be able to deduct them on your 1996 return. Attach receipts or other documents showing the amounts you paid. You can claim repayments of:

• Employment Insurance (EI) benefits (see the explanation that follows);
• Old Age Security or Canada or Quebec Pension Plan benefits;
• retiring allowances (severance pay);
• refund interest (see the explanation that follows);
• 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 T4U slip will show only the net amount you received, so you cannot claim a deduction.
• You may have repaid HRDC. If so, you should receive an official receipt, Statement of Benefits Repaid. Enter on line 232 the amount shown on this receipt. Attach the receipt to your return. 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 1996, you can deduct the amount you repaid.

LEGAL FEES

You can deduct the 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);
• incurred to collect late alimony or maintenance payments that you will include in your income;
• incurred to get a court order when you have to sue your spouse or former spouse for maintenance payments in a family court; and
• 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 a right to alimony or maintenance 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 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 1996 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 a copy of 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 (for deemed residents, non- residents and for non-residents electing under section 217 of the Income Tax Act)

EMPLOYMENT INSURANCE (EI) BENEFITS

If you received EI benefits (line 119) in 1996 and your net income before adjustments (line 234) is more than $48,750, you have to repay part of these benefits. Complete Chart 1 to calculate how much you have to repay.

Chart 1: EI benefits repayment
EI benefits from line 119	$__________ 1
EI benefits you repaid in 1996 and claimed on line 232	- __________ 2
Line 1 minus line 2	= $ 3
Net income before adjustments from line 234	$__________ 4
Base amount	- 48,750.00 5
Line 4 minus line 5 (if negative, enter "0")	= $ 6
EI benefits repayment: Enter 30% of either line 3 or line 6, whichever is less	$ 7

If you received Old Age Security benefits or net federal supplements in 1996, see "Old Age Security (OAS) pension benefits and net federal supplements" on this page. Otherwise, enter the amount from line 7 on lines 235 and 422 of your return.

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. If you are a deemed resident, complete Chart 2 to calculate how much you have to repay.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - If you received OAS pension or net federal supplements in 1996, do not complete Chart 2. Instead, enter on line 235 the amount from line 235 of your Old Age Security Return of Income.

Chart 2: 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 1996 and claimed on line 232	= $ 5
Net income before adjustments from line 234	$__________ 6
EI benefits repayment from line 7 in Chart 1 (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
	x 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 of Chart 1 (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.

NOTE
Recovery tax may have been withheld from your monthly OAS amount if you had an OAS repayment for 1995. The amount deducted is shown as "income tax deducted" in box 22 of your 1996 T4A(OAS) or T4A(P) slip. If you are a deemed resident, claim it on line 437, to reduce the amount of tax you owe when you file your 1996 return. Similarly, if you have an OAS repayment for 1996, tax may be withheld starting with your July 1997 amount. For more details, contact us.

If you are a non-resident, or a non-resident electing under section 217, you should claim any recovery tax deducted from your OAS benefits on your Old Age Security Return of Income. Do not claim it on this return.

LINE 237 - ACCUMULATED FORWARD-AVERAGING AMOUNT WITHDRAWAL (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

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 1996 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 will be the last return on which you will be able to withdraw previously averaged amounts.

LINE 248 - EMPLOYEE HOME RELOCATION LOAN DEDUCTION (for deemed residents)

Generally, you enter the amount shown as "Home Loan $xxx" in the footnotes area of your T4 slip. However, there is a maximum you can deduct. To find out the maximum you can deduct for 1996, call the International Tax Services Office. The telephone listings are included with this package.

LINE 249 - STOCK OPTION AND SHARES DEDUCTIONS (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the amount shown as "Stock-Option 110(1)(d) $xxx" or "Stock-Option 110(1)(d.1) $xxx" in the footnotes area of your T4 slip.

LINE 250 - OTHER PAYMENTS DEDUCTION (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

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 (for deemed residents)

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 1996 T5013 slip on your 1996 return.

LINE 252 - NON-CAPITAL LOSSES OF OTHER YEARS (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

DEEMED RESIDENTS - Enter the amount of your unapplied non-capital losses from 1989 to 1995, or your unapplied farming and fishing losses from 1986 to 1995, that you want to apply in 1996. 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 income tax guide called Farming Income or the guide called Fishing Income for details.

If you need more information on losses, get Interpretation Bulletin IT-232, Non-Capital Losses, Net Capital Losses, Restricted Farm Losses, Farm Losses and Limited Partnership Losses - Their Composition and Deductibility in Computing Taxable Income.

NOTE
You may want to carry back your 1996 non-capital or farming and fishing loss to your 1993, 1994, or 1995 return. To do this, use the Form T1A, Request For Loss Carry-Back, that is in your Farming Guide or your Fishing Guide, or get one from us. Attach a completed copy to your return. Do not file an amended return for the year or years you want to apply the loss.

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 (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

DEEMED RESIDENTS - 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 1996, and you want to apply it against taxable capital gains you reported on your 1993, 1994, or 1995 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 you want to apply the loss.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - Contact the International Tax Services Office for the special rules that apply to you.

LINE 254 - CAPITAL GAINS DEDUCTION (for deemed residents)

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 (for deemed residents)

To make your claim, use Form T2222, Northern Residents Deductions for 1996. If you were allowed this claim on your 1995 return, and you still lived in a prescribed zone in 1996, 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 (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

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.

INCOME EXEMPT UNDER A TAX TREATY

You can claim a deduction for foreign income you included on your return. For example, under the Canada-U.S. Income Tax Treaty, child support payments received from a U.S. resident are tax-free in Canada. 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, you cannot claim any credit for U.S. tax withheld on these benefits.

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.

STEP 5 - NON-REFUNDABLE TAX CREDITS

Non-refundable tax credits reduce the amount of income tax you owe. However, if the total of these credits is more than the amount you owe, you will not get a refund for the difference.

The information at lines 300 to 306 explains, in general, how to claim personal amounts.

WHAT NON-REFUNDABLE TAX CREDITS CAN YOU CLAIM? (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

DEEMED RESIDENTS - You can claim all the non-refundable tax credits that apply to you. Non-residents - You can claim the non-refundable tax credits on lines 316, 320, 340, and 342 if they apply to you. You can claim the other applicable non-refundable tax credits if you have reported at least 90% of your world income for the entire year on line 150 of your return. World income is income from sources inside and outside Canada.

NOTE
For us to allow full non-refundable tax credits, you have to attach a note to your return stating your world income for 1996 in Canadian dollars. You also have to include a breakdown of the income you earned from sources inside and outside Canada.

NON-RESIDENTS ELECTING UNDER SECTION 217 - You can claim non-refundable tax credits using whichever of the following three methods applies to you:

• Method 1: If you have included on your return at least 90% of your 1996 world income, you can claim all of the non-refundable tax credits that apply to you.
• Method 2: If you do not meet the 90% rule, you can still claim all the non-refundable tax credits that apply to you. You can do this if you have included more than 50% of your 1996 world income in your taxable income on your return. However, the total amount of non-refundable tax credits that you claim cannot be more than 17% of the section 217 income that was paid or credited to you in the year.
• Method 3: If you do not meet the requirements in methods 1 or 2, you can still claim the non-refundable tax credits on lines 308, , 312, 316, 320, 340, and 342, if they apply to you.

NOTE
If you are claiming non-refundable tax credits according to methods 1 or 2, attach a note to your return stating your world income for 1996 in Canadian dollars. You also have to include a breakdown of the income you earned from sources inside and outside Canada.

AMOUNTS FOR NON-RESIDENT DEPENDANTS (LINES 303 AND 306)

You may be able to claim a personal amount for certain dependants who are non-residents of Canada and who were dependant on you for support in 1996. You may be able to make this claim for your spouse (line 303), or for your or your spouse's children and grandchildren who were born in 1978 or earlier and who were mentally or physically infirm (line 306).

If your spouse, or your or your spouse's children or grandchildren already have enough income or assistance for a reasonable standard of living in the country in which they live, we do not consider them to depend on you for support. Also, we do not consider gifts you send them to be support.

Attach proof of your support payments to your return. The proof of payment has to show your name, the amount, the date of the payment, and the dependant's name and address. If you sent the funds to a guardian, the guardian's name and address also have to appear on the proof of payment.

LINE 300 - BASIC PERSONAL AMOUNT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

Claim the basic personal amount of $6,456.

