1998

What's new for 1998?

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

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Schedules - Schedule 12 from last year is now Schedule A, Statement of World Income. Schedule 13 from last year is now Schedule B, Allowable Amount of Non-Refundable Tax Credits. Both schedules are included in this guide.

1998 tax measures

This tax and benefit 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 1998, or as of the dates indicated.

Deemed residents - The definition of a deemed resident has changed. See page 8 for details.

Non-residents and non-residents electing under section 217 - New rules apply for calculating your taxable income. See page 8 for details.

Self-employed individuals (lines 135-143) - You may be able to claim a deduction against your business income for premiums you paid for coverage under a private health services plan, and for computer software and hardware purchased to deal with dates after December 31, 1999. In addition, there are changes that apply to most amounts you can claim for meals and entertainment that you provide employees after February 23, 1998. For details, see the guide that applies to your business.

Registered pension plan (RPP) deduction (line 207) and Registered retirement savings plan (RRSP) deduction (line 208) - You no longer have to include these amounts when finding out if you have to pay minimum tax. In addition, starting in 1999, you may be able to withdraw funds tax free from your RRSPs if you or your spouse participates in a continuing education program. For more information, get the guide called Lifelong Learning Plan (LLP).

Home Buyers' Plan - There are new rules about participating after 1998, if you have participated before, including rules about buying or building a home for someone (yourself or a relative) who qualifies for the disability amount (line 316). For more information, get the guide called Home Buyers' Plan (HBP) - For 1999 Participants.

Child care expenses (line 214) - The maximum amount you may be able to claim for each child has increased. In addition, you may be able to claim amounts paid to allow you or your spouse to go to school part time. For details, see Form T778, Child Care Expenses Deduction for 1998.

Moving expenses (line 219) - There are additional amounts you may be able to claim when you move. In addition, you may have to include in your income certain amounts relating to the move that you receive from your employer. See Form T1-M, Claim for Moving Expenses, for details.

Emergency workers - If you receive income from a government, municipality, or public authority for certain volunteer services, you may be able to reduce the amount you have to report by up to $1,000. See page 28 for details.

Personal amount supplement (line 307) - You may be able to claim this for yourself and either your spouse or a person described at line 305.

Caregiver amount (line 315) - If you cared for your or your spouse's parent or grandparent or an infirm dependant who lived with you, you may be able to claim this amount.

Disability amount (line 316) - After February 24, 1998, occupational therapists and psychologists can certify certain kinds of impairments.

Interest paid on student loans (line 319) - You can claim an amount for the interest paid in the year on certain student loans.

Tuition and education amounts (line 323) - The monthly education amount has been increased to $200 for individuals in full-time programs, including those attending part time because they are mentally or physically impaired. In addition, you can claim an education amount of $60 for each month in which you were studying in a qualifying part-time program.

Medical expenses (line 330) - You can claim amounts paid for you or a relative to learn to care for a relative who has a mental or physical infirmity and who is in your household or is dependent on you for support.

Federal individual surtax (line 419) - You may have less surtax to pay.

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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, by calling 1-800-267-1267 weekdays from 8:15 a.m. to 5:00 p.m.
(Eastern Time). From outside Canada, call the International Tax Services Office collect at (613) 952-3741.

La version française de cette publication est intitulée Guide général d'impôt et de prestations pour les non-résidents et les
résidents réputés du Canada - 1998.

Where do you find …

A ge amount31
Alimony20, 26
Amount for infirm dependants age 18 or older32
Amounts transferred from your spouse38
Annuity payments16
Attendant care expenses26, 39
Authorizing your representative6

B alance owing48
Basic federal tax44
Basic personal amount31

C anada Child Tax Benefit10
Canada or Quebec Pension Plan benefits16
Canada or Quebec Pension Plan contributions34, 46
Canada Savings Bonds18
Capital gains and capital gains deduction19, 30
Caregiver amount35
Carrying charges27
Changing your return11
Charitable donations41
Child care expenses26
Child support20, 26
Commission income15
Cultural gifts41

D eath benefits (other than Canada or Quebec
Pension Plan death benefits)21
Deceased persons, filing for9
Deemed residents8
Direct deposit48
Disability amount35
Dividends and dividend tax credit17, 43
Do you have to file a return?7

E cological gifts41
Education amount37
Elections Canada4
Emergency volunteers28
Employment income and expenses15, 27
Employment Insurance benefits17
Employment Insurance premiums34
Equivalent-to-spouse amount32

F ederal individual surtax45
Federal logging tax credit44
Federal tax42
Filing date9
Foreign income and property14
Foreign tax credit44

G oods and services tax/harmonized
sales tax (GST/HST) credit13
Government gifts41

H ome Buyers' Plan20, 24
Hours of service6

I dentification12
Income amounts paid back28
Income that is not taxed14
Instalments11, 48
Interest and other investment income17
Interest expenses27
Interest on refunds and balances owing10
Internet access6
Investment tax credit45, 47

L abour-sponsored funds tax credit46
Legal fees28
Loans and transfers of property14
Losses26, 29

M aintenance20, 26
Marital status12
Medical expenses39
Medical expense supplement, refundable47
Minimum tax43
Moving expenses26

N et federal supplements22, 29
Non-refundable tax credits30
Non residents8
Non residents electing under section 2178

O ld Age Security pension15
Overseas employment tax credit44

P artnership income - Limited or non-active19
Penalties9
Pension income amount35
Pension or superannuation income16
Pensions from a foreign country16
Personal amount supplement33
Political contributions45
Provincial tax46

R efunds11, 48
Registered pension plan deduction22
Registered retirement income fund (RRIF) income16
Registered retirement savings plan (RRSP)
income and deduction20, 22
Rental income19
Research grants15
Residential ties8
Retiring allowances (severance pay)21

S afety deposit box charges27
Saskatchewan Pension Plan deduction25
Scholarships20
Self-employment income21
Severance pay21
Social assistance payments22, 29
Social benefits repayment28, 46
Social insurance number12
Spousal amount31
Spouse - defined12
Support payments20, 26
Surtax for non-residents and deemed residents43, 44

T ax deducted (shown on information slips)46
Tax shelters15
Tax transfer for residents of Quebec47
Territorial tax46
Transfer of amounts from dependants36, 38
Tuition fees37

U nion, professional, or like dues25
United States social security benefits16, 30
Vow of perpetual poverty30

W age-loss replacement plans15
War veterans allowances and pensions 14
Workers' compensation benefits22, 29

The information on this page applies to you only if you are a deemed resident of Canada.

Please indicate "Yes" on page 1 of your return to authorize Revenue Canada to provide your name, address, and date of birth to Elections Canada. Elections Canada will use this information to make sure that the National Register of Electors is kept up to date. Please note that your authorization is needed every year, whether your information has changed or not.

National Register of Electors

The National Register of Electors is an automated data base maintained by Elections Canada, containing the name, address, and date of birth of Canadians eligible to vote. It is used to produce electoral lists without having to conduct door-to-door enumerations, saving approximately $30 million for each federal general election or referendum. Elections Canada needs your help in keeping the National Register of Electors up to date, because every year there are significant changes to elector information for almost 4 million Canadians, including name and address changes and new electors qualifying to vote.

If you indicate "Yes"

• You authorize Revenue Canada to give only your name, address, and date of birth to Elections Canada, for the purpose of making sure that your information in the National Register of Electors is up to date.
• Elections Canada will not add your name if it is not already on the National Register of Electors. Instead, you may receive a letter asking you to confirm that you are eligible to vote and to authorize that your name be added to the National Register of Electors.

If you indicate "No" (or do not make a choice)

• Revenue Canada will not give Elections Canada any information.
• You will not lose your right to vote.
• Elections Canada will not delete your name from the National Register of Electors if it is already there.
• Your information may not be up to date on electoral lists produced from the National Register of Electors. If so, you will have to take the necessary steps to correct your information during an election or referendum.

Confidentiality

Under the Canada Elections Act, information in the National Register of Electors can be used for electoral purposes only. You can request, in writing, not to be included on the National Register of Electors, or that your information not be shared with provinces, territories, municipalities, and school boards that use the National Register of Electors to produce their electoral lists.

Contacting Elections Canada

Telephone: (613) 993-2975 or 1-800-INFO-VOTE (1-800-463-6868) toll free in Canada and the United States

(613) 993-2975 from outside Canada and the United States

Teletypewriter: 1-800-361-8935 (for individuals with a hearing or speech impairment) toll free in Canada and the United States

Internet: www.elections.ca

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 on your 1998 return. It will help you determine your tax payable and
any refund to which you are entitled.

You don't need to read the whole guide!

Beginning on page 15 with "Line 101 - Employment income," we will lead you directly to
the information that may apply to you by using a symbol. Before you start, it is important
that you:

read the general information on pages 6 to 14;

determine whether you are a deemed resident, a non-resident, or a non-resident
electing under section 217 (see the definitions on page 8);

• 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…

= deemed residents

= non-residents

= 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 return. If the symbol that applies to you appears beside the line number in the guide, the information for that line may apply to you. If your symbol does not appear, the information does not apply to you.

Note

Keep in mind that you should use this guide only if your situation is listed on page 7 under the heading "Is this tax and benefit package for you?"

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. See the T.I.P.S. information at the end of this guide.

We have other tax guides and pamphlets, some of which contain 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 1997 return.

Throughout this guide, we mention forms, pamphlets, interpretation bulletins, information circulars, and other guides that give more details on specific tax topics. All publications mentioned in this guide are available at all tax services offices, including the International Tax Services Office, and at all tax centres.

Internet access

If you have access, you can find most of our publications at 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.

Before you contact 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 at the International Tax Services Office, you should do all of the following:

• 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 at the end of this guide.

Getting tax information (for faster service, call or visit us before 10:30 a.m. or after 1:00 p.m.)

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 - You can visit us at the International Tax Services Office Monday to Friday (except holidays) from 8:15 a.m. to 4:30 p.m. If you visit us, and ask for personal tax information, we will ask you for one piece of signed identification with your picture. You can also provide two pieces of signed identification and your Notice of Assessment, Notice of Reassessment, or information about the contents of your return.

By phone - You can call us Monday to Friday (except holidays) from 8:15 a.m. to 5:00 p.m. year round. During tax filing season (February 22 to April 30) you can call until 9:00 p.m. Monday to Thursday. If you call us, and ask for personal tax information, we will ask for your social insurance number or temporary taxation number, your date of birth, and the total income amount you reported on line 150 of your 1997 return. If you call after April 30, use the amount reported on your 1998 return. If you ask about your assessment we may ask for additional information from your return.

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 and signing Form T1013, Individual Consent Form.

If your representative visits us, he or she must show two pieces of identification, a Form T1013, Individual Consent Form, that you completed and signed, and your Notice of Assessment, Notice of Reassessment, or information about the contents of your return.

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

Before you start

Do you have to file a return?

