ARCHIVED - General Income Tax and Benefit Guide - 2017 - Net federal tax (Schedule 1)

Step 2 of Schedule 1 – Federal tax on taxable income

Enter your taxable income from line 260 of your return on line 36 of Schedule 1 (line 39 for residents of Quebec).

Complete the appropriate column depending on the amount on line 36 (line 39 for residents of Quebec).

Step 3 of Schedule 1 – Net federal tax

There are no lines on the return for the recapture of the investment tax credit or for the federal logging tax credit. If these amounts apply, use them to calculate your net federal tax on Schedule 1. If the result of these adjustments is negative and you do not have to pay minimum tax enter "0" on line 59 of Schedule 1, or line 62 for residents of Quebec.

Recapture of investment tax credit

If you have to repay all or part of an investment tax credit you received previously for scientific research and experimental development or for child care spaces, calculate on Form T2038(IND), Investment Tax Credit (Individuals), the amount you have to repay. Write "recapture of investment tax credit" and the amount below line 53 on Schedule 1, or line 56 for residents of Quebec. Add it to the amount on line 53 or line 56.

Federal logging tax credit

If you paid logging tax to a province for logging operations you performed in the province, you may be able to claim a logging tax credit. To calculate your credit, use the lesser of the following two amounts for each province in which you had a logging operation:

  • 66.6667% of the logging tax paid for the year to the province; and
  • 6.6667% of your net logging income for the year in the province.

Your allowable credit is the total of the credits for the year for all provinces, up to 6.6667% of your taxable income (line 260), not including any amounts on lines 208, 214, 215, 219, and 220. Write “federal logging tax credit” and enter the allowable amount below line 53 on Schedule 1, or line 56 of Schedule 1 for residents of Quebec. Subtract it from the total of the amount on line 53 or line 56 and the amount of any applicable recapture of investment tax credits.

Line 405 – Federal foreign tax credit

You may be able to claim this credit if you paid foreign taxes on income you received from outside Canada and reported on your Canadian return. Complete Form T2209, Federal Foreign Tax Credits, to calculate your credit, and claim the amount from line 12 of this form on line 405 of Schedule 1.

Note

If you deducted an amount on line 256 for income that is not taxable in Canada under a tax treaty, do not report that income, or any tax withheld from it, in your foreign tax credit calculation.

Supporting documents – If you are filing electronically, keep all your documents in case we ask to see them later. If you are filing a paper return, attach your completed Form T2209 and documents that show the foreign taxes you paid. If you paid taxes to the United States, attach your W‑2 information slip, U.S. 1040 return, U.S tax account transcript, and any other supporting documents that apply. If you are submitting documents in a foreign language, you will need to provide a copy of the original documents and a certified English or French translation.

Note

The translation has to be certified by an official who has the authority to administer an oath or solemn declaration (commissioner of oaths, notary public, or lawyer) unless it has been completed by a translator who is a member in good standing of one of the provincial or territorial organizations of translators and interpreters of Canada. The signatory's name has to be printed in the Latin alphabet.

Lines 409 and 410 – Federal political contribution tax credit

You can claim contributions either you or your spouse or common-law partner made during 2017 to a registered federal political party or to a candidate for election to the House of Commons.

The eligible amount is the amount by which the fair market value of your monetary contribution exceeds any advantage you received or will receive for making it. Generally, an advantage includes the value of certain property, service, compensation, use, or any other benefit.

Complete the chart for line 410 on the federal worksheet to calculate your credit. However, if your total political contributions are $1,275 or more, enter $650 on line 410.

Supporting documents – If you are filing electronically, keep all your documents in case we ask to see them later. If you are filing a paper return, attach your official receipts. Do not attach official receipts for amounts shown in box 14 of your T5003 slips, in box 184 of your T5013 slips, or on financial statements showing an amount a partnership allocated to you. Keep copies of all your documents in case we ask to see them later.

Line 412 – Investment tax credit

You may be eligible for this credit if any of the following apply. 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, manufacturing, or processing;
  • have unclaimed credits from the purchase of qualified property after 2006;
  • have an amount shown in box 41 of your T3 slips;
  • have an amount shown in box 186 or 194 of your T5013 slips;
  • have an amount shown in box 128 of your T101 slips;
  • have a partnership statement that allocates to you an amount that qualifies for this credit;
  • employ an eligible apprentice in your business; or
  • have an investment in a mining operation that allocates certain exploration expenditures to you.

New Eligibility for the mineral exploration tax credit has been extended to flow-through share agreements entered into before April 1, 2018.

You can claim an investment tax credit if you carry on a business and create one or more new child care spaces for children of your employees and other children. For more information, see Form T2038(IND), Investment Tax Credit (Individuals).

NewAs of March 22, 2017 you can no longer claim an investment tax credit for the creation of child care spaces. However, the investment tax credit will still be available for eligible expenses incurred before 2020 under a written agreement entered into before March 22, 2017.

For investment tax credits earned in a year after 2005, the carry-forward period is 20 years.

How to claim this credit

Attach to your paper return a completed copy of Form T2038(IND). For more information about the investment tax credit, see the information sheet attached to Form T2038(IND).

You must send the form to us no later than 12 months after the due date of your return for the year the qualified expenditure arises.

Tax Tip

You may be able to claim a refund of your unused investment tax credit. See line 454.

Lines 413 and 414 – Labour-sponsored funds tax credit

You may be able to claim this credit if you became the first registered holder to acquire or irrevocably subscribe to and pay for an approved share of the capital stock of a prescribed labour-sponsored venture capital corporation (LSVCC) from January 1, 2017, to March 1, 2018.