LINE 301 - AGE AMOUNT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

If you were 65 or older on December 31, 1996, and your net income (line 236 of your return) is:

• $25,921 or less, enter $3,482 on line 301;
• more than $25,921 but less than $49,134, use the chart that follows to calculate your claim; or
• $49,134 or more, you cannot claim an amount on line 301.

Age amount

Maximum claim	$ 3,482.00 1
Your net income from line 236	$__________ 2
Base amount	- 25,921.00 3
Maximum claim	$ 3,482.00 1
	x 15% 5
Multiply the amount on line 4 by 15% and enter the result on line 6	-__________ 6
Line 1 minus line 6 (if negative, enter "0")	$ 7

Enter the amount from line 7 on line 301 of your return.

DATE OF BIRTH - Be sure to enter your date of birth in the Identification area (Step 1) on page 1 of your return.

TAX TIP If you do not need all of your age amount to reduce your federal income tax to zero, you can transfer any unused amount to your spouse. See line 326 for details.

You may be able to claim all or part of your spouse's age amount. See line 326 for details.

LINE 303 - SPOUSAL AMOUNT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

If you supported your spouse (as defined on page 10) in 1996, you may be able to claim a spousal amount. If your spouse's net world income (see the next section) is:

• $538 or less, claim $5,380;
• more than $538, but less than $5,918, complete the calculation on line 303 of your return; or
• $5,918 or more, you cannot claim a spousal amount.

NET WORLD INCOME OF SPOUSE

If your spouse is a deemed resident, net world income is the amount from line 236 of your spouse's return, or the amount it would be if your spouse completed a return. If your spouse is a non-resident, net world income is your spouse's net income for 1996 from sources both inside and outside Canada.

• If you were living with your spouse on December 31, 1996, you have to use your spouse's net world income for the whole year. This applies even if you got married in 1996, or if you separated and got back together in 1996.
• If you separated in 1996 because of a breakdown in your relationship, and were not back together on December 31, 1996, you only have to reduce your claim by your spouse's net world income before the separation. For a common-law spouse, you also have to be separated for at least 90 days.
• If you also made alimony or maintenance payments to your spouse or former spouse, get the pamphlet called Alimony or Maintenance. It contains the information you will need to prepare your return correctly.

TAX TIP If you cannot claim the spousal amount (or you have to reduce your claim) because of dividends your spouse received from taxable Canadian corporations, you may be able to reduce your tax if you report all of your spouse's dividends. See line 120 for details.

LINE 305 - EQUIVALENT-TO-SPOUSE AMOUNT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You may be able to claim all or part of the $5,380 equivalent-to-spouse amount if, at any time in the year, you were single, divorced, separated, or widowed and, at that time, you supported a dependant who was:

• under 18, your parent or grandparent, or mentally or physically infirm;
• related to you by blood, marriage, or adoption;
• living with you in a home that you maintained; and
• living in Canada. If the dependant is your child, the child does not have to live in Canada, but must still live with you.

Your dependant may live away from home while attending school. In that case, we consider that dependant to live with you for the purposes of this credit if the dependant lived with you when not in school.

You cannot claim an equivalent-to-spouse amount:

• If you are claiming a spousal amount (see line 303).
• If you had a spouse, as defined on page 10, throughout 1996. If you were separated but you reconciled during 1996, for the purposes of this claim, we consider you to have had a spouse throughout 1996.
• For your common-law spouse. However, you may be able to claim the spousal amount on line 303.
• If someone else in your household is making this claim. Each household is allowed only one claim for the equivalent-to-spouse amount.
• For a child for whom you are able to deduct support payments. However, if you separated in 1996, due to a breakdown in your relationship, some special rules apply. For details, get the pamphlet called Alimony or Maintenance.

HOW TO CLAIM

• Calculate your dependant's net world income. If your dependant is a deemed resident, net world income is the amount from line 236 of your dependant's return, or the amount it would be if your dependant completed a return. If your dependant is a non-resident, net world income is your dependant's net income for 1996 from sources both inside and outside Canada.
• Complete Schedule 5 to calculate your claim, and attach it to your return.

NOTE
You cannot split this amount with another person. Once you claim this amount for a dependant:

• no one else can claim this amount or an amount on line 306, "Amounts for infirm dependants age 18 or older," for that dependant; and
• under proposed changes, if the dependant is infirm and age 18 or older, you may also be able to claim an amount on line 306 for that dependant.

LINE 306 - AMOUNTS FOR INFIRM DEPENDANTS AGE 18 OR OLDER (for deemed residents, non-residents and for non-residents electing under section 217 of the Income Tax Act)

You can claim an amount for your or your spouse's dependent child or grandchild only if that child or grandchild was mentally or physically infirm and was born in 1978 or earlier.

You can also claim an amount for a person who meets all of the following conditions. The person must have been:

• your or your spouse's parent, grandparent, brother, sister, aunt, uncle, niece, or nephew;
• born in 1978 or earlier;
• mentally or physically infirm;
• dependent on you, or on you and others; and
• resident in Canada at any time in the year.

If someone else is claiming an amount on line 305 for the same dependant, you cannot claim an amount on line 306 for that dependant.

Under proposed changes, if you are claiming an amount on line 305 for a dependant who is infirm and age 18 or older, you may also be able to claim an amount on line 306 for that dependant. To determine the amount you can claim, first subtract the dependant's net world income from $6,456. From either the result or $2,353 (whichever is less) subtract the amount you are claiming on line 305, and claim the excess (if any) on line 306.

If you can deduct support payments you made for your child, you cannot claim an amount on line 306 for that child. However, if you can deduct such payments for that child, and you separated in 1996 due to a breakdown in your relationship, some special rules apply. For details, get the pamphlet called Alimony or Maintenance.

NOTE
A parent includes someone on whom you were completely dependent and who had custody and control of you when you were under 19 years of age.

HOW TO CLAIM

• Calculate the net world income of each of your dependants. If your dependant is a deemed resident, net world income is the amount from line 236 of your dependant's return, or the amount it would be if your dependant completed a return. If your dependant is a non-resident, net world income is your dependant's net income for 1996 from sources both inside and outside Canada. When completing Schedule 6, subtract the dependant's net world income on line 2. Line 3 cannot be more than $2,353.

Under proposed changes, if you are claiming an amount on line 305 for this dependant, subtract that claim on line 4 of Schedule 6.

• Attach Schedule 6 to your return. You should also have a signed statement from a doctor that gives the nature, commencement, and duration of the dependant's infirmity. Keep the signed statement in case we ask to see it.

Under proposed changes, starting for 1996, the maximum amount you can claim is $2,353. In addition, the dependant's net world income can now be up to $4,103, without reducing the amount of your claim.

CLAIMS MADE BY MORE THAN ONE PERSON - If you and another person support the same dependant, you can split the claim for that dependant. However, the combined claim that you and the other person make cannot be more than the maximum amount allowed for that dependant.

TAX TIP If your dependant qualifies for the disability amount, you may be able to claim all or part of that amount. See line 318 for details.

LINE 308 - CANADA OR QUEBEC PENSION PLAN CONTRIBUTIONS THROUGH EMPLOYMENT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the total of the amounts, in dollars and cents, shown in boxes 16 and 17 of your T4 or T4 Short slips. Do not enter more than $893.20.

If you contributed more than $893.20, enter the excess amount on line 448 of your return. We will refund the excess amount to you, or use it to reduce your balance owing. However, if you have to complete a tax return for the province of Quebec, claim the excess amount on your Quebec provincial return.

In some cases, you may have an overpayment, even if you contributed less than $893.20. For example, in 1996, you may have turned 18 or 70, or received a Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) retirement or disability pension. If so, we will prorate your contributions, calculate your overpayment, and show it on your Notice of Assessment. If you would like to calculate your CPP overpayment, get Form T2204, Calculation of Employee Overpayment of 1996 Canada Pension Plan Contributions and 1996 Employment Insurance Premiums.

EMPLOYMENT IN QUEBEC - If you contributed to the QPP in 1996 but lived outside Quebec on December 31, 1996, treat the amount as if you contributed it to the CPP.

TAX-EXEMPT EMPLOYMENT INCOME EARNED BY A REGISTERED INDIAN - If you are a registered Indian with tax-exempt employment income, and there is no amount shown in box 16 of your T4 or T4 Short slip, you may be able to contribute to the CPP on this income. See the next section for details.

MAKING ADDITIONAL CPP CONTRIBUTIONS

You may not have contributed to the CPP for certain income you earned through employment, or you may have contributed less than you were allowed. This can happen if:

• you had more than one employer in 1996;
• you had income, such as tips, from which your employer did not have to withhold contributions; or
• you were in a type of employment that was not covered under CPP rules, such as casual employment.