You have to file a 1998 return if any of the following applies to you:

• You have a balance owing for 1998.
• You want to claim a refund.
• You want to apply for the goods and services tax/harmonized sales tax (GST/HST) credit.
• You or your spouse wants to continue receiving Canada Child Tax Benefit payments. If so, each spouse must file a return. For more information, see the section called "Canada Child Tax Benefit" on page 10.
• We sent you a request to file a return.
• You sold or disposed of capital property, such as real estate or shares, in 1998.
• You claimed a capital gains reserve on your 1997 return.
• You have to pay back any of your Old Age Security or Employment Insurance benefits. See line 235 for details. 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.
• You have to contribute to the Canada Pension Plan (CPP). This can apply if the total of your 1998 net self-employment income and pensionable employment income is more than $3,500. See line 310 for details.
• You want to carry forward the unused portion of your tuition and education amounts. See line 323 for details.
• 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 1998. If this is your situation, you have to file a return electing under section 217 of the Income Tax Act.
• 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 1998. If this is your situation, you have to file a return electing under section 216 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 (see page 24) up to date, you have to file a return.

Is this tax and benefit packagefor you?

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

• You were a deemed resident of Canada (as defined on page 8) during 1998. For exceptions, see the following section "What if you can't use this package?"
• You were a non-resident for all of 1998 and you are filing
  a return to elect under section 217 of the Income Tax Act(as defined on page 8).
• You were a non-resident (as defined on page 8) for all of 1998, and you are reporting Canadian-source income other than from employment in Canada or from a business with a permanent establishment in Canada (and you are not electing under section 217).

What if you can't use this tax and benefit package?

• If you were a deemed resident in 1998 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 to live during 1998, use the tax package for the province or territory where you lived on December 31, 1998.
• If you were a non-resident in 1998 and you are reporting income from employment in Canada, or from a business with a permanent establishment in Canada (and you are not electing under section 217), use the tax package for the province or territory where you earned the income. You should also get the guide called Non-Residents and Temporary Residents of Canada for the special rules that apply.
• If you were a non-resident during 1998 who received Canadian-source rental income or timber royalties, and you are only filing a return to pay tax on this income at the same rate that residents of Canada pay, use the Income Tax Guide for Electing Under Section 216.
• If you lived outside Canada during 1998, but you maintained residential ties (see definition on page 8) in Canada, generally we consider you to be a factual resident of Canada. Use the package for the province or territory where you kept your residential ties.
• If you were a newcomer to Canada in 1998, use the package for the province or territory where you lived on December 31, 1998. You should also get the pamphlet Newcomers to Canada for the special rules that apply.
• If you emigrated from Canada during 1998, use the package for the province or territory where you lived on the day you left Canada. You should also get the pamphlet called Emigrants and Income Tax for the special rules that apply.

Where can you get the tax and benefit 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 of the International Tax Services Office at the end of this guide.

Are you a non-resident?

You are a non-resident of Canada for tax purposes if you did not have residential ties (as defined below) in Canada in 1998, and you:

• lived outside Canada throughout 1998 (except if you are a deemed resident as defined on this page); or
• stayed in Canada for less than 183 days in 1998.

What income should you report? - Report your 1998 income from Canadian sources such as scholarships, fellowships, bursaries, net research grants, and taxable capital gains from disposing of taxable Canadian property. If you received Canadian-source employment income or income from a business with a permanent establishment in Canada, use the package for the province or territory where you earned the income.

Under proposed changes, do not include on your return any gain or loss from disposing of taxable Canadian property, if, under a tax treaty, the gain from that disposition would be exempt from tax in Canada. See line 127 for details.

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 choose to report certain types of this income on a Canadian return. Choosing to do this is called "electing under section 217" and the return on which you report this income is referred to as a "section 217 return."

By filing a section 217 return, you may receive a refund of some or all of the non-resident tax withheld.

Section 217 may apply to you if you were a non-resident of Canada in 1998 and you received any of the Canadian-source income listed on page 50 in the section called "Does section 217 apply to you?"

If 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 1998, you have to file a section 217 return.

What income should you report? - Report all section 217 income (see listing on page 50) that was paid or credited to you in 1998, plus your 1998 Canadian-source business and employment income, and taxable capital gains from disposing of taxable Canadian property.

Under proposed changes, do not include on your return any gain or loss from disposing of taxable Canadian property, if, under a tax treaty, the gain from that disposition would be exempt from tax in Canada. See line 127 for details.

Also, do not claim a loss from a business carried on in Canada, if, under a tax treaty, any income from that business would be exempt from tax in Canada.

If you are a former resident of Canada, you only need to report employment income received from a Canadian resident if, under the terms of a tax treaty between Canada and your new country of residence, the employment income is exempt from tax in your new country.

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 1998, and you did not establish residential ties (as defined on
this page) in Canada.

You are also a deemed resident if you lived outside Canada during 1998, you did not have residential ties in Canada, and you were:

• a member of the Canadian Forces at any time in 1998;
• a member of the Canadian Forces overseas school staff who chooses to file a return as a deemed resident (if you left Canada during 1998, see "Were you a member of the overseas Canadian Forces school staff who left Canada in 1998?" 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 1998;
• 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;

• under proposed changes, after February 23, 1998, a person who, under a tax treaty, is exempt from tax in your new country of residence because of your relationship to a resident (including a deemed resident) of Canada;

• a dependent child of one of the first four persons described above, and your net income in 1998 was less than $6,957; or
• a former resident of Canada and you lived with and were the spouse of one of the first four persons described above at any time during 1998.

Under proposed changes, if you lived with and were the spouse of one of the first four persons described above at any time during 1998, you are no longer automatically a deemed resident. Instead, you are a deemed resident if:

• you ceased to be a resident of Canada after February 23, 1998, but, under a tax treaty, you are exempt from tax in your new country of residence; or
• you ceased to be a resident of Canada before February 24, 1998, and you choose to be a deemed resident. If this is your situation, contact the International Tax Services Office for details.

What income should you include? - Include your 1998 world income. World income is income from all sources both inside and outside Canada.

Were you a member of the overseas Canadian Forces school staff who left Canada in 1998?

If you were and you severed your residential ties, you are an emigrant. If this is your situation, you should use the 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 package for the province or territory where you lived just before you left Canada. In future years, you will use the 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 have to pay 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 return, and that you are asking for relief from the federal non-resident and deemed resident surtax.

Filing your return

Getting started

Gather all the documents you will need to complete your return. This includes your information slips (such as T3, T4, T4A, and T5 slips) and 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 for more instructions.

Mail or deliver your return in the envelope included in this guide. If you are preparing other people's returns, mail or deliver each person's return in a separate envelope.

Note

If you have a farming business and you are participating in the net income stabilization account (NISA) program, use the envelope contained in the guide called Farming Income and NISA.

What date is your1998 return due?

Generally, your 1998 return has to be filed on or before April 30, 1999 .

Note

If you file your return after April 30, 1999, your goods and services tax/harmonized sales tax (GST/HST) credit and Canada Child Tax Benefit payments may be delayed.

Self-employed persons - If you or your spouse carried on a business in 1998 (other than a business whose expenditures are primarily in connection with a tax shelter) your 1998 return has to be filed on or before June 15, 1999 . However, if you have a balance owing for 1998, you still have to pay it on or before April  30, 1999 . Send your payment to the International Tax Services Office with a note explaining how the payment is to be applied. Do not attach a copy of your return to your payment, unless you are filing that return.

Non-residents electing under section 217 - Your 1998 section 217 return is due on or before June 30, 1999 . However, if you have a balance owing, you have to pay it by April 30, 1999 .

Deceased persons - As the legal representative (executor or administrator) of the estate of an individual who died in 1998 or before May 1, 1999, (June 16, 1999, for a self-employed individual or that individual's spouse) you may have to file a 1998 return for that individual (see "Do you have to file a return?" on page 7). If so, the 1998 return for the deceased individual (and for the individual's spouse) has to be filed on or before whichever of the following two dates is later :

• April 30, 1999, for most individuals (June 15, 1999, for a self-employed individual or the individual's spouse); or
• six months after the individual's date of death.

For details about your filing requirements and options, get the guide called Preparing Returns for Deceased Persons.

Note

If you received income in 1998 for a person who died in 1997 or earlier, do not file a 1998 return for that income on behalf of that person. However, you may have to file a T3 Trust Income Tax and Information Return for the estate.

What penalties and interest do we charge?

Penalties

If you owe tax for 1998, and do not file your 1998 return within the dates we specify under "What date is your 1998 return due?" on this page, we will charge you a late-filing penalty. The penalty is 5% of your balance owing for 1998, 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.

Tax Tip

Even if you cannot pay the full amount you owe on or before April 30, 1999, you can avoid the late-filing penalty by filing your return on time.

We may waive this penalty (as well as any interest that may apply, as discussed in the next section) 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. For details, get Information Circular 92-2, Guidelines for the Cancellation and Waiver of Interest and Penalties.

If you fail to report an amount on your return, you may have to pay a penalty. If you do this more than once within a four-year period, you may have to pay another penalty.

Non-residents electing under section 217 - If you file your 1998 section 217 return after June 30, 1999, your election is not valid.

Interest

If you have a balance owing for 1998, we charge compound daily interest starting May 1, 1999, on any unpaid taxes owing for 1998. This includes any balance owing if we reassess your return. In addition, we will charge you interest on any penalty you have to pay, starting the day after your return is due.

When will we pay interest?

We will pay you compound daily interest on your 1998 tax refund, starting on whichever of the following three dates is latest :

• June 15, 1999;
• the 46th day after you file your return; or
• the date you overpaid your taxes.

What do you include with your return and what records do you keep?

Include one copy of each of your information slips. 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. It could also delay the processing of your return.

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

You should also keep a copy of your 1998 return, the related Notice of Assessment, and any Notice of Reassessment. These can help you complete your 1999 return. For example, your Notice of Assessment for 1998 will tell you:

• your 1999 RRSP deduction limit;
• your undeducted RRSP contributions for 1999;
• your non-capital loss carry-forward balance; and
• your tuition and education amounts carry-forward balance. For details, see line 323.

Non-residents and non-residents electing under section 217 - You also need to include a completed Schedule A, Statement of World Income. You will find Schedule A included in this guide.

What if you are missing information?

If you have to file a 1998 return, as explained on page 7, be sure to file it on time (see page 9) even if some slips or receipts are missing. If you know that you will not be able to get a slip by the due date, attach a note to your return, stating which slips are missing, the payer's name and address, and what you are doing to get the slips. To calculate the income to report and any amounts the payer deducted, use any stubs you may have, and attach them to your return.

How do you report foreign income and other amounts?

If you are a deemed resident of Canada, report foreign income and other amounts (such as expenses and taxes paid) in Canadian dollars. Use 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 the International Tax Services Office to get an average annual rate.

Canada Child Tax Bene fit (CCTB)

If you are a deemed resident of Canada and you are responsible for the care of a child who is under 18, you can apply for the CCTB for that child. To do so, submit a completed Form RC66, Canada Child Tax Benefit Application, as soon as possible after the child is born or begins to live with you.

After we process your CCTB application, we will send you a Canada Child Tax Benefit Notice, telling you the amount to which you are entitled (if any) and how we calculated it. If you qualify, you will receive the payments no later than the 20th of every month. However, if your total benefit for the year is less than $120, we will usually send it all in one payment.

