Line 400 - Taxable income

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

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

Minimum tax

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

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

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

A. You claimed any of the following tax credits:

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

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

C. You claimed any of the following:

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

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

Example

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

Tax Tip

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

Lines 409 and 410 - Federal political contribution tax credit

Enter on line 409 the total you contributed during 1995 to a registered federal political party or a candidate for election to the House of Commons.

Use the chart that follows to calculate the credit you can enter on line 410. If your total political contributions are $1,150 or more, enter $500 on line 410.

Receipts - Attach to your return your official receipts (unless the amount is shown in box 36 of your T5013 slip, or in the financial statements a partnership gives to you).

Line 412 - Investment tax credit

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 bought qualified small business property after December 2, 1992, and before 1994.
• You received a T101 or T102 slip with an amount in box 13.
• You received a T3 slip with an amount in box 41.
• You received a T5013 slip with an amount in box 38, or an amount is shown in the financial information given to you by a partnership.

How to claim

Attach a completed copy of Form T2038(IND.), Investment Tax Credit (Individuals), to your return.

For a general explanation of the investment tax credit, get either the income tax guide called Farming Income or the guide called Fishing Income. You can get these guides and Form T2038(IND.) from us.

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

You may be able to claim a credit of up to $1,000 if you acquired, or irrevocably subscribed and paid for, an approved share of the capital stock of a prescribed labour-sponsored venture capital corporation at any time from January 1, 1995, to February 29, 1996. You also had to be the first registered holder of the approved share.

If you acquired, or irrevocably subscribed, and paid for an approved share between January 1, 1995, and March 1, 1995, and claimed the credit for it on your 1994 return, you cannot claim a credit for that share on your 1995 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 may not be more than 20% of the net cost, up to a maximum of $1,000, on line 414.

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.

Tax Tip

Some provinces and territories may offer a similar tax credit. If so, you may be able to get a further credit against your provincial or territorial tax. See the pink information forms included with your income tax package for more details.

Line 419 - Federal individual surtax

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 1995 return. If your basic federal tax less 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 that is more than $12,500. Use Schedule 1 to determine your federal individual surtax.

Tax Tip

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

Line 421 - Canada Pension Plan contributions payable on self-employment and other earnings

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

If you were a resident of Quebec, this line does not apply to you. You will enter the Quebec Pension Plan contribution you have to pay on your Quebec provincial return.

Line 422 - Social benefits repayment

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

Line 428 - Provincial or territorial tax

Use the pink forms included with your package to calculate your provincial or territorial tax.

If you had income from a business with a permanent establishment outside your province or territory of residence, use Form T2203, Calculation of Tax for 1995 - Multiple Jurisdictions, to calculate the other provincial or territorial tax you have to pay. Attach a copy of the form to your return.

If you are a resident of Quebec, this line only applies to you if you had income from a business with a permanent establishment outside Quebec. You will have to file a Quebec provincial return to calculate your provincial tax.

Line 437 - Total income tax deducted

Enter the total of the amounts shown in the "Income tax deducted" box from all of the information slips in your name. If you were a resident of Quebec, do not include any of your Quebec provincial income tax deducted on this return.

If you were not a resident of Quebec and you had Quebec provincial income tax withheld from your income, attach to your return a copy of your provincial information slip. Include these tax deductions with your claim on line 437.

Note

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

Lines 438 and 440 - For residents of Quebec only

Line 438 - Tax deducted transfer

If, during 1995, you earned income outside Quebec, such as employment income, tax may have been deducted for a province or territory other than Quebec. However, if you should be using the Quebec income tax return as explained on page 5, you owe your provincial tax to Quebec. You can transfer, to the Province of Quebec, up to 45% of the income tax deducted on your information slips that employers and other payers outside Quebec issued.

Complete the following chart to calculate the maximum amount you can transfer. If the taxable income on your federal return (line 260) is zero, no transfer is necessary.

Line 440 - Refundable Quebec abatement

The Quebec abatement is provided instead of direct cost-sharing by the federal government under the federal-provincial fiscal arrangement. It reduces your federal income tax and may even give you a refund.

If you did not have a business with a permanent establishment outside Quebec, your refundable Quebec abatement is 16.5% of either line 15 or line 26 of Schedule 1, whichever is applicable.

If you had income from a business with a permanent establishment outside Quebec, use Form T2203, Calculation of Tax for 1995 ¾ Multiple Jurisdictions, to calculate your abatement.

Line 448 - Canada Pension Plan overpayment

If you were not a resident of Quebec and 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.

Line 450 - Unemployment Insurance overpayment

If you contributed more than the maximum amount that applies to you, 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 Unemployment 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

If you are eligible for an investment tax credit (line 412), based on expenditures you made in 1995, 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).

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

Line 456 - Part XII.2 trust tax credit

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

Line 457 - Employee and partner GST rebate

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 for these expenses.

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

• you are an employee whose employer is a GST registrant (i.e. your employer has a 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 Completion Guide and Form for: Employee and Partner GST Rebate from us. The guide lists the expenses that qualify. It also includes a copy of Form GST-370, Employee and Partner Goods and Services Tax Rebate, which you need to make your claim. Attach a completed copy of this form to your return.

Note

Generally, any rebate you receive has to be reported in income in the year in which you receive the rebate. For example, if you claim and are allowed a rebate on your 1995 return, and that return is assessed in 1996, you have to report the rebate you received on your 1996 return.

You may have received a GST rebate in 1995. 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

If you made instalment payments for your 1995 taxes, enter on line 476 your total instalments. We will be able to process your return faster if you correctly enter the instalment payments you made for 1995.

In February 1996, we will issue you either Form INNS1, Instalment Reminder, or Form INNS2, Instalment Payment Summary, that shows your total 1995 instalment payments that we have on record. If you made an instalment payment for your 1995 taxes that does not appear on this reminder or summary, also include that amount on line 476.

Line 478 - Forward-averaging tax credit

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

Line 479 - Provincial or territorial tax credits

For details on these credits, see the pink information forms included with your income tax package.

If you were a resident of Quebec, this line does not apply to you. You will claim your provincial tax credits on your Quebec provincial return.

Lines 484 and 485 - Refund or Balance owing

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

If you are expecting a refund for 1995, 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: a Canada Student Loan, an Unemployment Insurance benefit overpayment, an Immigration loan, and a training allowance overpayment. 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.

To start direct deposit, or to change information you already provided to us, complete the Direct Deposit Request at the bottom of page 4 of your return. You don't have to complete this area if you already have direct deposit service and the information you provided before hasn't changed.

Your direct deposit request will stay in effect until you change the information or cancel the service. However, 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 a designated account, we will mail a cheque to you at the address we have on file.

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.

Note

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.

If you are changing the account to which we deposit a payment, do not close the old account before we deposit the payment into the new account.

Line 485 - Balance owing

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.

Paying your balance owing with postdated cheques - If you pay your balance owing with postdated cheques, your Notice of Assessment will not take into account the cheques that are still postdated when we prepare the notice. We will credit them to your account when they become negotiable and will send you an acknowledgement. However, we will charge compound interest from April 30, 1996, until you pay the account in full.

Note

If you cannot pay your balance owing when you file, contact us to arrange a payment schedule.

Tax Tip

You can avoid a late-filing penalty by filing your return on or before the due date. See page 6 for details.