To make more CPP contributions for 1996, get Form CPT20, Election to Pay Canada Pension Plan Contributions. Attach a completed copy to your return, or send Form CPT20 to us separately before May 1, 1998. This form lists the eligible employment income on which you can make more CPP contributions. If you have not contributed the maximum of $893.20, you can contribute 5.6% on any part of the income on which you have not already made contributions. The 1996 income limit for which you can contribute to the CPP is $35,400. Making additional contributions may increase the pension you receive later.

Complete Schedule 8 to calculate your additional CPP contributions. Include them on lines 310 and 421.

MAKING OPTIONAL QPP CONTRIBUTIONS

Include on line 310 any optional QPP contributions you made on your Quebec provincial income tax return, if you filed one. Also, attach a completed Schedule 8 to show how you calculated the amount.

LINE 310 - CANADA OR QUEBEC PENSION PLAN CONTRIBUTIONS PAYABLE ON SELF-EMPLOYMENT AND OTHER EARNINGS (for deemed residents)

You can claim an amount for the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions that you have to make on self-employment earnings and on limited or non-active partnership income.

If you were a member of a partnership, make sure you include only your share of the net profit or loss.

If you have both wages and self-employment earnings, the amount of CPP or QPP contributions that you have to make on your self-employment earnings will depend on how much you have already contributed to the CPP or QPP as an employee. You cannot use your net business losses to reduce the CPP or QPP contributions that you paid on your employment earnings.

HOW TO CALCULATE YOUR CONTRIBUTIONS

Complete Schedule 8 to calculate your CPP or QPP contributions payable, and attach it to your return.

Use the amounts from lines 135 to 143 and line 122 of your return. Enter on line 310 and line 421 the required contributions in dollars and cents.

If you have to complete a tax return for the province of Quebec, use the amounts from line 134, lines 156 to 160, and line 173 of your Quebec provincial return. Enter on line 310 the amount of the contributions in dollars and cents.

NOTE
In 1996, you may have turned 18 or 70, or received a CPP or QPP retirement or disability pension. If so, we will prorate your CPP or QPP contributions. We will calculate the correct amount and show it on your Notice of Assessment.

LINE 312 - EMPLOYMENT INSURANCE PREMIUMS (for deemed residents and non-residents electing under section 217 of the Income Tax Act)

Enter the total, in dollars and cents, of the amounts shown in box 18 of all your T4, T4 Short, and T4F slips, up to the following limits:

• $1,150.76 for 52 weekly pay periods, based on insurable earnings of up to $39,000;
• $1,172.89 for 53 weekly pay periods, based on insurable earnings of up to $39,750; or
• $1,194.75 for 27 bi-weekly pay periods, based on insurable earnings of up to $40,500.

Your insurable earnings are shown in box 24 of your T4 or T4 Short slip (or box 14, if box 24 is blank) or box 16 of your T4F slip. If you contributed more than the limit that applies to you, enter the excess amount on line 450. We will refund this excess amount to you or use it to reduce your balance owing.

In some cases, you may have overpaid your Employment Insurance premiums even if you contributed less than the maximum. If so, we will calculate your overpayment and show it on your Notice of Assessment. If you would like to calculate your overpayment, get Form T2204, Calculation of Employee Overpayment of 1996 Canada Pension Plan Contributions and 1996 Employment Insurance Premiums.

LINE 314 - PENSION INCOME AMOUNT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

You may be able to claim up to $1,000, if you reported pension or annuity income on line 115 or line 129 of your return. Therefore, make sure you have reported your pension or annuity income on the correct lines of your return.

Use the following chart to calculate your claim.

Pension income amount

Amount from line 115 of your return	$__________ 1
Annuity payments from line 129 of your return (box 16 of your T4RSP slip) only if you were 65 or older on December 31, 1996, or received the payments because of the death of your spouse	+__________ 2
Line 1 plus line 2	$__________ 3
Foreign pension income included on line 115 and deducted on line 256	__________ 4
Income from a U.S. individual retirement account included on line 115	+__________ 5
Line 4 plus line 5	-__________ 6
Line 3 minus line 6	$ 7

Enter on line 314 of your return, $1,000 or the amount from line 7, whichever is less.

NOTE
Only pension or annuity income you report on lines 115 or 129 qualifies for the pension income amount. Therefore, amounts such as Old Age Security benefits, Canada Pension Plan benefits, Quebec Pension Plan benefits, Saskatchewan Pension Plan payments, death benefits, and retiring allowances do not qualify.

TAX TIP If you do not need all of your pension income amount to reduce your federal income tax to zero, you can transfer any unused amount to your spouse.

You may be able to claim all or part of your spouse's pension income amount. See line 326 for details.

LINE 316 - DISABILITY AMOUNT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You may be able to claim a disability amount of $4,233 if your doctor or optometrist certifies that:

• you had a severe mental or physical impairment in 1996, which caused you to be markedly restricted in any of the basic activities of daily living; and
• your impairment was prolonged, which means it has lasted, or is expected to last, for a continuous period of at least 12 months.
• You may be markedly restricted in a basic activity of daily living if:
• you are blind; or
• you are unable to feed and dress yourself, control bowel and bladder functions, walk, speak, hear, or perceive, think, and remember. You may also be markedly restricted if it takes you an extremely long time to perform any of these activities, even with therapy and the use of appropriate aids and medication.

To qualify for the disability amount, your ability to perform an activity of daily living has to be markedly restricted all or almost all of the time. If you are markedly restricted occasionally or part of the time, you are not entitled to this tax credit.

NOTE
If you receive a disability benefit, it does not necessarily mean that you are eligible to claim this credit.

If you or anyone else claims medical expenses (line 330) for a full- or part-time attendant for which the total paid is more than $5,000 ($10,000 in the year of death) or for care in a nursing home because of your mental or physical impairment, you cannot claim the disability amount. You can claim your expenses or the disability amount, whichever you prefer, but not both.

TAX TIP If you meet certain conditions, you can claim both the disability amount (line 316), and either expenses for attendant care that allowed you to earn income (line 215), or expenses for full- or part-time attendant care provided in Canada for which the total paid is not more than $5,000 ($10,000 in the year of death) as a medical expense (line 330). See the explanations at these lines for details.

HOW TO CLAIM

• If you are making a new application for this amount, you have to submit a properly completed and certified Form T2201, Disability Tax Credit Certificate.
• If you were allowed the disability amount in 1995 and you still met the eligibility requirements in 1996, you can claim the disability amount in 1996 without sending us another Form T2201. However, you have to send us one if the period stated on the certificate ended before 1996.

We will accept a photocopy of your Form T2201 only if your doctor's or optometrist's signature is an original, not a photocopy. For more information, get a copy of the pamphlet called Tax Information for People with Disabilities. The pamphlet also contains Form T2201.

If you are making a new application for this amount, we will now review your claim before we assess your return to determine whether you are eligible. Once approved, you will be able to claim this amount, as long as your circumstances do not change.

TAX TIP If you do not need all of your disability amount to reduce your federal income tax to zero, you can transfer any unused amount to your spouse (see line 326) or another supporting person (see line 318).

You may be able to claim all or part of your spouse's (see line 326) or other dependant's (see line 318) disability amount.

LINE 318 - DISABILITY AMOUNT TRANSFERRED FROM A DEPENDANT OTHER THAN YOUR SPOUSE (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

If you have a dependant who can claim the disability amount (see line 316), you may be able to claim all or part of this amount. You can claim the unused part of the disability amount for your dependant who lived in Canada or who was a deemed resident at any time in 1996 if:

• you claimed an equivalent-to-spouse amount on line 305 for that dependant;
• the dependant was your or your spouse's child, grandchild, parent, or grandparent, and you could have claimed an equivalent-to- spouse amount on line 305 for that dependant if you did not have a spouse and if the dependant did not have any income;
• the dependant was your or your spouse's child or grandchild, and you made a claim on line 306, "Amounts for infirm dependants age 18 or older," for that dependant;
• the dependant was your or your spouse's child or grandchild, and you could have made a claim on line 306, "Amounts for infirm dependants age 18 or older," for that dependant if he or she had no income and had been 18 years of age or older in 1996; or
• the dependant was your or your spouse's parent or grandparent, and you could have made a claim on line 306, "Amounts for infirm dependants age 18 or older," for that dependant if he or she had no income. In addition, the individual must have been dependent on you because of his or her mental or physical infirmity.