The CCTB is based on the income shown on your return and your spouse's (if applicable, see page 12) return. Therefore, to qualify for the credit, you both have to file a return every year, even if there is no income to report. Once you have applied for the CCTB, you have to advise us immediately of any of the following changes (as well as the date it happened or will happen):

• the child is no longer in your care;
• the child stops living with you;
• the child dies;
• you move;
• your marital status changes;
• you have your payments deposited directly into your account at a financial institution (see "Direct deposit" on page 48) and your banking information changes;
• you or your spouse is no longer a resident of Canada; or
• your immigration status changes.

The pamphlet called Your Canada Child Tax Benefit has more details. For more information about the CCTB, call us at 1-800-387-1193.

After you file

When can you expect your refund?

We can usually process your return in four to six weeks . However, we usually start to process returns in mid-February, so do not call before March 1, even if you filed your return in January. 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. See the T.I.P.S. information 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, we may select your return for a more detailed review before we assess it. If so, and we ask you to give us documents to verify the deductions or credits you claimed, your assessment may be delayed. We also review some returns after we have assessed them, to verify the income reported, or the deductions or credits claimed.

How do you change a return?

If you need to make a change to any return you have sent us, do not file another return for that year . Instead, send both of the following to the International Tax Services Office:

• a completed Form T1-ADJ, T1 Adjustment Request, or a signed letter providing the details of your request (including the years of the returns you want us to change), your social insurance number or temporary taxation number, your address, and a telephone number where we can reach you during the day; and
• supporting documents for the changes you want to make and, if you have not sent them to us before, supporting documents for your original claim.

Note

Send your Form T1-ADJ or letter separately from your 1998 return.

You can ask for a refund for years as far back as 1985. It usually takes eight weeks before we mail you a Notice of Reassessment.

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 1985 or any year after that. If you are filing a return for a year before 1998, make sure you attach receipts for all the deductions or credits you are claiming.

What is a voluntary disclosure?

If you have never filed a return, stopped filing returns 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. Information Circular 85-1, Voluntary Disclosures, has more details.

What should you do if you disagree?

If you disagree with your assessment or reassessment, contact the International Tax Services Office for more information. If you still disagree, you can make a formal objection by filing a Form T400A, Objection, or a letter on or before whichever of the following two dates is later :

• one year after the due date for the return; or
• 90 days after the date of the Notice of Assessment or Reassessment.

What should you do if you move?

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/harmonized sales tax (GST/HST) credit or Canada Child Tax Benefit (and similar provincial or territorial programs) payments to which you may be entitled. If you use direct deposit, and your account at your financial institution has changed, be sure to advise us of your new account. We also need to know your new address to mail you your return 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.

Note

Because an individual's personal information is confidential, generally we will not provide a change of address to other government departments or Crown corporations, such as Human Resources Development Canada or Canada Post. Similarly, they do not provide such information to us.

Should you be paying your 1999 taxes by instalments?

You may have to pay your 1999 taxes by instalments if there is not enough income tax withheld from your income. To find out if you should pay your 1999 taxes by instalments, estimate your 1999 taxes and credits using your 1998 return. Enter those amounts in the chart on page 12, which contains the most common factors to consider. If you would like to know all of the factors, or if you want to calculate your instalment payments, get Form T1033-WS, Worksheet for Calculating 1999 Instalment Payments.

1999 Insta lment requirements

Total payable (line 435) not including the
amount on line 421 $ 1

Tax credits (line 482) 2

Total of amounts on
lines 448, 450, 457, and 476 - 3

Line 2 minus line 3 - 4

Line 1 minus line 4 $ 5

The amount on line 5 is your net tax owing for instalment purposes.

You may have to pay your 1999 taxes by instalments if both of the following apply:

• your net tax owing for instalment purposes (line 5 above) is more than $2,000 ($1,200 if you have to file a return for the province of Quebec) for 1999; and
• using the same calculation, your net tax owing for instalment purposes (line 5 above) was more than $2,000 ($1,200 if you have to file a return for the province of Quebec) for 1998 or 1997.

If our records show that you may have to pay your taxes by instalments, we will send you an Instalment Reminder in advance, showing the amount we suggest you pay and 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.

Identificatio n

Complete the entire identification area of your return, even if you attach a personal label. If you provide incomplete or incorrect information, the processing of your return, and any refund, credit, or benefit, such as your goods and services tax/harmonized sales tax (GST/HST) credit, and any benefit to which you may be entitled under the Canada Child Tax Benefit Program may be delayed .

Non-residents electing under section 217 - Write "Section 217" at the top of page 1 of your return.

Personal label

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

We may modify part of your address to meet Canada Post's requirements. Therefore, the address on your package, Notice of Assessment, or any other correspondence we send you may be different from the one you indicate on your return.

Social insurance numb er (SIN)

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. If you do not have a SIN, apply for one at any Human Resources 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.

Marital status

Check the box that applies to your status for income tax purposes on December 31, 1998. Check either "Married" or "Living common law" (whichever applies) if you had a spouse who meets the definition below. Check one of the other boxes only if the first two categories do not apply.

Spouse

This term applies to a person to whom, at the time, you were legally married, or with whom, at the time, you were living common law.

Living common law - This applies when you live and have a relationship with a person of the opposite sex to whom any of the following applies. He or she:

• is the natural or adoptive parent (legal or in fact) of your child;
• has been living with you for at least 12 continuous months; or
• lived with you previously for at least 12 continuous months, and you are living together again.

The above includes any period that you were separated for less than 90 days because of a breakdown in the relationship.

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 1998, enter the province or territory where you had a permanent business establishment.

Date of entry or departure

When you complete the identification area on your return, do not show a date of entry or departure. If you enter a date of entry or departure, we may reduce your claim for non-refundable tax credits.

Elections Canada

If you are a deemed resident of Canada, on page 1 of your return you can authorize us to give certain information to Elections Canada to help maintain the National Register of Electors. See page 4of this guide for more information.

Goods and services tax/harmonized sales tax (GST/HST) credit application

In Newfoundlan d, Nova Scotia, and New Brunswick, provincial sales taxes have been harmonized with the GST, resulting in the HST. You can only receive the GST/HST credit if you apply for it each year , even if you received it in the previous year

To apply, you have to complete this area on page 1 of your 1998 return .

Your credit is based on the information provided on your return and, if applicable, your spouse's return (see the definition of "spouse" on page 12).

If you qualify, you will receive the payments in July and October of 1999, and January and April of 2000.

Before you complete this area on your return, be sure to read all of the information in this section. If you apply, we will let you know in July of 1999 the amount to which you are entitled, if any, and how we calculated your credit.

Who can apply?

You can apply for the GST/HST credit if, at the end of 1998, you were a deemed resident of Canada and any of the following applies. 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/HST credit if, at the end of 1998, 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 1998; 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 employee of such a person.

Note

You cannot claim the credit for your spouse or child who met either of the last two conditions at the end of 1998.

Number of children

You can claim a GST/HST credit for each of your children who, at the end of 1998:

• 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 by either you or your spouse.

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

Net income of spouse

Your spouse's net income is the amount on line 236 of your spouse's return, or the amount that it would be if your spouse filed a return.

Income limit

In the chart that follows, look up the number of children you have. If your net family income is equal to, or less than, the amount shown across from the number of your children, you may be entitled to receive the credit. Your net family income is the total of your net income and, if applicable, your spouse's net income.

Number of children	Maximum family income
0	$33,880
1	$35,980
2	$38,080
3	$40,180
4	$42,280
5 or more	apply

Note

These income limits are only guidelines to help you decide if you should apply for the credit. If you apply, we will send you a notice by the end of July 1999 to let you know the amount to which you are entitled, if any.

Calculating your GST/HST credit

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

We may apply your GST/HST credit against certain outstanding federal, provincial, or territorial government debts, such as student loans, Employment Insurance and social assistance benefit overpayments, Immigration loans, and training allowance overpayments. We may also apply it to satisfy a garnishment order under the Family Orders and Agreements Enforcement Assistance Act.

Foreign incom e

As a deemed resident of Canada, you have to report your income from all sources, both inside and outside Canada.

Foreign property

If you are a deemed resident of Canada, on page 1 of your return there is a question for you to answer about owning or holding foreign property. This refers to:

• foreign property you owned; and
• your share of foreign property in which you had an interest.

Answer "yes" if the total cost of all these properties was more than CAN$100,000. Get Form T1135, Foreign Income Verification Statement, and attach a completed copy to your return.

Foreign property includes:

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

Note

If you (either alone or with a related person) held 10% or more of the shares of a non-resident corporation, you may have to file an additional return. For more details, contact us.

However, foreign property does not include:

• an interest in a registered retirement savings plan (RRSP), registered retirement income fund (RRIF), or registered pension plan (RPP) that contains foreign property;
• mutual funds registered in Canada that contain foreign investments;
• 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 complete list of the different kinds of foreign property.

Loans and transfers to non-resident trusts

As a deemed resident of Canada, in 1998 or a previous year you may have loaned or transferred funds or property to a

non-resident trust. If so, you may have to complete and file Form T1141, Information Return in Respect of Transfers or Loans to a Non-resident Trust. For more information, get Form T1141.

Beneficiaries of non-resident trusts

As a deemed resident of Canada, in 1998 you may have received funds or property from, or been indebted to, a non-resident trust under which you were a beneficiary. If so, you may have to complete and file Form T1142, Information Return in Respect of Distributions From and Indebtedness to a Non-resident Trust. For more information, get Form T1142.

Due dates for forms

The deadline for filing these forms is the same as for your 1998 return (see "What date is your 1998 return due?" on page 9). File Form T1135 with your return. File Forms T1141 and T1142 separately from your return.

Penalties

There are substantial penalties for failing to complete and file these forms by the due date.

Total incom e

If you are a deemed resident of Canada, you have to include in income most amounts you received in 1998. However, whether you are a deemed resident, a non-resident, or a non-resident electing under section 217, you do not have to include any of the following amounts in your income:

• any GST/HST credit or Canada Child Tax Benefit payments;
• any provincial or territorial child tax credits or benefits;
• allowances for newborn children received from the Régie des rentes du Québec and Quebec family allowances;
• compensation received from a province or territory if you were a victim of a criminal act or a motor vehicle accident;
• lottery winnings or inheritances;
• any allowance, disability pension, or dependants' pension paid for war service; or
• most amounts received from a life insurance policy following someone's death.

Note

Income earned on any of the above amounts is taxable (such as interest you earn when you invest lottery winnings).

Loans and transfers of property

If you are a deemed resident of Canada, 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 either:

• loaned to your spouse, parent, grandparent, child, grandchild, brother, or sister, or to your niece or nephew who was under 18 at the end of 1998; or
• transferred to your spouse or to your child, grandchild, sister, brother, niece, or nephew who was under 18 at the end of 1998.

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.

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

Enter the total of amounts shown in box 14 of all your T4 slips. If you have not received your 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.

Note

If you received a housing allowance as a cleric, the allowance may be included in box 14 of your T4 slip. If so, subtract the amount of the allowance from the amount in box 14, and include the difference on line 101. Include the allowance on line 104.