If you became the first registered holder of an approved share from January 1, 2017, to March 1, 2017, and did not claim the whole credit for it on your 2016 return, you can claim the unused part on your 2017 return.

If you became the first registered holder of an approved share from January 1, 2018, to March 1, 2018, you can claim any part of the credit for that share on your return for 2017 and the unused part on your return for 2018.

Provincially registered LSVCC

Enter the net cost of your acquisition of provincially registered shares of a labour‑sponsored venture capital corporation 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.

Claim the amount of your allowable credit on line 414 to a maximum of $750.

The allowable credit is 15% of the lesser of:

  • $5,000; and
  • net cost reported at line 413.

Note

If the first registered holder of the share is an RRSP for a spouse or common-law partner, the RRSP contributor or the annuitant (recipient) can claim this credit for that share.

Tax Tip

Your province or territory may offer a similar tax credit. For more information, see the provincial or territorial forms, unless you were a resident of Quebec on December 31, 2017. In that case, see the guide for the provincial income tax return for Quebec.

Supporting documents – If you are filing electronically, keep all your documents in case we ask to see them later. If you are filing a paper return, attach your official provincial or territorial slips.

Line 415 – Working income tax benefit (WITB) advance payments

If you received WITB advance payments in 2017, report the amount from box 10 of your RC210 slip.

For more information, go to Working income tax benefit (WITB) or see Form RC201, Working Income Tax Benefit Advance Payments Application for 2018. To view your RC210 slip or your WITB online, go to My Account for Individuals.

Note

If you can claim the WITB for 2017, complete Schedule 6.

Line 418 – Special taxes

RESP accumulated income payments

If you received an accumulated income payment from a registered education savings plan (RESP) in 2017, you may have to pay an additional tax on all or part of the amount shown in box 040 of your T4A slips. Complete Form T1172, Additional Tax on Accumulated Income Payments from RESPs, to calculate your tax payable on this accumulated income and report the amount from line 10, 13, or 16 (whichever applies). For more information, see Information Sheet RC4092, Registered Education Savings Plans (RESPs).

Tax on excess employees profit-sharing plan (EPSP) amounts

You may have to pay a tax if you are a specified employee (an employee dealing with an employer in a non-arm's length relationship or with a significant equity interest in their employer) and your employer made contributions to your EPSP for the year that exceed a threshold equal to 20% of your employment income from the employer for the year. For more information and to calculate your threshold and tax payable on this excess amount, use Form RC359, Tax on Excess Employees Profit-Sharing Plan Amounts. Report the amount from line 10 of Form RC359 on line 418. If this tax applies to you, you may be eligible to claim a deduction on line 229 of your return.

Tax related to the non-purchase of replacement shares in a Quebec labour-sponsored fund

You must pay a special tax if you redeemed your shares in a Quebec labour-sponsored fund to participate in the Home Buyers’ Plan (HBP) or the Lifelong Learning Plan (LLP) but did not purchase replacement shares within the prescribed time.

The special tax is the part of the federal tax credit that you received for the acquisition of the shares that were redeemed to participate in the HBP or LLP and were not replaced within the prescribed time.

How to report the special tax:

  • For credits claimed in all years other than 2015, include on line 418 of your Schedule 1, the total of the amounts shown in boxes F and L1, plus 60 % of box L2 of your Relevé 10 information slips (official slip for the province of Quebec).
  • For credits claimed in 2015, enter the actual tax credit you received (line 414 of Schedule 1 of your 2015 return) on that portion of shares not reacquired within the prescribed time.

Supporting documents – If you are filing electronically, keep your official provincial slips for your records. If you are filing a paper return, attach your official provincial slips.

Line 420 – Net federal tax

See Net federal tax.

Line 421 – CPP contributions payable on self-employment and other earnings

See CPP contributions payable on self-employment and other earnings.

Line 422 – Social benefits repayment

See Social benefit repayment.  

Line 424 – Federal tax on split income

This tax applies to certain types of income of a child born in 2000 or later. For more information, see Split income of a child under 18. If this tax applies, calculate it on Form T1206, Tax on Split Income, and report the amount from line 5 of this form on line 424 of Schedule 1.

A child under 18 years of age may have to pay tax on split income for dividends on shares of a corporation. Any capital gain from the disposition of those shares to a person who does not deal at arm's length with the child will be deemed to be a dividend. This deemed dividend is subject to the tax on split income and is considered to be an "other than eligible dividend" for the purposes of the dividend tax credit.

Line 425 – Federal dividend tax credit

If you reported dividends on line 120 of your return, claim on line 425 of Schedule 1 the total of the dividend tax credits from taxable Canadian corporations shown on your information slips.

If you received eligible dividends, the federal dividend tax credit is 15.0198% of your taxable amount of eligible dividends reported on line 120 of your return.

If you received "other than eligible dividends," the federal dividend tax credit is 10.5217% of your taxable amount of dividends reported on line 180 of your return.

For explanations of eligible dividends and "other than eligible dividends," see line 120.

Note

Foreign dividends do not qualify for this credit.

Line 427 – Minimum tax carryover

If you paid minimum tax on any of your 2010 to 2016 returns but you do not have to pay minimum tax for 2017, you may be able to claim credits against your taxes for 2017 for all or part of the minimum tax you paid in those years.

To calculate your claim, complete the applicable parts of Form T691, Alternative Minimum Tax.

Supporting documents – If you are filing electronically, keep your Form T691 for your records. If you are filing a paper return, attach your Form T691.

Calculation of provincial or territorial tax (Form 428)

To calculate your provincial or territorial tax, complete Form 428.

Note

If you resided in Quebec on December 31, 2017, you must file a provincial income tax return for Quebec.

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