If you can deduct support payments you made for your child, you cannot claim a disability amount for your child. However, if this is the first year you can deduct such payments for that child, some special rules apply. For details, get the pamphlet called Alimony or Maintenance.

If you or anyone else claims medical expenses for a full-or part-time attendant for which the total paid is more than $5,000 ($10,000 in the year of death) or for care in a nursing home because of your dependant's mental or physical impairment, you cannot claim the disability amount. You can claim the expenses or the disability amount, whichever you prefer, but not both. However, you may be able to claim both the disability amount and medical expenses for full-or part-time attendant care provided in Canada that are not more than $5,000 ($10,000 in the year of death). See line 330 for details.

HOW TO CLAIM

• Use the chart in this section to calculate how much of each dependant's disability amount you can claim.
• Attach to your return a properly completed and certified Form T2201, Disability Tax Credit Certificate, for each dependant. If you were allowed a disability amount in a previous taxation year and the dependant still met the eligibility requirements in 1996, you can claim the disability amount in 1996 without sending us another Form T2201. However, you have to send us a new one if the period stated on the certificate ended before 1996. If you are not attaching Form T2201 for a dependant, attach a note stating the dependant's name, social insurance number, and relationship to you.

Unused part of dependant's disability amount

Dependant's disability amount	$ 4,233.00 1
Total of amounts your dependant can claim on lines 300 to 314	+ 2
Line 1 plus line 2	= $ 3
Dependant's taxable income (line 260)	- 4
Line 3 minus line 4 (if negative, enter "0")	= $ 5

Enter on line 318 of your return $4,233 or the amount from line 5, whichever is less.

If more than one person is making a claim for the same dependant, attach a note to your return including the name and social insurance number of anyone else making a claim. The total claimed for that dependant cannot be more than the amount on line 5 or $4,233, whichever is less.

You can claim this credit only if the spouse of the person with a disability is not already claiming the disability tax credit or any other non-refundable tax credit (other than medical expenses) for the person with a disability, and you supported that person.

LINE 320 - TUITION FEES (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You can claim, on your 1996 return, the tuition fees paid for courses you took from January 1 to December 31, 1996. You cannot claim other expenses, such as books, or board and lodging.

To qualify, the total tuition fees you paid for the year to any one educational institution had to be more than $100.

You can claim tuition fees paid to:

• a university, college, or other educational institution in Canada, if they were for courses at the post-secondary school level;
• an institution in Canada certified by the Minister of Human Resources Development, if you were 16 or older on December 31, 1996, and the fees were for a course that developed or improved your skills in an occupation; or
• a university outside Canada if you were enrolled full-time in a course that was at least 13 consecutive weeks long, and that would lead to a degree.

DEEMED RESIDENTS - The above-mentioned educational institutions do not have to be located in Canada.

If your employer or your parent's employer paid your tuition fees, you can only claim them if the amount paid is included in your income or your parent's income. If your tuition fees are paid by a federal or provincial job training program, and no related amount is included in your income, the fees do not qualify for this credit.

Under proposed changes, if your fees are paid (or you are entitled to be reimbursed for them) under a federal program to assist athletes, you cannot claim the fees unless the payment or reimbursement has been included in your income.

HOW TO CLAIM

• If you are claiming tuition fees paid to an institution in Canada, you must have either an official tax receipt or Form T2202A.
• If you are claiming tuition fees paid to an educational institution outside Canada, you must have your educational institution complete Form TL11A (for a university outside Canada) or Form TL11D (for deemed residents).
• If you are claiming tuition fees paid to a flying school, or club in Canada, you must have your school or club complete Form TL11B.

You can get these forms from us. You can also get Form TL11B from your flying school or club.

RECEIPTS - Do not include your receipts or forms with your return. However, you have to keep them in case we ask to see them.

TAX TIP You have to claim your tuition fees first, even if someone else paid them. If you do not need all of your tuition fees to reduce your federal income tax to zero, you can transfer any unused amount to your spouse (see line 326) or another supporting person (see line 324).

You may be able to claim all or part of your spouse's (see line 326) or other dependant's (see line 324) tuition fees.

LINE 322 - EDUCATION AMOUNT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

Under proposed changes, you can claim an education amount of $100 for each whole or part month in 1996 that you were enrolled in a qualifying educational program.

In most cases, you have to be enrolled as a full-time student. You must have a Form T2202 or T2202A, completed by your educational institution, that confirms the period you were enrolled in a qualifying program.

PART-TIME STUDENTS

If you are enrolled in a qualifying program but can only attend part-time because of a mental or physical impairment, you can claim an education amount. You have to complete Form T2202 to make your claim as a part-time student.

HOW TO CLAIM

• Multiply the number of months shown on your Form T2202 or T2202A (maximum 12) by $100.
• Enter your claim on line 322 of your return.

You cannot claim the education amount for a program if you:

• received an allowance for that program (such as a training allowance under the Employment Insurance Act, Unemployment Insurance Act, or National Training Act);
• received a benefit for that program (such as free board and lodging from a nursing school);
• received a grant for that program;
• were reimbursed for the cost of your courses, other than by award money you received; or
• were receiving salary or wages while taking a job-related course.

NOTE
An allowance, benefit, grant, or reimbursement does not include any scholarship, fellowship, bursary, or prize you received, or any benefit you received under the Canada Student Financial Assistance Act, Canada Student Loans Act, or An Act respecting financial assistance for students of the Province of Quebec.

RECEIPTS - Do not include your form with your return. However, you have to keep it in case we ask to see it.

TAX TIP
If you do not need all of your education amount to reduce your federal income tax to zero, you may be able to transfer any unused amount to your spouse (see line 326) or another supporting person (see line 324).

You may be able to claim all or part of your spouse's (see line 326) or other dependant's (see line 324) education amount.

LINE 324 - TUITION FEES AND EDUCATION AMOUNT TRANSFERRED FROM A CHILD (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

A student who does not need to claim all of his or her tuition fees (line 320) or education amount (line 322) to reduce his or her federal income tax to zero may be able to transfer the unused part to you if you are the parent or grandparent of that student or of that student's spouse.

Under proposed changes, the limit on the total of the amount transferred has been increased to $5,000 minus the amount the student needs, even if there is still an unused part.

HOW TO CLAIM

The student has to use Form T2202 or the back of copy 2 of Form T2202A to calculate the transfer amount and to designate you as the parent or grandparent. If the tuition fees being transferred to you are not shown on the student's Form T2202 or T2202A, you should attach to it a copy of the student's official tuition fees receipt.

STUDENT WITH A SPOUSE - If a student's spouse claims the spousal amount (line 303) or the amounts transferred from the spouse (line 326), you cannot claim the tuition fees and education amount transfer. However, the student's spouse can claim the transfer on line 326.

STUDENT CLAIMED AS A DEPENDANT - A parent or grandparent who claims the student as a dependant on line 305 or 306 is the only person who can claim the tuition fees and education amount transferred from the student.

STUDENT NOT CLAIMED AS A DEPENDANT - The student has to choose the parent or grandparent who can claim the tuition fees and education amount transfer. Only one person can claim the transfer from the student.

RECEIPTS - Do not include the forms, or the student's official tuition fees receipt with your return. However, you have to keep them in case we ask to see them.

LINE 326 - AMOUNTS TRANSFERRED FROM YOUR SPOUSE (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You can transfer from your spouse (as defined on page 10) any of the following amounts that your spouse qualifies for but does not need to reduce his or her federal income tax to zero:

• the age amount (line 301) if your spouse was 65 or older;
• the pension income amount (line 314);
• the disability amount (line 316); and
• tuition fees (line 320) and the education amount (line 322).

Under proposed changes, the limit on the total of the tuition and education amounts transferred has been increased to $5,000 minus the amount your spouse needs, even if there is still an unused part.

Use Schedule 2 to calculate your claim and attach a completed copy to your return. Be sure to show, in the Identification area on page 1 of your return, your marital status, and your spouse's name and social insurance number.

RECEIPTS - Attach to your return your spouse's Form T2201, Disability Tax Credit Certificate. If you were (or your spouse was) allowed a disability amount in a previous taxation year for your spouse's condition, and your spouse still met the eligibility requirements in 1996, you can claim the disability amount without sending us another Form T2201. However, you have to send us a new one if the period stated on the certificate ended before 1996.

Do not include your spouse's receipts or forms for tuition fees or the education amount with your return. However, you have to keep them in case we ask to see them.

NOTE
You cannot transfer any unused amounts from your spouse if you were separated because of a breakdown in your relationship for a period of 90 days or more that included December 31, 1996.