Tax Tip

Your contributions to the Canada or Quebec Pension Plan (box 16 or 17 of your T4 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 slips, or if you have any questions about the amount of your contributions, contact your employer.

Commissions (box 42)

Enter on line 102 the total commissions shown in box 42 on all your T4 slips you received as an employee. 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 guide called Business and Professional Income to determine how to report your commission income and claim your expenses.

Line 104 - Other employment income

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

Note

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 310 for details.

Amounts to report on this line also include:

• Net 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;
• Income-maintenance insurance-plans (wage-loss replacement plans) - Report the taxable part of payments you received, such as income from a wage-loss replacement plan. Box 28 of your T4A slip includes 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 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; and
• Certain goods and services tax/harmonized sales tax (GST/HST) and Quebec sales tax (QST) rebates - If you are an employee who paid and deducted employment expenses in 1997 or earlier, you may have received a GST/HST or QST rebate in 1998 for those expenses. If so, include on line 104 the rebate you received. However, a rebate for a vehicle or musical instrument you bought, for which you can claim capital cost allowance, is treated differently. The guide called Employment Expenses contains instructions on how to report such rebates and information about capital cost allowance.

To find out what other amounts to include on this line, call our T.I.P.S. (Info-Tax) service. See the T.I.P.S. information at the end of this guide.

Line 113 - Old Age Security pension

Enter the amount from box 18 of your T4A(OAS) slip. 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) slip, contact the nearest Income Security Programs office of Human Resources Development Canada.

Notes

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 in 1998, you also may have to complete Form T1136, Old Age Security Return of Income. For more details, get this form and related guide.

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

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.

Lump-sum benefits - If you received a lump-sum CPP or QPP benefit in 1998, all or part of it may have been for a year before 1998. This amount is already included on your T4A(P) slip, and you have to report all of it for 1998. However, you may be eligible for a more beneficial tax treatment. If the part that relates to a previous year is $300 or more, you may have that part taxed as if you had received it in the previous year. If you are a deemed resident, 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. If you were a deemed resident in 1997 and you received a lump-sum benefit in 1997, we did this calculation automatically when we assessed your 1997 return.

If you received a lump-sum benefit in 1995 or 1996, Human Resources Development Canada (HRDC) will advise us how much of it applied to each previous year. We will then apply the more beneficial tax treatment, and tell you the results on a Notice of Reassessment. For more details, call HRDC at 1-800-277-9914.

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.

CPP or QPP child benefit (box 17)

Include 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)

As a beneficiary of the estate of the deceased person, you can choose to include this amount either on line 114 of your own return, or on a Trust Income Tax and Information Return for the estate . 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 guide called T3 Guide and Trust Return.

Line 115 - Other pensions or superannuation

Include on this line any other pensions or superannuation you received, such as amounts shown in box 16 of your T4A slips and box 31 of your T3 slips. Report on line 130 any amount shown in box 18 of your T4A slip or box 22 of your T3 slip.

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 (including life income fund) payments

Report an amount from box 24 of your T4A slip, box 16 or 20 of your T4RIF slip, or box 19 of your T5 slip as follows:

• If you were 65 or older on December 31, 1998, 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 of Canada, report in Canadian dollars the total amount of your 1998 foreign pension income. See "How do you report foreign income and other amounts?" on page 10. Attach a note to your return, identifying the type of pension you received and where it came from.

Do not deduct from your foreign income the amount of tax the foreign country withheld. However, you may be able to claim a credit for this amount. See "Lines 431 and 433 - Federal foreign tax credit" on page 44for details.

In some cases, amounts you receive may not be considered pension income and may have to be reported elsewhere on your return. If you received amounts from United States individual retirement accounts (IRAs) contact the International Tax Services Office.

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 the International Tax Services Office.

United States social security - If you are a deemed resident of Canada, include on line 115 the full amount, in Canadian dollars, of your U.S. social security benefits. You can claim a deduction for part of this income. See line 256 for details.

Benefits paid for your children are their income, even if you received the payments.

Line 119 - Employment Insurance benefits

Enter the amount shown in box 14 of your T4E slip. If you repaid to Human Resources Development Canada excess benefits you received, you may be able to claim a deduction. See line 232 for details.

Note

If your net income before adjustments (line 234) is more than $39,000, you may have to repay some of the benefits you received. See line 235 for details.

Line 120 - Taxable amount of dividends from taxable Canadian corporations

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 "Foreign interest and dividend income" on page 18for 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 425 - Federal dividend tax credit" on page 43for 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 14for 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 do this only 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. 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

Include on this line your interest from Canadian sources, such as amounts shown in box 13 of your T5 slips, and interest and dividend income from foreign sources. Also include the interest on any tax refund you received in 1998, 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.

Notes

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 14for more information.

Generally, when you invest your money in your child's name, you have to report the income from those investments. However, if you deposited Canada Child Tax Benefit payments into a bank account or 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 report your share of interest from a joint investment based on how much you contributed to it.

Example

Karen and Pavel received a T5 slip from their joint bank account showing the $400 interest they earned in 1998. 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) × $400 (total interest) = $320
Pavel reports $80 interest, calculated as follows:

$1,000 (his share) × $400 (total interest) = $80

Bank accounts

Report interest paid or credited to you in 1998, 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 Canada Savings Bonds, see "Canada Savings Bonds (CSBs)" on page 18.

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, 1997, report on your 1998 return the interest that accumulated to the end of June 1998, even if you do not receive a T5 slip. Report the interest from July 1998 to June 1999 on your 1999 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.

For most investments you made in 1990 or later, you have to report the interest each year, as you earn it.

For information about reporting methods for investments (including CSBs) made in 1989 or earlier , call our T.I.P.S. (Info-Tax) service. See the T.I.P.S. information at the end of this guide.

Canada Savings Bonds

Interest on a regular interest ("R") bond is paid annually until the bond matures, or you cash it in. Interest on a compound interest ("C") bond is not paid until you cash it in.

How to report

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

"C" bonds, Series 43 and 44 (1988 and 1989) - The rest of this section applies only to these bonds. If you are already using the annual accrual method to report your bond interest on these bonds, complete Chart 1 below.

Ch art 1
Interest to report for "C" bonds using the
annual accrual method

For each series:	Series 43	Series 44
A - Face value of bonds
B - Amount from line A divided by 100	=	=
C - Interest amount	× 7.04	× 6.39
Line B × Line C Include this amount on line 121	=	=

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

Chart 2
Interest to report for "C" bonds if you want to change
to the annual accrual method

For each series:	Series 43	Series 44
A - Face value of bonds
B - Amount from line A divided by 100	=	=
C - Interest amount	× 7.04	× 29.49
Line B × Line C Include this amount on line 121	=	=

If you already use the cash or receivable method for these bonds, 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 43 bonds, you should have reported $35.33 on your 1991 return, $26.78 on your 1994 return, and $35.78 on your 1997 return. These bonds matured in 1998 and will not earn any more interest. Regardless of which method you were using to report interest on these bonds, for 1998 you have to report all the interest they have ever earned, minus the amounts you reported in previous years.
• For Series 44 bonds, you should have reported $32.05 on your 1992 return and $24.48 on your 1995 return. You should report $29.49 on your 1998 return.

If you cashed Series 43 or 44 "C" bonds in 1998, report the amount shown on the T600 slip minus any part of that amount that you reported in previous years. To calculate the amount you should have reported for each $100 of bonds, use Chart 3 below.

Chart 3
Interest already reported for each $100 of "C" bonds cashed before maturity

For each series:	Series 43	Series 44
Annual accrual method	97.89	79.63
Cash or receivable method	97.89	56.53

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.

Treasury bills (T-Bills)

If you disposed of a T-Bill at maturity in 1998, you have to report as interest the difference between the price you paid and the proceeds of disposition shown on your T5008 slip, Statement of Securities Transactions, or account statement.

If you disposed of a T-Bill before maturity in 1998, you may also have to report a capital gain or loss. For details, get the guide called Capital Gains.

Earnings on life insurance policies

Report the earnings that 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 "How do you report foreign income and other amounts?" on page 10.

Tax Tip

If you paid foreign taxes on foreign investment income you received, you may be able to claim a foreign tax credit. See "Lines 431 and 433 - Federal foreign tax credit" on page 44for details.

Line 122 - Net partnership income: Limited or non-active partners only

Enter on line 122 your share of the net income or loss from a partnership if the partnership did not include a rental or farming operation and you were either:

• a limited partner; or
• 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 the International Tax Services Office.

If you have a tax shelter, see "Tax shelters" on page 15.

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 slip to calculate your claim.

Line  126 - Rental income

Generally, you report rental income payable to you in 1998. You have to include with your return a statement showing your rental income and expenses for the year. You can use Form T776, Statement of Real Estate Rentals,to help you calculate your net rental income.

Enter your gross rental income on line 160 and your net rental income or loss on line 126. If you have a loss, show the amount in brackets. If you were a member of a rental partnership, you should also include any amount in box 20 of your T5013 slip, Statement of Partnership Income, or that the partnership allocated to you in its financial statements.

The guide called Rental Income contains Form T776 and more information about rental activities. If you have a tax shelter, see "Tax shelters" on page 15.

Line 127 - Taxable capital gains

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.

If you realized a capital gain after 1991 as a result of a mortgage foreclosure or conditional sales repossession, do not include the capital gain in income when calculating your GST/HST credit, Canada Child Tax Benefit payments, age amount (line 301), social benefits repayment (line 235) and refundable medical expense supplement (line 452). If this applies to you, contact the International Tax Services Office for more details.

When you donate capital property to a charity, we consider you to have sold the property at its fair market value. As a result, you may have to report a capital gain or loss for that property. There are special rules for donations of certain property. For details, get the guide called Capital Gains and the pamphlet called Gifts and Income Tax.

How to report

Use Schedule 3 to calculate your taxable capital gains or allowable capital losses and attach the completed schedule to your return. Generally, if all of your gains or losses are shown on T3, T4PS, T5, or T5013 slips, or on a financial statement from a partnership, enter the total on line 174 of Schedule 3.

If your securities transactions are shown on an account statement or a T5008 slip, use the information on these documents to help you complete Schedule 3. For more information about these and other capital dispositions, get the guide called Capital Gains.

If you have a taxable capital gain, enter the amount from line 199 on Schedule 3 on line 127 of your return. If you have a net capital loss, do not claim the loss on line 127 of your return. We will register in our system the loss you show on line 199 of Schedule 3. You can then use it to reduce your taxable capital gains of other years. The "Note" at line 253 explains how to do this.

Under proposed changes, if you are a non-resident or a non-resident electing under section 217, do not include on your return any gain or loss from disposing of taxable Canadian property, if, under a tax treaty, the gain from that disposition would be exempt from tax in Canada. Attach to your return, a note stating that you have not included the gain or loss because of a tax treaty. Attach a completed Schedule 3 in respect of the disposition.

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 - Support payments received

Enter on line 156 the total spousal and child support you received in 1998. Enter on line 128 the taxable amount. For more information, including rules that apply to child support agreements and court orders dated May 1, 1997, or later, get the pamphlet called Support Payments.