LINE 330 - MEDICAL EXPENSES (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You can claim medical expenses that were paid for:

• yourself;
• your spouse;
• your or your spouse's children or grandchildren who were dependent on you for support; and
• your or your spouse's parent, grandparent, brother, sister, uncle, aunt, niece, or nephew who lived in Canada (or was a deemed resident of Canada) and who was dependent on you for support.

NOTE
If you claim medical expenses for a dependant, other than your spouse, whose net world income is more than $6,456, see line 331 for more details.

You can claim medical expenses paid in any 12-month period ending in 1996 and not claimed in 1995, even if they were not paid in Canada.

Your total expenses have to be more than either $1,614 or 3% of your net income (line 236), whichever is less.

TAX TIP It may be better for the spouse with the lower income to claim the allowable medical expenses. Compare your credit with the credit your spouse would be allowed. You can make whichever claim you prefer.

HOW TO CLAIM

Calculate your allowable medical expenses as follows:

• Choose the 12-month period ending in 1996 for which you will claim medical expenses. You cannot include any expenses you deducted on your 1995 return.
• Add up your allowable medical expenses for that period, and enter the total on line 330. n Subtract $1,614 or 3% of your net world income (line 236) whichever is less.

RECEIPTS - Attach your receipts to your return.

ALLOWABLE MEDICAL EXPENSES

The following are some examples of medical expenses you can claim:

• payments to a doctor, dentist, nurse, or public or licensed private hospital;
• payments for artificial limbs, wheelchairs, crutches, hearing aids, prescription eyeglasses or contact lenses, dentures, pacemakers, prescription drugs, and certain prescription medical devices;
• expenses for guide and hearing-ear dogs; and
• most premiums paid to private health services plans. Do not attach to your return the receipts for these premiums, but keep them in case we ask to see them.

For more examples of allowable medical expenses, call our T.I.P.S. (Info-Tax) service. See the T.I.P.S. information at the end of this guide.

TRAVELLING EXPENSES - If medical treatment is not available locally, you may be able to claim the cost of travelling to get the treatment somewhere else. Attach to your return your receipts and a statement listing your travelling expenses.

REIMBURSEMENT OF AN ALLOWABLE MEDICAL OR DENTAL EXPENSE - You cannot claim the part of an expense for which you have been or can be reimbursed. However, you can claim all of the expense if the reimbursement is included in your income, such as a benefit shown on a T4 slip, and you did not deduct the reimbursement anywhere else on your return.

EXAMPLE André was in the hospital while on vacation in Mexico. He paid $2,800 in Canadian dollars for allowable medical expenses, which are not limited to those paid in Canada. He was reimbursed for $1,500 of these expenses by his employer's health care plan. This was included on his T4 slip. Therefore, André can claim the full $2,800.

EXPENSES FOR AN ATTENDANT OR FOR FULL-TIME CARE IN A NURSING HOME

You may be able to claim either:

• amounts paid for a full-time attendant, provided the expenses were paid to a person who is not your spouse and is 18 years of age or older, or for full-time care in a nursing home (if a doctor has certified by letter or by signing a properly completed Form T2201, Disability Tax Credit Certificate, that the person receiving such care had a severe and prolonged mental or physical impairment in 1996); or
• amounts paid for full- or part-time attendant care provided in Canada, if the total paid is not more than $5,000 ($10,000 in the year of death). You can claim these expenses if the patient can claim the disability amount (line 316), and the expenses were paid to a person 18 years of age or older who is not your spouse. However, if you made a claim for either attendant care expenses (line 215) or child care expenses (line 214) for that patient, you cannot make this claim.

NOTE
If you or anyone else claims expenses for a full- or part-time attendant that are more than $5,000 ($10,000 in the year of death) or for care in a nursing home, neither you nor anyone else can claim a disability amount (line 316 or 318) for the disabled person. You can claim whichever you prefer, but not both. Compare with line 316 to decide which claim is better.

TAX TIP If you meet certain conditions, you can claim the disability amount (line 316), and either expenses for attendant care that allowed you to earn income (line 215), or expenses for full- or part-time attendant care provided in Canada for which the total paid is not more than $5,000 ($10,000 in the year of death) as medical expenses (line 330). See the explanations at these lines for details.

For more information on medical expenses, get Interpretation Bulletin IT-519, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction.

LINE 331 - MEDICAL EXPENSES ADJUSTMENT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

If you claimed medical expenses for a dependant (other than your spouse) whose net world income was more than $6,456, you have to reduce your medical expenses.

To calculate your adjustment, subtract the basic personal amount ($6,456) from the dependant's net world income on line 236 of his or her return, or the amount that it would be if the dependant completed a return. Multiply the result

by 4. Complete this calculation for each dependant for whom you claimed medical expenses. Add all the amounts together, and enter the total on line 331 of your return.

TAX TIP If the medical expenses adjustment you calculate for a dependant is more than the medical expenses you claimed for that dependant, it is not to your benefit to claim the medical expenses for that dependant.

LINE 335 (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You do not have to complete the rest of Step 5 if the amount on line 335 equals, or is more than, the amount on line 260, and is less than $29,591. If so, go to Step 6, enter "0" on lines 406, 417, and 419, and complete the rest of your return. In any other case, see line 338.

LINE 338 (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

To calculate your non-refundable tax credits, multiply the amount on line 335 by 17%. If you are not claiming charitable donations or cultural, ecological, or government gifts, transfer your credits from line 338 to line 350 and go to Step 6.

LINE 340 - CHARITABLE DONATIONS (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

MAXIMUM YOU CAN CLAIM

You can claim whichever of the following is less:

• the total donations of cash (or other property, get the pamphlet called Gifts and Income Tax for details) made in 1996 plus any donations made in any of the previous five years that you did not claim before; or
• under proposed changes, 50% of your net income (line 236) plus 50% of the amount on line 339 of your return (taxable capital gains included in your income, from capital property you donated in 1996, minus any capital gains deduction you claimed in 1996 on that property).

For the year a person dies and the preceding year, the limit is 100% of the person's net income.

TAX TIP You can claim donations that your spouse made as long as your spouse does not claim them.

You can claim a federal tax credit of 17% of the first $200 of your donations, and 29% of the balance. A credit for your donations can also reduce your provincial or territorial tax, as well as any federal, provincial, or territorial surtaxes. Quebec residents claim provincial tax credits on their provincial returns.

To qualify, the donations have to be made to:

• Canadian registered charities;
• registered Canadian amateur athletic associations;
• prescribed universities outside Canada;
• Canadian non-profit organizations that only provide low-cost housing for seniors;
• Canadian municipalities;
• registered national arts service organizations;
• the United Nations (or its Specialized Agencies); or
• charities outside Canada to which the Government of Canada has made a donation in 1995 or 1996.

NOTE
If you are a member of a religious order and you have taken a vow of perpetual poverty, claim your deduction on line 256 of your return.

RECEIPTS - Attach to your return official receipts, showing either your name or your spouse's name, your T4, T4 Short, or T4A slips with an amount shown in box 46, your T3 slips with an amount shown in box 36, your T5013 slips with an amount shown in box 34, or financial statements showing an amount a partnership allocated to you.

You may have included with a previous return a receipt for a donation you are claiming for 1996. If so, attach a note indicating with which return you submitted the receipt.

We will not accept as proof of payment cancelled cheques, photocopies (unless the issuer certifies them to be true copies), credit card slips, pledge forms, or stubs.

DONATIONS TO U.S. CHARITIES

You can claim any donations to U.S. charities that would be allowed on a U.S. return.

Under proposed changes, the limit on the donations you can claim has been increased to 50% of the net U.S. income you report on your Canadian return.

CARRYING FORWARD DONATIONS

You do not have to claim on your 1996 return the charitable donations you made in 1996. You can carry them forward for up to five years, as long as you only claim them once.

If you need more details on charitable donations, get Interpretation Bulletin IT-110, Deductible Gifts and Official Donation Receipts, and its Special Release.

LINE 342 - CULTURAL, ECOLOGICAL, AND GOVERNMENT GIFTS (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

Enter on line 342 the total of the following three amounts:

• your gifts to Canada, a province, or a territory. Attach to your return your receipt for each gift, unless a particular amount is shown on a T5013 slip or is allocated to you by a partnership in its financial statements. You have to report any capital gain or loss on a property, other than a cultural property. See the income tax guide called Capital Gains for details.
• the value of cultural property, certified by the Canadian Cultural Property Export Review Board, that you gave to a designated institution in Canada. Attach to your return both the official receipt and Form T871, Cultural Property Income Tax Certificate, for each gift.
• the value of land you donated, after February 27, 1995, to a Canadian municipality, or a registered charity that the Minister of the Environment has designated. The land must be certified by that Minister to be important to the preservation of Canada's environmental heritage. Attach to your return both the official receipt and the Certificate for Donation of Ecologically Sensitive Land, issued by the Minister of the Environment. You may have to report any capital gain or loss on the property that you donated. For details, see the income tax guide called Capital Gains.

Unlike other donations, your claim for the above three types of gifts is not limited to the percentage specified at line 340. You can choose the part of your donations you want to claim in the year, and you can carry forward any unused part for up to five years. For more information, get the pamphlet called Gifts and Income Tax.

NOTE
You may want to make a monetary gift directly to the federal Debt Servicing and Reduction Account. If so, mail it to the Receiver General at: Place du Portage, Phase 3, 11 Laurier Street, Hull QC K1A 0S5. Include a note asking that we apply your gift to this account. We will send you a tax receipt. All such gifts will only be used to service the public debt.

STEP 6 - REFUND OR BALANCE OWING

Generally, the tax you have to pay is based on your taxable income (line 260). Use Schedule 1, Federal Tax Calculation, to determine your federal income tax, federal non-resident and deemed resident surtax, and federal individual surtax. For details, see the section called "Schedule 1, Federal Tax Calculation," on page 41.

MINIMUM TAX

Read the following information to determine if minimum tax applies to you, and if 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 persons who died in 1996.

Below are the most common situations that may make you have to pay minimum tax:

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 1996 RRSP deduction limit;
• a deduction for transferring retiring allowances to an RRSP (line 208) or an RPP (line 207);
• a loss (including your share of a partnership loss) resulting from, or increased by, claiming capital cost allowance on certified feature films and certified 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 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
Sergio claimed a deduction in 1996 for transferring $50,000 of his retiring allowance to his RRSP. Because this deduction is more than $40,000, Sergio may have to pay minimum tax. To find out, he should complete Form T691, Calculation of Minimum Tax.

TAX TIP
If you paid minimum tax for any years from 1989 to 1995, but you do not have to pay minimum tax for 1996, you may be able to claim a credit against your 1996 taxes for all or part of the minimum tax you paid in those years. See line 504 for details.

LINES 409 AND 410 - FEDERAL POLITICAL CONTRIBUTION TAX CREDIT (for deemed residents)

Enter on line 409 the total you contributed during 1996 to a registered federal political party or a candidate for election to the House of Commons. Use the following chart to calculate your credit. However, if your total political contributions are $1,150 or more, simply enter $500 on line 410.

Federal political contribution tax credit
If your total federal contribution is $100 or less:

Your total contribution $__________ x 75% = $ 1

Enter the amount on line 1 on line 410 of your return.

If your total federal contribution is more than $100 but not more than $550:

Your total contribution $__________

On the first - 100.00 credit is $75.00 2

On the rest $ x 50% = + 3

Line 2 plus line 3 = $ 4

Enter the amount on line 4 on line 410 of your return.

If your total federal contribution is more than $550:

Your total contribution $__________

On the first - 550.00 credit is $ 300.00 5

On the rest $__________ x 33.33% = +__________ 6

Line 5 plus line 6 = $ 7

Enter on line 410 of your return $500 or the amount from line 7, whichever is less.

RECEIPTS - Attach to your return your official receipts, your T5013 slips showing an amount in box 36, or financial statements showing an amount a partnership allocated to you, whichever apply.

LINE 412 - INVESTMENT TAX CREDIT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

You may be eligible for this credit if any of the following apply to you:

• 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, or manufacturing.
• You have unclaimed credits from the purchase of qualified small business property after December 2, 1992, and before 1994.
• You have an amount in box 13 of your T101 or T102 slip.
• You have an amount in box 41 of your T3 slip.
• You have an amount in box 38 of your T5013 slip, or an amount is shown in the financial information given to you by a partnership.

HOW TO CLAIM

Attach to your return a completed copy of Form T2038(IND.), Investment Tax Credit (Individuals) 1995 and Subsequent Years. For more information on the investment tax credit, get either the income tax guide called Farming Income or the guide called Fishing Income. Both guides also contain Form T2038(IND.).

TAX TIP
You may be able to reduce your federal individual surtax by any unclaimed investment tax credit, or claim a refund of your unused investment tax credit. For details, see lines 419 and 454.

LINES 413 AND 414 - LABOUR-SPONSORED FUNDS TAX CREDIT (for deemed residents, for non-residents and for non-resident electing under section 217 of the Income Tax Act)

You may be able to claim a credit if you became the first registered holder of (acquired, or irrevocably subscribed to and paid for) an approved share of the capital stock of a prescribed labour-sponsored venture capital corporation at any time after 1995, but before March 2, 1997.

If you became the first registered holder of an approved share after 1995, but before March 1, 1996, and claimed the credit for it on your 1995 return, you cannot claim a credit for that share on your 1996 return.

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 your allowable credit, which, for shares of which you became the first registered holder before March 6, 1996, cannot be more than 20% of the net cost (to a maximum of $1,000) on line 414.

Under proposed changes, the allowable credit for shares of which you became the first registered holder after March 5, 1996, cannot be more than 15% of the net cost, to a maximum of $525. The 1996 credit for these shares is also limited to $525 minus the credit for any shares of which you became the first registered holder after 1995, but before March 6, 1996. In addition, these shares have a new minimum holding period.

Use the chart below to calculate the maximum credit you can claim for 1996, for shares of which you became the first registered holder after December 31, 1995, but before March 2, 1997.

Labour-sponsored funds tax credit

Net cost of shares of which you became the first registered holder after December 31, 1995, but before March 6, 1996 x 20% (maximum $1,000) $__________ 1

Net cost of shares of which you became the first registered holder after March 5, 1996, but before March 2, 1997 x 15% (maximum $525) +__________ 2

Line 1 plus line 2 (maximum $525) $ 3

Enter on line 414 of your return the amount from line 1 or line 3, whichever is more.

RECEIPTS - To make a claim, you have to file with your return either a T5006 slip, Statement of Registered Labour-Sponsored Venture Capital Corporation Class A Shares, or an official provincial slip.

LINE 419 - FEDERAL INDIVIDUAL SURTAX (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You have to pay a federal individual surtax of 3% of your basic federal tax after deducting any federal forward-averaging tax credit you are entitled to claim on your 1996 return. If your basic federal tax, minus your federal forward-averaging tax credit, is more than $12,500, you have to pay an extra surtax of 5% (for a total of 8%) on the amount over $12,500. Use Schedule 1 to calculate your federal individual surtax.

TAX TIP
If you can claim a foreign tax credit or investment tax credit, you may be able to use the unclaimed part of these credits to reduce the federal individual surtax you have to pay. For details, get Form T2209, Calculation of Federal Foreign Tax Credits, and Form T2038(IND.), Investment Tax Credit (Individuals) 1995 and Subsequent Years.

LINE 421 - CANADA PENSION PLAN CONTRIBUTIONS PAYABLE ON SELF-EMPLOYMENT AND OTHER EARNINGS (for deemed residents)

Enter the Canada Pension Plan contributions you have to pay, as calculated on Schedule 8.

If you are completing a tax return for the province of Quebec, this line does not apply to you. You will enter on your Quebec provincial return the Quebec Pension Plan contributions you have to pay.

LINE 422 - SOCIAL BENEFITS REPAYMENT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the amount of social benefits you have to repay, as calculated in the charts under line 235 in this guide.

NON-RESIDENTS ELECTING UNDER SECTION 217 - Enter only the amount of your Employment Insurance (EI) benefits repayment, as calculated in Chart 1 under line 235 in this guide. Do not enter the amount of your Old Age Security pension or net federal supplements repayment.

LINE 428 - PROVINCIAL OR TERRITORIAL TAX (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

DEEMED RESIDENTS - This line applies to you only if you had income from a business with a permanent establishment in a province or territory in Canada in 1996. If this is your situation, complete Form T2203, Calculation of Tax for 1996 - Multiple Jurisdictions, to calculate the provincial or territorial tax you have to pay (except for Quebec tax) on this income. Attach a copy of the form to your return.

NON-RESIDENTS ELECTING UNDER SECTION 217 - This line applies to you only if you had income from employment in Canada in 1996, or from a business with a permanent establishment in a province or territory in Canada in 1996. If this is your situation, complete Form T2203, Calculation of Tax for 1996 - Multiple Jurisdictions, to calculate the provincial or territorial tax you have to pay (except for Quebec tax) on this income. Attach a copy of the form to your return.