Tax Tips

If the payments you received from a resident of another country 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 support income you repaid under a court order. For details, get the pamphlet called Support Payments.

Line 129 - Registered retirement savings plan (RRSP) income

Enter on line 129 the total amount shown in boxes 16, 18, 20, 22, 26, 28, and 34 of all your T4RSP slips, unless your spouse made a contribution to your RRSP. See "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 box 20, 22, or 26 of your T4RSP slips if he or she contributed to any of your RRSPs in 1996, 1997, or 1998. In that case, your T4RSP slip should show yes in box 24, and either your spouse's name in box 38 or your spouse's social insurance number in box 36.

To calculate the amount from a spousal RRSP that each of you has to report, complete Form T2205, Calculating Amounts From a Spousal RRSP or RRIF to Include in Income. Both you and your spouse should include this form with your returns. However, only the person shown as the annuitant on the T4RSP slip can claim the income tax deducted (box 30). Attach the slip to your return.

Note

If you and your spouse were living apart because of a breakdown in the relationship when you withdrew funds from your RRSP, you have to report the whole amount shown on your T4RSP slips.

For more details on RRSP income, get the 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 1997, you have to repay to your RRSP on or before March 1, 1999, the amount shown on the statement we sent you in the fall of 1998. You also have to designate it using line 246 of Schedule 7. Do not make the repayment to us. For more information, see "Line 4 (line 246) - RRSP contributions made from January 1, 1998, to March 1, 1999, you are designating as your HBP repayment" on page 24.

If you do not repay the full amount indicated on your repayment statement for 1998, you have to include on line 129 of your return the part you did not repay.

Example

Mohammed withdrew funds under the HBP in 1995. The statement he received in the fall of 1998 showed a required repayment of $800. The only RRSP contribution he made from January 1, 1998, to March 1, 1999, was for $500 on June 17, 1998. He designated it on line 246 of Schedule 7 as a repayment under the HBP, and includes $300 in his income on line 129 ($800 required repayment minus $500 repaid and designated).

For more information, including the rules that apply when the person who made the withdrawal dies, turns 69, or becomes a non-resident, get the publication called Home Buyers' Plan (HBP) for the year of the withdrawal.

Line 130 - Other income

Use this line to report taxable income that is not reported anywhere else on the return. Make sure you have read the instructions for lines 101 to 129 first. Identify the type of income you are reporting in the space to the left of line 130 on your return. If you have more than one type of income, attach a note to your return giving the details.

To find out if an amount is taxable, contact the International Tax Services Office.

Note

Special rules apply for income from property one family member lends or transfers to another. See "Loans and transfers of property" on page 14for more information.

Scholarship s, fellowships, bursaries, study grants, and artists' project grants

Total all the amounts you received in 1998 (box 28 of your T4A slips). 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.

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.

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.

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 boxes 26 and 27 of your T4A slips.

Also, report 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 "Transfers" on page 23.

Under proposed changes, if you make this transfer, you no longer have to consider it when finding out if you have to pay minimum tax (see page 42).

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. See the T.I.P.S. information at the end of this guide.

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

Lines  135 to 143 - Self-employment income

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. For more information contact the International Tax Services Office.

Under proposed changes, if you are a non-resident electing under section 217, you cannot claim a loss from a business carried on in Canada, if, under a tax treaty, the income from that business would be exempt from tax in Canada.

If your fiscal period does not end on December 31, 1998, the guide called Reconciliation of Business Income for Tax Purposes, will help you calculate the business income to report on your 1998 return. If you filed Form T1139, Reconciliation of 1997 Business Income for Tax Purposes, with your 1997 return, you have to complete the 1998 version of this form and attach it to your return.

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.

The following 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)
• Fishing Income (Form T2121, Statement of Fishing Activities)
• Farming Income (Form T2042, Statement of Farming Activities) or Farming Income and NISA (Form T1163 Statement A, NISA Account Information and Statement of Farming Activities for Individuals, and Form T1164 Statement B, NISA Account Information and Statement of Farming Activities for Additional Farming Operations)

Note

If you are participating in the net income stabilization account (NISA) program and you are filing a return, use the envelope contained in the guide called Farming Income and NISA.

If you use your home for day care, the pamphlet called Using Your Home for Day Care has more information.

Generally, if you were a limited or non-active partner, you enter your net income or loss on line 122. However, if your net income or loss is from a rental operation, you 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 the T5013 slip to your return. If you did not receive this slip, you should attach the applicable self-employment form indicated above, or your financial statement.

If you have a tax shelter, see "Tax shelters" on page 15.

Line 144 - Workers' compensation benefits

Enter the amount shown in box 10 of your T5007 slip. 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 box A of your RL-5 slip from the province of Quebec), 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 on line 236 (without including these payments, or deducting the amounts on lines 214 or 235) has to report these payments, no matter whose name is on the slip. If you and your spouse have the same net income, whoever received the payments has to report them.

Note

You do not have to include certain social assistance payments you or your spouse received for being a foster parent or for caring for a disabled adult who lived with you. For more information, contact the International Tax Services Office. However, if the payments are for caring for your spouse or an individual related to you or your spouse, you or your spouse (whoever has the higher net income) will have to include them.

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

Line 146 - Net federal supplements

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 the International Tax Services Office to find out how much you can deduct on line 250.

Net income

Line 206 - Pension adjustment

Enter on line 206 the total of all amounts in box 52 of your T4 slips, or box 34 of your T4A slips. Generally, this total represents the value of the benefits you earned in 1998 under a registered pension plan (RPP) or a deferred profit-sharing plan (DPSP).

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 1999 registered retirement savings plan (RRSP) deduction limit, which we will show on your Notice of Assessment for 1998. 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 1998, you may have to enter an amount on this line. For details, contact the International Tax Services Office.

Line 207 - Registered pension plan (RPP) deduction

Enter the total of all deductible amounts shown in box 20 of your T4 slips, in box 32 of your T4A slips, or on your union or RPP receipts.

You can deduct the total amount unless it is more than $3,500 and your information slip shows a past-service amount. In that case, or if you contributed to an RPP in a previous year and could not deduct part of the amount, get the guide called RRSPs and Other Registered Plans for Retirement to find out how much you can deduct.

Generally, you have to start receiving a pension from your RPP by the end of the year you turn 69. However, 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 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 the International Tax Services Office to find out if you can deduct the amount.

Line 208 - Registered retirement savings plan (RRSP) deduction

This section gives general information on RRSPs. If you need more information after reading this section, get the guide called RRSPs and Other Registered Plans for Retirement. See "Schedule 7, RRSP Contributions, Transfers, and Designations of Repayments Under the Home Buyers' Plan" on page 24to find out if you have to complete this schedule.

Note

Neither you nor your spouse can contribute to your RRSP after the end of the year you turn 69. Therefore, you may no longer be able to contribute to your own RRSP, even though you still have an RRSP deduction limit that you have not used. If so, you can still contribute to an RRSP for your spouse (and deduct the contributions) as long as your spouse's age allows.

If an RRSP annuity contract you purchased before March 6, 1996, already specifies the amount, frequency, and specific starting date of payments from your RRSP, that date will remain in effect.

Receipts - Attach to your return official receipts for all amounts you contributed from March 3, 1998, to March 1, 1999, including those you are not deducting on your 1998 return and those you are designating as Home Buyers' Plan repayments. See "Line 4 (line 246) - RRSP contributions made from January 1, 1998, to March 1, 1999, you are designating as your HBP repayment" on page 24.

We will accept a photocopy of a receipt only 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.

Also attach Schedule 7 if you have to complete it. See "Schedule 7, RRSP Contributions, Transfers, and Designations of Repayments Under the Home Buyers' Plan" on page 24.

You may have made contributions from January 1, 1998, to March 2, 1998, that you did not deduct on your 1997 return. If you did not attach the receipts and a properly completed Schedule 7 to your 1997 return, see "Line 1 - Undeducted RRSP contributions from your 1997 Notice of Assessment or Notice of Reassessment" on page 24.

Under proposed changes, you may be able to withdraw funds after 1998 from your RRSP tax free if you or your spouse participates in continuing education or adult training programs. For more information, get the guide called Lifelong Learning Plan (LLP).

You also may be able to withdraw funds under the Home Buyers' Plan after 1998 to buy or build a home that is more accessible by a disabled person, either yourself or a relative. For details, get the guide called Home Buyers' Plan (HBP) - For 1999 Participants.

Maximum you can deduct

The maximum you can deduct on line 208 is whichever of the following amounts is less :

• your "1998 RRSP deduction limit" plus income eligible for transfer that you received in 1998 and transferred to your RRSP on or before March 1, 1999, (see "Transfers" later in this section); or
• the total of your RRSP contributions made from March 3, 1998, to March 1, 1999, plus the undeducted RRSP contributions shown on your 1997 Notice of Assessment or Notice of Reassessment.

Note

If you lived or helped out in certain areas of eastern Canada during the ice storm in January of 1998, you were allowed to deduct, on your 1997 return, contributions made to your or your spouse's RRSPs from March 3, 1998, to March 31, 1998. Do not claim for 1998 any amounts you already claimed for 1997.

Your RRSP contributions

This includes amounts you contributed to your own RRSP or an RRSP for your spouse based on your "1998 RRSP deduction limit." They also include transfers and amounts you are designating as Home Buyers' Plan (HBP) repayments . For more information about these subjects, see later in this section.

Note

Your RRSP contributions do not include the following amounts:

Any RRSP contribution you made on or after March 3, 1998, that was refunded to you or your spouse in 1998 because it was an undeducted contribution. Report the refund on line 129 of your 1998 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 it to your return and claim a deduction on line 232. Otherwise, attach a completed 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 publication called Home Buyers' Plan (HBP) for the year you made your withdrawal.

Any payments directly transferred to your own RRSP for which you did not receive an information slip.

The part of an RRSP withdrawal that you recontributed to your RRSP and deducted on line 232. This would have happened if, in error, you withdrew more RRSP funds than necessary to obtain past-service benefits under a registered pension plan (RPP).

The excess part of a direct transfer of a lump-sum payment from your RPP to an RRSP or registered retirement income fund (RRIF) that you withdrew and are including on line 129 or 130 of your 1998 return, and deducting on line 232. You can complete 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.

Transfers

You may have received certain types of income and reported them on line 115, 129, or 130 of your 1998 return. If you contributed any of these amounts to your own RRSP on or before March 1, 1999, you can deduct this contribution, called a transfer , in addition to any RRSP contribution you make based on your "1998 RRSP deduction limit." Include the amounts you are transferring on lines 240 and 245 of Schedule 7.

For example, if you received a retiring allowance in 1998, you would report it on line 130 of your return. You can contribute to your RRSP up to the eligible part of that income (box 26 of your T4A slip) and deduct it as a transfer.

Under proposed changes, you no longer have to consider any amounts you contribute to your or your spouse's RRSP when finding out if you have to pay minimum tax.

Non-residents and non-residents electing under section 217 -  You can transfer certain Canadian-source amounts otherwise subject to withholding tax, to a registered retirement savings plan (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, a RRIF, an RRSP, or a retiring allowance. The transfers have to be direct transfers, and you have to complete Form NRTA1, Authorization for Non-Resident Tax Exemption. For more information, contact the International Tax Services Office.