LINE 437 - TOTAL INCOME TAX DEDUCTED (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the total of the amounts shown in the "Income tax deducted" box from all of your information slips.

If you are subject to Quebec tax, do not include any Quebec provincial income tax on this return.

NOTE
If you paid foreign taxes, you have to complete Method B of Schedule 1, Federal Tax Calculation, to claim your foreign tax credit.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - If you received Old Age Security benefits in 1996, include the amount of non-resident tax shown in box 17 of your NR4-OAS slip. Do not include the amount of recovery tax shown in box 27 of the slip.

LINE 448 - CANADA PENSION PLAN OVERPAYMENT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

If you contributed more than you had to, as explained at line 308, enter the difference on line 448. We will refund the excess contributions to you, or use them to reduce your balance owing. However, if you have to complete a tax return for the province of Quebec, this line does not apply to you. Claim the excess amount on your Quebec provincial return.

LINE 450 - EMPLOYMENT INSURANCE OVERPAYMENT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

If you contributed more than you had to, as explained at line 312, enter the difference on line 450. We will refund the excess premiums to you or use them to reduce your balance owing.

NOTE
If you had to repay some of the Employment Insurance benefits you received, do not claim the repayment on this line. See line 232 for details on how to claim a deduction for the benefits you repaid.

LINE 454 - REFUND OF INVESTMENT TAX CREDIT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

If you are eligible for an investment tax credit (line 412), based on expenditures made in 1996, you may be able to claim a refund of your unused investment tax credit.

Calculate the refundable part of your investment tax credit on Form T2038(IND.), Investment Tax Credit (Individuals) 1995 and Subsequent Years. Attach a completed copy of the form to your return.

The refund you claim reduces the amount of credit available to you for other years.

LINE 456 - PART XII.2 TRUST TAX CREDIT (for deemed residents)

Enter the amount shown in box 38 of your T3 slip.

LINE 457 - EMPLOYEE AND PARTNER GST REBATE (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

If you deducted expenses from your income as an employee (lines 212 or 229) or as a partner (lines 135 to 143), you may be eligible for a rebate of the GST you paid on those expenses.

Generally, you can claim a rebate of the GST you paid if:

• your employer has a GST registration number and files a GST return; or
• you are a member of a registered partnership, and you have reported on your return your share of the income from that partnership.

To claim this rebate, get the publication called Guide and Form for: Employee and Partner GST Rebate. The guide lists the expenses that qualify. It also includes a copy of Form GST-370, Employee and Partner GST Rebate, which you need to make your claim. Attach a completed copy of this form to your return, and enter on line 457 the rebate you are claiming.

NOTE
Generally, you have to include in income any rebate you receive, on the return for the year in which you receive it. For example, you may claim a rebate on your 1996 return. If we allow your claim, and assess that return in 1997, you have to report the rebate on your 1997 return.

You may have received a GST rebate in 1996. If you did and you are an employee, see line 104. If you are a partner, get the income tax guide called Business and Professional Income.

LINE 476 - TAX PAID BY INSTALMENTS (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

Enter the total instalment payments you made for your 1996 taxes. We will be able to process your return faster if you correctly enter the instalment payments you made for 1996.

In February 1997, we will issue you either Form INNS1, Instalment Reminder, or Form INNS2, Instalment Payment Summary, that shows your total 1996 instalment payments that we have on record. If you made an instalment payment for your 1996 taxes that does not appear on this reminder or summary, also include that amount on line 476.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - If you disposed of taxable Canadian property in 1996, enter the amount of tax withheld on the disposition.

LINE 478 - FORWARD-AVERAGING TAX CREDIT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

If you are withdrawing some of your forward-averaging amount on line 237, enter on line 478 the total forward-averaging tax credit from Form T581, Forward Averaging Tax Credit. See line 237 for details.

Non-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - If you are withdrawing some of your forward-averaging amount on line 237, contact the International Tax Services Office for the special rules that apply to you.

LINES 484 AND 485 - REFUND OR BALANCE OWING (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

Your refund or balance owing is the difference between your total payable (line 435) and your total credits (line 482).

If your total payable (line 435) is less than your total credits (line 482), enter the difference on line 484. This amount is your refund.

If your total payable (line 435) is more than your total credits (line 482), enter the difference on line 485. This amount is your balance owing.

If the difference is less than $2, you do not have to make a payment and you will not receive a refund.

LINE 484 - REFUND (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

If you are expecting a refund for 1996, but our records show that you owe an amount, or are about to owe an amount for another year, we may keep some or all of your refund and apply it against the amount you owe.

We may also have to apply your income tax refund against certain outstanding government debts. The most common types of government debts are Canada Student Loans, Employment Insurance benefit overpayments, Immigration loans, and training allowance overpayments. We may also apply your refund to satisfy a garnishment order under the Family Orders and Agreements Enforcement Assistance Act.

DIRECT DEPOSIT

You can have your income tax refund, GST credit, and your Child Tax Benefit payments deposited directly into your account at a financial institution in Canada.

To start direct deposit, or to change information you already gave us, complete the Direct Deposit Request on page 4 of your return. You do not have to complete this area if you already have direct deposit service and the information you already gave us hasn't changed. Your direct deposit request will stay in effect until you change the information or cancel the service.

If you are changing the account into which we deposit a payment, do not close the old account before we deposit the payment into the new account. If your financial institution advises us that you have a new account, we may deposit your payments into the new account. If we cannot deposit a payment into your account, we will mail a cheque to you at the address we have on file.

If you want your Child Tax Benefit payments deposited into a different account, you will have to send us a completed Form T1-DD(1), Direct Deposit Request - Individuals. You can get this form from us. You can send it with your return, or separately.

If you need help to complete the information on page 4, or to cancel direct deposit service for one or more of these payments, contact us.

LINE 485 - BALANCE OWING (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

Attach to the front of your return a cheque or money order made out to the Receiver General. Do not mail cash. To help us credit your payment properly, please write your social insurance number on the back of your cheque or money order. Enter the amount of your payment on line 486.

MAKING A PAYMENT ARRANGEMENT - If you cannot pay your balance owing on or before April 30, 1997, you can make a mutually acceptable payment arrangement by contacting the International Tax Services Office. We will still charge daily compound interest on any outstanding balance after April 30, 1997, until you pay it in full.

TAX TIP
Even if you cannot pay all of your balance owing right away, you should still file your return on time. Then you will not have to pay a penalty for filing your return after the due date. See page 8 for details.

SCHEDULE 1, FEDERAL TAX CALCULATION (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

(LINES 500 TO 518)

There are two methods on Schedule 1 (Method A or Method B) that you can use to calculate your federal tax, your federal surtax for non-residents and deemed residents of Canada, and your federal individual surtax. If you have a straightforward tax situation, use Method A, and follow the instructions on Schedule 1. If you have to use Method B, the information that follows will help you complete Schedule 1.

If you have to pay minimum tax, or if you are claiming an overseas employment tax credit, see either Form T691, Calculation of Minimum Tax, or Form T626, Overseas Employment Tax Credit Calculation, whichever applies, before completing the schedule.

LINE 500 - TAX ADJUSTMENTS (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You may be allowed a tax adjustment if you:

• reported on lines 114 and 152 of your return a lump-sum Canada Pension Plan or Quebec Pension Plan disability benefit; or
• reported on line 130 of your return a lump-sum amount from your pension or deferred profit-sharing plan for benefits you earned before 1972.

If either of these situations applies to you, we will use this line to record any tax adjustment you are allowed.

LINE 502 - FEDERAL DIVIDEND TAX CREDIT (for deemed residents)

If you reported dividends on line 120, enter the dividend tax credit on line 502. This amount is the total of the dividend tax credits from taxable Canadian corporations shown on the dividend information slips. If you didn't receive dividend information slips, the dividend tax credit is 13.33% of the taxable amount of dividends from taxable Canadian corporations (see line 120).

NOTE
Foreign dividends do not qualify for this credit.

LINE 504 - MINIMUM TAX CARRY-OVER (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

If you paid minimum tax for any years from 1989 to 1995, but you do not have to pay minimum tax for 1996, you may be able to claim a credit against your 1996 taxes for all or part of the minimum tax you paid in those years. To calculate your claim, complete Parts I, II, and VIII of Form T691, Calculation of Minimum Tax. Attach to your return a completed copy of the form.

LINE 506 - BASIC FEDERAL TAX (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

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.

OVERSEAS EMPLOYMENT TAX CREDIT - To make your claim, use Form T626, Overseas Employment Tax Credit Calculation. Enter the result of the calculation on line 506. For details, get Interpretation Bulletin IT-497, Overseas Employment Tax Credit, and Form T626.

SURTAX FOR NON-RESIDENTS AND DEEMED RESIDENTS OF CANADA (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

You pay this tax instead of a provincial or territorial tax.

If you did not have a business with a permanent establishment in Canada, or employment income from Canada, use Schedule 1 to calculate this surtax for non-residents and deemed residents of Canada.

If you had income from a business with a permanent establishment in Canada, or employment income from Canada, you have to pay provincial or territorial tax on that income. Use Form T2203, Calculation of Tax for 1996 - Multiple Jurisdictions, to calculate your provincial or territorial tax (except Quebec). Attach a copy of the form to your return.

LINES 507 AND 508 - FEDERAL FOREIGN TAX CREDIT (for deemed residents, for non-residents and for non-residents electing under section 217 of the Income Tax Act)

This credit is for foreign income or profits taxes you paid on income you received from outside Canada and reported on your Canadian tax return. Certain 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 (such as U.S. social security benefits). In that case, do not include that income, or any tax withheld on that income, in your foreign tax credit calculation.

If the total 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.

You also have to do a separate calculation for business income taxes and non-business income taxes paid to each foreign country. 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 the lower of the following two amounts:

• the foreign income tax you actually paid; and
• the tax due to 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 cannot be more than 15% of your net income from that property. However, you can 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.

NON-RESIDENTS, AND NON-RESIDENTS ELECTING UNDER SECTION 217 - If you were a former resident of Canada who disposed of taxable Canadian property in 1996, 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 in Method B on Schedule 1 and attach the schedule to your return. For a more detailed calculation, get Form T2209, Calculation of Federal Foreign Tax Credits. Attach a completed copy of the form 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 9 of this guide.
• Attach 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 W2 information slip, U.S. 1040 return, 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
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 do not have to complete a return for the province of Quebec, you may be able to claim a provincial or territorial foreign tax credit. Get Form T2036, Calculation of Provincial Foreign Tax Credit, to help you calculate the credit. Attach a completed copy of the form to your return.

Also, 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, 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.

FEDERAL LOGGING TAX CREDIT (for deemed and for non-residents electing under section 217 of the Income Tax Act)

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. For details on how to calculate your credit, contact us.

Since there is no line on the return to claim your tax credit, write in "federal logging tax credit" and your allowable credit below line 30 in Method B on Schedule 1. Subtract your allowable credit from the amount on line 30, and enter the result on line 406 of your return (if negative, enter "0").

LINE 511 - ADDITIONAL FEDERAL FOREIGN TAX CREDIT (for deemed residents)

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

LINE 518 - ADDITIONAL INVESTMENT TAX CREDIT (for deemed residents and for non-residents electing under section 217 of the Income Tax Act)

You may also be able to reduce your individual surtax by part of the unused investment tax credit you earned for 1996. See Form T2038(IND.), Investment Tax Credit (Individuals) 1995 and Subsequent Years, for details.

TAX INFORMATION PHONE SERVICE (T.I.P.S.)

T.I.P.S. is an automated telephone service that provides you with general and personal tax information. T.I.P.S. offers the five services listed below:

1. TELEREFUND - tells you the status of your 1996 refund. This service is available from February to September.

2. GOODS AND SERVICES TAX CREDIT (GSTC) - tells you if you are eligible for the GST credit and the date you can expect to receive your cheque. This service is available for five weeks each time GST credit cheques are mailed.

3. REGISTERED RETIREMENT SAVINGS PLAN (RRSP) DEDUCTION LIMIT - gives the amount of RRSP contributions you may deduct for 1996 and, if it applies, any unclaimed amounts available for you to deduct on your 1996 return. This service is available from September to the end of April.

4. BULLETIN BOARD - contains recent information that may be of concern or interest to you.

5. INFO-TAX - gives recorded tax information. For a list of topics, see the chart below. This service is available from mid-January to the end of June.

TELEREFUND, GSTC, AND RRSP ARE AVAILABLE:

Weekdays from 7:00 a.m. to 11:00 p.m.

Saturdays from 8:00 a.m. to 4:00 p.m. and

Sundays from 8:00 a.m. to 1:00 p.m.

BULLETIN BOARD AND INFO-TAX ARE AVAILABLE:

24 hours a day, 7 days a week.

HOW TO USE T.I.P.S.

Call the T.I.P.S. number under "Revenue Canada" in the "Government of Canada" section of your telephone book. Select the language you want to use, either "1" for english or "0" for French. Next, select the service you want to use:

• "1" for Telerefund
• "2" for GSTC
• "3" for RRSP
• "4" for Bulletin Board or
• "5" for Info-Tax

Once you are in the Info-Tax system, to select the topic you want, use the three-digit number form the chart below.

For TELEREFUND, GSTC, and RRSP information, we will ask you to provide your social insurance number, as well as your month and year of birth. We will also ask you to state the total income you entered on line 150 of your return, so be sure to keep your working copy handy. If you call BEFORE MAY 1, you will need the amount you entered on LINE 150 OF YOUR 1995 RETURN. If you call AFTER APRIL 30, you will need the amount you entered on LINE 150 OF YOUR 1996 RETURN.

INFO-TAX MESSAGE NUMBERS AND TOPICS

121 Interest income

126 Rental income

127 Capital gains

128 Alimony or maintenance income

130 Other income

147 Non-taxable income

208 RRSP contributions

214 Child care expenses

215 Attendant care expenses

219 Moving expenses

220 Alimony or maintenance paid

221 Carrying charges or interest expenses

229 Other employment expenses

232 Other deductions

254 Capital gains deduction

255 Northern residents deductions

301 Age amount

303 Spousal amount

305 Equivalent-to-spouse amount

306 Amounts for infirm dependants age 18 or older

314 Pension income amount

316 Disability amount

320 Tuition fees

322 Education amount

324 Transferring tuition fees and education amount

326 Transferring amounts from your spouse

330 Medical expenses

340 Charitable donations

448 GSTC

449 Child Tax Benefit

601 Electronic filing (EFILE)

602 Filing of making changes to a previous year's return

603 Your appeal rights

604 Voluntary disclosures

605 Authorizing representatives

606 Refunds

609 Exchange rates

610 Do you have to file a return?

611 Missing information

612 Newcomers to Canada

630 Special services

631 Services for disabled persons

655 Home Buyers' Plan

702 Instalment payments

703 Making payment arrangements

705 Interest on unpaid taxes

706 Late-filing penalties

707 Interest rate

882 Direct deposit

883 Problem Resolution Program

899 Info-Tax survey

999 Main Menu

INTERNATIONAL TAX SERVICES OFFICE

Revenue Canada
International Tax Services Office
2204 Walkley Road
Ottawa ON K1A 1A8
CANADA

REGULAR HOURS OF SERVICE

Monday to Friday (holidays excluded) 8:15 a.m. to 5:00 p.m. (Eastern Time)

EXTENDED HOURS OF TELEPHONE SERVICE

February 24, 1997, through April 30, 1997 Monday to Thursday (holidays excluded): 8:15 a.m. to 9:00 p.m. (Eastern Time) Friday (holidays excluded): 8:15 a.m. to 5:00 p.m. (Eastern Time)

Calls from the Ottawa area . . . . . . . . . . . . . . . . . . 952-3741
Calls from Canada and the U.S. . . . . . . . . . . . . . 1-800-267-5177
Calls from outside Canada and the U.S. . . . . . . . . . (613) 952-3741
We accept collect calls.

T.I.P.S. AUTOMATED PHONE SERVICE

Calls from anywhere in Canada (Mountain Time). . . . . . 1-800-661-6558
Calls from the United States or Mexico (Eastern Time). . (613) 957-7834
You will be charged for any long distance calls.

Please call the numbers listed above first. If you need more help, you can call:

Assistant Director, Enquiries and Adjustments. . . . . . (613) 526-6452
Problem Resolution Program . . . . . . . .(613) 952-3502/1-800-661-4985
Director . . . . . . . . . . . . . . . . . . . . . . . . (613) 526-6477
Assistant Director, Returns Processing . . . . . . . . . (613) 954-4113
Assistant Director, Non-Resident Withholding Accounts. . (613) 526-6584

Fax number . . . . . . . . . . . . . . . . . . . . . . . (613) 941-2505

Date modified:

1899-12-30