Overcontributions - If you contribute to an RRSP more than you can deduct, you may have to pay a special tax.

The guide called RRSPs and Other Registered Plans for Retirement gives more details on contributions, deductions, transfers, and overcontributions.

1998 RRSP deduction limit

We will show your 1998 RRSP deduction limit on your latest Notice of Assessmentor Notice of Reassessment for 1997,or on Form T1028, Your RRSP Deduction Limit Statement for 1998.

If you do not have your notice or Form T1028, you can find out your limit for 1998 by calling our automated T.I.P.S. (RRSP) service, or by contacting the International Tax Services Office. See the T.I.P.S. information at the end of this guide.

If you would like to calculate your 1998 RRSP deduction limit, get the 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, which you can carry forward indefinitely.

You may have had earned income in a previous year, but not filed a return for that year. If you want to keep your RRSP deduction limit up to date, you have to file a return for that year.

Schedule 7, RRSP Contributions, Transfers, and Designations of Repayments Under the Home Buyers' Plan

You have to complete this schedule and attach it to your return if any of the following applies. You:

• will not be claiming on your 1998 return all of the amounts you contributed to your own RRSP or your spouse's RRSP from March 3, 1998, to March 1, 1999;
• claimed a deduction on line 208 for eligible income you reported on line 115, 129, or 130 of your return, and transferred to your RRSP; or
• want to designate all or part of your RRSP contributions as a 1998 Home Buyers' Plan (HBP) repayment.

There is an example of how to complete Schedule 7 on page 25. Complete this schedule to allow us to verify any claim for undeducted RRSP contributions on your future returns. This information will also enable us to tell you, on

your Notice of Assessment or Reassessment for 1998, your undeducted RRSP contributions available for you to deduct on your 1999 return.

You will find instructions on the schedule about how to complete lines 1 to 7. You will find more information below about lines 1, 2, and 4.

Line 1 - Undeducted RRSP contributions from your 1997 Notice of Assessment or Notice of Reassessment

This is the total of all contributions to your own RRSP or to an RRSP for your spouse that you made after 1990 that you showed on a previous Schedule 7, but did not deduct on any previous return.

If you do not have your 1997 Notice of Assessment or Notice of Reassessment, you can find out if you have undeducted RRSP contributions for 1997 by calling our automated T.I.P.S. (RRSP) service. See the T.I.P.S. information at the end of this guide.

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Note

If you made RRSP contributions from March 2, 1997, to March 2, 1998, that you did not deduct on your 1997 return, you should have filed a completed Schedule 7 with your 1997 return. If you did not, you should submit a completed copy of a 1997 Schedule 7 to the International Tax Services Office, but not with your 1998 return . See "How do you change a return?" on page 11for details. However, if either of the following applies, contact the International Tax Services Office:

You made a contribution from January 1, 1991, to March 1, 1995, and you did not show it on Schedule 7 for 1994.

You made a contribution from March 2, 1995, to March 1, 1997, and you did not show it on Schedule 7 for 1995 or 1996.

Line 2 (line 245) - RRSP contributions made from March 3, 1998, to March 1, 1999

Be sure that this line includes all eligible amounts you reported on lines 115, 129, or 130 of your 1998 return and contributed to your own RRSP on or before March 1, 1999. Enter this amount on line 7 (line 240) as well. See "Transfers" on page 23. Do not include any amounts listed in the note under "Your RRSP contributions" on page 23.

Also include on this line any contributions you made from January 1, 1999, to March 1, 1999, that you are not deducting on your 1998 return. Otherwise, we may reduce or disallow any claim for these contributions you may make on your return for a future year.

Line 4 (line 246) - RRSP contributions made from January 1, 1998, to March 1, 1999, you are designating as your HBP repayment

If you withdrew funds from your RRSP under the Home Buyers' Plan (HBP) before 1997, you should have received a Home Buyers' Plan - Statement of Accountfrom us in the fall of 1998, indicating the amount of your annual repayment for 1998. You have to make this repayment by contributing to your own RRSP from January 1, 1998, to March 1, 1999, and designating it using line 4 (line 246) of Schedule 7. Do

not make the repayment to us. Your statement also confirmed the total amount you have repaid to date.

Enter on this line the total of the RRSP contributions you want to designate as repayments under the HBP for 1998. Do this only if you did not deduct them or designate them as repayments on your 1997 return, and they were not refunded to you. You cannot deduct on your return any RRSP contribution you designate as an HBP repayment on Schedule 7.

If you withdrew funds under the HBP in 1997, you have to make your first annual repayment to your RRSP after 1998 and before March 1, 2000. If you withdrew funds from your RRSP in 1998, you have to make your first annual repayment after 1999 and before March 2, 2001.

Note

If you have not repaid the amount indicated on your statement of account on or before March 1, 1999, you have to include an amount in income. See line 129 for details.

For more information, including the rules that apply when the person who made the withdrawal dies, turns 69 get the publication called Home Buyers' Plan (HBP)for the year of the withdrawal.

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 special rules that apply to you.

Example

Kristen contributed $200 to her RRSP each month from April 1, 1998, to March 1, 1999, for a total of $2,400. Her 1997 Notice of Assessment showed that she had $400 in undeducted RRSP contributions . This means that Kristen's RRSP contributions available to deduct for 1998 are $2,800. However, her 1997 Notice of Assessmentshowed that her 1998 RRSP deduction limit was $2,200, so that is the most she can deduct for 1998. She did not transfer any eligible income to her RRSP, and she did not designate a Home Buyers' Plan repayment for 1998. Kristen completes her Schedule 7 as follows:

Unded ucted RRSP contributions from your 1997 Notice of Assessment or Notice of Reassessment							400	00	1
RRSP contributions made from March 3, 1998, to March 1, 1999					245	+	2,400	00	2
Add lines 1 and 2						=	2,800	00	3
RRSP contributions made from January 1, 1998, to March 1, 1999, you are designating as your
HBP repayment (do not include any amounts that you will be including on lines 6 and 7 below)					246	-	0	00	4
RRSP contributions available to deduct for 1998 (line 3 minus line 4)						=	2,800	00	5
Deduction you are claiming for 1998 for your RRSP contributions that are based on your 1998 RRSP deduction limit			2,200	00	6
Eligible income reported on line 115, 129, or 130 that you transferred to your RRSP	240	+	0	00	7
Add lines 6 and 7 (the total cannot exceed the amount on line 5)
Enter this total on line 208 of your return.		=	2,200	00		-	2,200	00	8
Undeducted RRSP contributions available to carry forward to 1999: Line 5 minus line 8						=	600	00	9

Kristen enters $2,200 on line 208 of her 1998 return, and attaches all $2,400 worth of her receipts and the completed Schedule 7 to her return. She also has undeducted RRSP contributions of $600 that will show on her 1998 Notice of Assessment.

Note

When Kristen completes her 1999 return , she will enter $600 on line 1 of the Schedule 7 that she will file with that return, in order to claim a deduction for those contributions.

Line 209 - Saskatchewan Pension Plan deduction

You may be able to deduct 1998 contributions 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, 1998, to March 1, 1999, (not including any contributions that you deducted on your 1997 return); or
• your 1998 RRSP deduction limit minus your RRSP deduction from line 208 (not including transfers to your RRSP).

Receipts - Attach your receipts to your return.

Line 212 - Annual union, professional, or like dues

Enter the total of the following amounts:

• annual membership dues you paid to a trade union or an association of public servants;
• dues you paid to a professions board that you had to pay under provincial law;
• 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) that you had to pay 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 shown in box 44 of your T4 slip, or on your receipts, includes any goods and services tax/harmonized sales tax (GST/HST) you paid.

Tax Tip

You may be eligible for a rebate of any GST/HST you paid as part of your dues. See line 457 for details.

Receipts - With the exception of your T4 slips, 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

Generally, you can claim expenses you or your spouse paid for someone to look after your child, so you (or your spouse) could earn income, go to school, or conduct research in 1998. The child must, at some time in 1998, have either been under 16 or had a mental or physical infirmity.

Under proposed changes, the maximum amount you can claim for each child has increased. In addition, expenses paid to allow you or your spouse to go to school part-time can be claimed.

For more information, and to make your claim, get Form T778, Child Care Expenses Deduction for 1998. However, if you claimed child care expenses on your 1997 return, the package we mailed to you should include this form.

Tax Tip

You may be able to claim payments you made to a boarding school, sports school, or camp. For details, get Form T778.

Receipts - Attach a completed Form T778, but not your receipts, to your return. However, you have to keep your receipts in case we ask to see them.

Non-residents and non-residents electing under section 217 -  You can only deduct child care expenses if you meet the criteria outlined on Form T778 and the expenses were paid to a resident of Canada for services provided in Canada .

Line 215 - Attendant care expenses

If you can claim the disability amount (line 316) you can claim expenses you paid for personal attendant care that allowed you to earn certain income. This includes income from employment or self-employment and a grant you received for conducting research. To calculate your claim, complete Form T929, Attendant Care Expenses.

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

also can get the guide called Information Concerning People with Disabilities, which contains Form T929.

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

Line 217 - Business investment loss

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. For more information, and to find out how to complete lines 217 and 228 (to the left of line 217) get the guide called Capital Gains.

If you have a tax shelter, see "Tax shelters" on page 15.

Non-residents and non-residents electing under section 217 - A business investment loss applies to you only if the loss arises from property that would have been taxable to you in Canada.

Line  219 - Moving expenses

Deemed residents - If you moved at least 40 kilometres in 1998 to start a job or a business, or to
study full-time at an educational institution that offers post-secondary courses, you may be able to deduct your moving expenses from income you earned at the new location. For more information, get Form T1-M, Claim for Moving Expenses.

Non-residents -  You can only deduct moving expenses if you were a full-time student during 1998. If this is your situation, contact the International Tax Services Office for the special rules that apply to you

How to claim

Complete Form T1-M to find out what you can deduct.

Note

If you moved in 1997 but could not claim all your moving expenses in that year, you can claim the remaining expenses against income you earned in 1998 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 - Support payments made

Enter on line 230 the total spousal and child support you paid in 1998. Enter on line 220 the deductible amount. For more information, including rules that apply to child support agreements and court orders dated May 1, 1997, or later, get the pamphlet called Support Payments.

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

Line 221 - Carrying charges and interest expenses

You can claim the following carrying charges and interest you paid to earn income from investments:

• fees to manage or take care of your investments (other than administration fees you paid for your registered retirement savings plan or registered retirement income fund) including safety de posit 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 return, but only if you have income from a business or property, accounting is a usual 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
• most interest you pay on money you borrow, but generally only as long as you are using it to try to earn investment income, including interest and dividends. However, if the only earnings your investment can produce are capital gains, you cannot claim the interest you paid. For details, contact the International Tax Services Office.

Under proposed changes, you may be able to claim an amount for the interest portion of student loan repayments. For more information, see line 319.

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 guide called Capital Gains.

Note

You cannot deduct the interest you paid on money you borrowed to contribute to a registered retirement savings plan or a registered education savings plan.

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 a $1,000 CSB through payroll deductions. The total amount deducted from his pay for the bond was $1,013.23 (composed of the $1,000 face value of the bond plus $13.23 he paid in interest). Michael can claim the $13.23 on line 221.

Policy loan interest - To claim interest you paid during 1998 on a policy loan made to earn income, have your insurer complete Form T2210, Verification of Policy Loan Interest by the Insurer, on or before April 30, 1999.

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 1998, you can deduct the amount you repaid.

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.

Receipts - To make your claim, complete Part IV of Schedule 4. 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 15.

Line 224 - Exploration and development expenses

If you invested in a petroleum, natural gas, or mining venture in 1998, but did not participate actively, you can deduct your expenses on this line. If you participated actively, follow the instructions at 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, Statement of Partnership Income, or a statement that gives details of the deduction.

The statement has 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 15.

Renounced resource expenses - If you received a T101 or T102 slip, use the instructions on the back to calculate your deduction. Attach to your return your slip and a note showing how you calculated your deduction.

Depletion allowances - Claim these amounts on line 232.

If you have any questions about these expenses, contact the International Tax Services Office.

Line 229 - Other employment expenses

You can deduct certain expenses (including any goods and services tax/harmonized sales tax (GST/HST)) you paid to earn employment income. You can claim the expenses only if your employment contract required you to pay them, and either you did not receive an allowance for the expenses, or the allowance you received is included in your income.

Note

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

Complete and attach Form T777, Statement of Employment Expenses, to give us details of your expenses and to calculate how much you can deduct. The guide called Employment Expensescontains Form T777 and other forms you may need. The guide also explains the limits and conditions that apply when you claim these expenses.

Emergenc yvolunteers - Under proposed changes, you may be able to deduct up to $1,000 against the income you receive from a government, municipality, or public authority for certain volunteer work. This applies if you were a volunteer ambulance technician, fire fighter, or search, rescue, or other emergency worker. The deduction applies to the total amount you receive from each such public body, but it cannot be claimed if you were employed by that body (other than as a volunteer) for the same or similar duties. The deductible amount is shown in box 76 of your T4 slip.

Repayment of salary or wages - You can deduct salary or wages you included in income for 1998 or a previous year, if you repaid them in 1998. 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/HST you paid as part of your expenses. See line 457 for details.

Line 232 - Other deductions

Use this line to claim allowable amounts not deducted anywhere else on this return. For details about amounts not listed, call our T.I.P.S. (Info-Tax) service. See the T.I.P.S. information at the end of this guide.

In the space to the left of line 232, identify the deduction you are claiming. If you have more than one amount, or you want to explain your deduction more fully, attach a note to your return.

If you have a tax shelter, see "Tax shelters" on page 15.

Income amounts paid back

In 1998, you may have paid back amounts that you included in income for 1998 or a previous year. If so, you may be able to deduct them on your 1998 return. Attach to your return receipts or other documents showing the amounts you paid back. However, if you paid back employment income, see "Repayment of salary or wages" under line 229. If you paid back income tax refund interest, see "Refund interest" under line 221.

EI benefits - You may have received more benefits than you should have, and already paid them back to Human Resources Development Canada (HRDC). For example:

• HRDC may have reduced your EI benefits after discovering the mistake. In this case, your T4E slip will show only the net amount you received, so you cannot claim a deduction.
• You may have repaid HRDC. If so, box 30 of your T4E slip will show the amount you paid back. Include this amount on line 232. This is not the same as repaying a social benefit as explained at line 235.

Legal fees

You can deduct any of the following:

• 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);
• fees you incurred to collect late support payments that you will include in your income or non-taxable child support payments, or that you incurred to defend your right to such payments;
• fees you incurred to get a court order when suing your spouse or former spouse, or the natural parent of your child, for maintenance payments (including non-taxable child support payments) in a Family Court; and
• fees you 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 for up to seven years legal fees that you cannot claim in the year.

You cannot claim legal costs to obtain a separation or divorce, to establish or revise a right to support payments, or to establish custody of a child. For details of other legal fees you may be able to deduct, get Interpretation Bulletin IT-99, Legal and Accounting Fees.

Line 235 - Social benefits repayment

Employment Insurance (EI) benefits

You may have to repay part of the EI benefits (line 119) you received in 1998 if one of the following applies:

• There is an amount in box 15 of your T4E slip, the repayment rate in box 7 is 30% , and your net income before adjustments (line 234) is more than $48,750.
• There is an amount in box 16 of your T4E slip, and your net income before adjustments (line 234) is more than $48,750.
• There is an amount in box 15 of your T4E slip, the repayment rate in box 7 is more than 30% , and your net income before adjustments (line 234) is more than $39,000.

Complete one or both of the charts included with your T4E slip to calculate how much of your EI benefits you have to repay.

If you are a deemed resident and you also have to repay Old Age Security (OAS) pension benefits or net federal supplements that you received (see the next section) enter, on lines 7 and 13 of the chart on this page, the EI benefits that you have to repay.

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. Complete the chart below 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 1998, do not complete the chart below. Instead, enter on line 235 the amount from line 235 of your Old Age Security Return of Income.

Notes

Recovery tax may have been withheld from your monthly OAS amount if you had an OAS repayment for 1997. The amount deducted is included in box 22 of your 1998 T4A(OAS) slip. If you are a deemed resident, claim it on line 437 to reduce the amount of tax you owe when you file your 1998 return. Similarly, if you have an OAS repayment for 1998, tax may be withheld starting with your July 1999 OAS payment.

If you are a non-resident or a non-resident electing under section 217, do not claim on line 437 of this return any recovery tax deducted from your OAS benefits. Instead, you should claim it on your Old Age Security Return of Income.

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 paid back in 1998
and claimed on line 232 - 4

Line 3 minus line 4 (if negative, enter "0") $ 5

Net income before adjustments from
line 234 $ 6

EI benefits repayment from line 10 of
chart 1 or line 14 of chart 2 included
with your T4E slip (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

× 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 above (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.

  Taxable income

Line 248 - Employee home relocation loan deduction

Enter the amount shown in box 37 of your T4 slip.

Line 249 - Stock option and shares deductions

Enter the total of the amounts shown in box 39 "Stock-Option 110(1)(d)" and box 41 "Stock-Option 110(1)(d.1)" of your T4 slips.

Line 250 - Other payments deduction

Generally, you can deduct the amount from line 147 of your return. This is the total of the workers' compensation payments, social assistance payments, and net federal supplements you entered on lines 144, 145, and 146.

Note

If your net income before adjustments (line 234) is more than $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 the International Tax Services Office to determine how much you can deduct.

Line  251 - Limited partnership losses of other years

If you had limited partnership losses in previous years that you have not already deducted, you may be able to claim part of these losses against income earned from the same partnership. For details, contact the International Tax Services Office.

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 1998 T5013 slip on your 1998 return.

Line 252 - Non-capital losses of other years

Deemed residents - Enter the amount of your unapplied non-capital losses you reported on your 1991 to 1997 returns, or your unapplied farming and fishing losses you reported on your 1988 to 1997 returns, that you want to apply in 1998. 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 Farming Income, Farming Income and NISA, or Fishing Income guide for details.

If you need more information on losses, get Interpretation Bulletin IT-232, Losses - Their Deductibility in the Loss Year or in Other Years.

Note

You may want to carry back your 1998 non-capital, farming, or fishing loss to your 1995, 1996, or 1997 return. To do this, use the Form T1A, Request for Loss Carry-Back, that is in the Farming Income, Farming Income and NISA, and Fishing Income guides, or get one from the International Tax Services Office. Attach a completed copy to your return. Do not file an amended return for the year or years to which 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

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 guide called Capital Gains.

Note

If you incurred a net capital loss in 1998, and you want to apply it against taxable capital gains you reported on your 1995, 1996, or 1997 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 to which 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

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 guide called Capital Gains.

Line 255 - Northern residents deductions

To make your claim, use Form T2222, Northern Residents Deductions - 1998. For a list of the areas that qualify, get Form T4039, Northern Residents Deductions - Places in Prescribed Zones. You can get both of these forms from the International Tax Services Office.

Line 256 - Additional deductions

Income exempt under a tax treaty

If you are a deemed resident, you can claim a deduction for foreign income you included on your return (such as support payments you received from a resident of another country and reported on line 128) if it is tax-free in Canada because of a tax treaty. If you are a non-resident or a non-resident electing under section 217, you can claim a deduction for Canadian-source income you included on your return if it is tax-free in Canada because of a tax treaty.

If you do not know whether your income is tax-free in Canada, contact the International Tax Services Office.

Note

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

Vow of perpetual poverty

If you have taken a vow of perpetual poverty as a member of a religious order, you can deduct the amount of earned income and pension benefits that you have given to the order. Attach a letter from your order or your employer stating that you have taken a vow of perpetual poverty.

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.

Non-refundable tax cre dits

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 307 and 315 explains, in general, how to claim personal amounts. For more details, get Interpretation Bulletin IT-513, Personal Tax Credits.

What amounts can you claim?

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, 319, 323 (other than the education amount), and 349 if they apply to you. In addition, you can claim the other applicable non-refundable tax credits if you have included at least 90% of your 1998 net world income on line 236 of your return. To determine the amount you can claim, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits. These schedules are included in this guide.

Note

For us to allow full non-refundable tax credits, you have to attach a completed Schedule A to your return.

Non-residents electing under section 217  - If you have included at least 90% of your 1998 net world income on line 236 of your return, you can claim all of the non-refundable tax credits that would apply to you if you had been resident in Canada throughout 1998. If you do not meet this 90% rule, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine the allowable amount of non-refundable tax credits you can claim. These schedules are included in this guide.

Note

For us to allow full non-refundable tax credits, you have to attach a completed Schedule A to your return.

Amounts for non-resident dependants (lines 303 and 306)

You may be able to claim a personal amount for certain dependants who live outside Canada, if they depended on you for support. 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 1980 or earlier and who were mentally or physically infirm (line 306). You cannot claim an amount for any other relatives who lived outside Canada for all of 1998.

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.

How to claim

• Follow the instructions at lines 303 and 306 to calculate your spousal amount, and amounts for infirm dependants age 18 or older.
• 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

Claim the basic personal amount of $6,456.

Under proposed changes, you may be able to claim an additional amount on line 307.

Non-residents and non-residents electing under section 217  - To determine whether you can claim this amount, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits. Attach Schedule A to your return.

Line 301 - Age amount

If you were 65 or older on December 31, 1998, and your net world income (line 236 of your return if you were a deemed resident; and line 14 of Schedule A, Statement of World Incomeif you were a non-resident or a non-resident electing under section 217) 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 world income
(see Note below) $ 2

Base amount - 25,921.00 3

Line 2 minus line 3 $ 4

× 15% 5

Multiply line 4 by 15% and
enter the result on this line - 6

Line 1 minus line 6
(if negative, enter "0") $ 7

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

Note

If you are a deemed resident, your net world income is the amount from line 236 of your return. If you are a non-resident or a non-resident electing under section 217, your net world income is the amount from line 14 of Schedule A, Statement of World Income.

Date of birth - Be sure to enter your date of birth in the Identification area 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 the unused part 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.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 303 - Spousal amount

You may be able to claim a spousal amount if you supported your spouse (as defined on page 12) in 1998. 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.

Under proposed changes, you may be able to claim an additional amount on line 307.

Net world income of spouse

If your spouse is a deemed resident, your spouse's net world income is the amount on line 236 of your spouse's return, or the amount that it would be if your spouse filed a return. If your spouse is a non-resident, your spouse's net world income is your spouse's net income for 1998 from all sources both inside and outside Canada.

If you were living with your spouse on December 31, 1998, you have to use your spouse's net world income for the whole year. This applies even if you got married in 1998, or if you separated and got back together in 1998.

If you separated in 1998 because of a breakdown in your relationship, and were not back together on December 31, 1998, reduce your claim only 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.

There are exceptions to the above rules if you were required to make support payments to your spouse or former spouse. Get the pamphlet called Support Payments to help you 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.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line  305 - Equivalent-to-spouse amount

You may be able to claim an 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 to whom all of the following applied. The dependant:

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

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

You cannot claim an equivalent-to-spouse amount if any of the following applies:

• The dependant's net world income is $5,918 or more.
• You are claiming a spousal amount (see line 303).
• The claim is for your common-law spouse. However, you may be able to claim the spousal amount on line 303.
• Someone else in your household is making this claim. Each household is allowed only one claim for the equivalent-to-spouse amount, even if there is more than one dependant in the household.
• The claim is for a child for whom you can deduct support payments, or for whom you are required to make non-deductible support payments. However, if you separated in 1998, due to a breakdown in your relationship, some special rules apply. For details, get the pamphlet called Support Payments.

Note

If you were separated, but reconciled during the year, you can claim the equivalent-to-spouse amount if you otherwise qualify for it and do not claim the spousal amount (line 303) for the year.

Under proposed changes, you may be able to claim an additional amount on line 307.

How to claim

• Calculate your dependant's net world income. If your dependant is a deemed resident, net world income is the amount on line 236 of your dependant's return, or the amount that it would be if he or she filed a return. If your dependant is a non-resident, net world income is your dependant's net income for 1998 from all sources both inside and outside Canada.
• Complete Schedule 5 to calculate your claim, and attach it to your return.

Notes

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 for that dependant.

If you and another person both can claim this amount for the same dependant, but cannot agree who will claim it, neither of you is allowed to claim the amount.

If the dependant is infirm and age 18 or older, you also may be able to claim an amount on line 306 for that dependant. Under proposed changes, you may be able to claim an amount on line 315 instead of line 306.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 306 - Amount for infirm dependants age 18 or older

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 1980 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 1980 or earlier;
• mentally or physically infirm;
• dependent on you, or on you and others for support; and
• living in Canada at any time in the year.

Notes

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.

A child can include anyone who has become dependent on you, even if he or she is older than you.

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

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. You can claim an amount only if the dependant's net world income is less than $6,456.

If you can deduct support payments you made for your child, or you are required to make non-deductible child support payments for that child, you cannot claim an amount on line 306 for that child. However, if you separated in 1998 due to a breakdown in your relationship, some special rules apply. For details, get the pamphlet called Support Payments.

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 on line 236 of your dependant's return, or the amount that it would be if he or she filed a return. If your dependant is a non-resident, net world income is your dependant's net income for 1998 from all sources both inside and outside Canada.
• Complete Schedule 6 and attach it to your return. You also should have a signed statement from a doctor that gives the nature, commencement, and duration of the dependant's infirmity. Keep the statement in case we ask to see it.

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 total of your claim and the other person's claim cannot be more than the maximum amount allowed for that dependant.

If your dependant's net world income is more than $4,103, it may be better for you to claim the proposed new amount at line 315.

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.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 307 - Personal amount supplement

Under proposed changes, you may be able to claim an amount for 1998 in addition to your basic personal amount (line 300). You also may be able to claim an amount if you had a spouse (as defined on page 12) or lived with a person described at line 305. However, in any case, you will not be able to claim an amount if your net world income (line 236 of your return if you were a deemed resident or line 14 of Schedule A, Statement of World Income,if you were a non-resident) was more than $38,911.

You can claim an amount if your net world income was more than $6,456 but less than $19,456, and one of the following applies:

• You neither had a spouse, nor lived with a person described at line 305.
• You had a spouse, or lived with a person described at line 305, but his or her net world income was more than $6,955.

If the above situation does not apply, you can claim an amount if all of the following apply:

• You had a spouse, or lived with a person described at line 305.
• Your spouse, or the person described at line 305, had a net world income of less than $6,956.
• The total of your net world income and the net world income of your spouse (or the person described at line 305) was less than $38,912.

In that case, enter on line 393 of Schedule 13 your spouse's net world income, or enter on line 397 the net world income of the person described at line 305.

Tax tip

If your spouse, or the person described at line 305, had a net world income of more than $6,456, but less than $6,956, he or she also should claim an amount on line 307 of his or her own return.

Complete Schedule 13 to make your claim. If you are a non-resident or a non-resident electing under section 217, keep in mind when you complete Schedule 13 that your net income is the amount from line 14 of Schedule A.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 308 - Canada or Quebec Pension Plan contributions through employment

Enter the total, in dollars and cents, of the amounts shown in boxes 16 and 17 of your T4 slips. Do not enter more than $1,068.80. If you contributed to the QPP in 1998 but do not have to file a return for the province of Quebec, attach to your return the RL-1 slip your employer sent you.

If you contributed more than $1,068.80, enter the excess amount on line 448 of your return. We will refund this overpayment to you, or use it to reduce your balance owing. However, if you have to file a return for the province of Quebec, and you contributed more than $1,068.80, claim the overpayment on your Quebec provincial return.

In some cases, you may have an overpayment, even if you contributed less than $1,068.80. For example, we will prorate your CPP or QPP contribution, and show the correct amount on your Notice of Assessment if, in 1998, either of the following situations applied to you:

• You were a CPP participant and you turned 18 or 70, or received a CPP retirement or disability pension.

• You were a QPP participant and you turned 18 or received a QPP disability pension.

If you would like to calculate your CPP overpayment, get Form T2204, Calculation of Employee Overpayment of 1998 Canada Pension Plan Contributions and 1998 Employment Insurance Premiums.

You may be able to make CPP contributions on certain employment income for which no contributions (or less than the maximum) were made. For more information, see "Making additional CPP contributions" on this page.

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 slip, you may be able to contribute to the CPP on this income. See "Making additional CPP contributions" under line 310 for details.

Line 310 - Canada or Quebec Pension Plan contributions payable on self-employment and other earnings

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 have both employment 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 self-employment losses to reduce the CPP or QPP contributions that you paid on your employment earnings.

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 any of the following applies. You:

• had more than one employer in 1998;
• had income, such as tips, from which your employer did not have to withhold contributions; or
• were in a type of employment that was not covered under CPP rules, such as casual employment.

To make additional CPP contributions for 1998, get Form CPT20, Election to Pay Canada Pension Plan Contributions. Attach a completed copy to your return, or send it to us separately before May 1, 2000. This form lists the eligible employment income on which you can make additional CPP contributions.

If the amount on line 308 is less than $1,068.80, you can contribute 6.4% on any part of the income on which you have not already made contributions. The 1998 income limit for which you can contribute to the CPP is $36,900. 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 return, if you filed one. Also, attach a completed Schedule 8 to show how you calculated the amount.

How to calculate your contributions

Complete Schedule 8 to calculate your CPP or QPP contributions payable, and attach it to your return. If you were a member of a partnership, make sure you include only your share of the net profit or loss.

If you do not have to file a return for the province of Quebec , use the amounts on lines 135 to 143 and line 122 of your return. Enter on line 310 and line 421 the required contribution in dollars and cents.

If you have to file a return for the province of Quebec , use the amount on line 164 of your Quebec provincial return. Enter on line 310 the amount of the contribution in dollars and cents. You will need to complete Schedule  8, Calculating Quebec Pension Plan Contributions on Self-Employment and other Earnings, for residents of Quebec. You can get this Schedule from us.

Note

We will prorate your CPP or QPP contribution, and show the correct amount on your Notice of Assessment in certain situations, such as if, in 1998, you:

• were a CPP participant and you turned 18 or 70, or received a CPP retirement or disability pension; or.

• were a QPP participant and you turned 18 or received a QPP disability pension.

Line 312 - Employment Insurance premiums

Enter the total, in dollars and cents, of the amounts shown in box 18 of all your T4 and T4F slips. Do not enter more than $1,053.00.

If you contributed more than $1,053.00, enter the excess amount on line 450 of your return. We will refund this overpayment to you, or use it to reduce your balance owing.

In some cases, you may have an overpayment even if you contributed less than $1,053.00. 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 1998 Canada Pension Plan Contributions and 1998 Employment Insurance Premiums.

If the total of the Employment Insurance (EI) insurable earnings shown in box 24 of all your T4 slips (or box 14 if box 24 is blank) and box 16 of your T4F slips is $2,000 or less, we will refund your total EI premiums to you or use the amount to reduce your balance owing. In this case, do not enter your total EI premiums on line 312. Instead, enter the amount on line 450.

If your total EI insurable earnings are more than $2,000 and less than $2,059, we will refund a part of your EI premiums to you or use the amount to reduce your balance owing. In this case, enter your total EI premiums on line 312. We will calculate your refund and show it on your Notice of Assessment. If you would like to calculate your refund yourself, get Form T2204.

Line 314 - Pension income amount

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 correctly.

Note

Only pension or annuity income you report on line 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.

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, 1998,
or you 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 .

Tax Tip

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

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

Non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 315 - Caregiver amount

Under proposed changes, if in 1998 you (either alone or with another person) maintained a dwelling where you and a dependant lived, you may be able to claim this amount. Each dependant for whom you claim this amount must have been one of the following individuals:

• your child or grandchild;
• your brother, sister, niece, or nephew, parent or grandparent (including in-laws) who was considered to be a resident of Canada for income tax purposes; or
• your aunt or uncle who was considered to be a resident of Canada for income tax purposes.

In addition, the dependant must have met all of the following conditions. The person must have:

• been 18 or over at the time he or she lived with you;
• had a net world income of less than $13,853; and
• been dependent on you due to mental or physical infirmity or, if he or she is your parent or grandparent (including in-laws) born in 1933 or earlier.

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 total of your claim and the other person's claim cannot be more than the maximum amount allowed for that dependant.

Generally, nobody can claim this amount for a dependant for whom anyone has claimed an amount on line 305 or 306. However, you can claim amounts on lines 315 and 305. Complete Schedule 12 to make your claim.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 316 - Disability amount

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

• You had a severe mental or physical impairment in 1998, which caused you to be markedly restricted in any of the basic activities of daily living.
• 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 either:

• 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.

Note

If you receive a disability benefit (such as CPP or QPP disability benefits) it does not necessarily mean that you are eligible to claim this credit. 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 .

Under proposed changes, after February 24, 1998, a psychologist can certify your impairment regarding your ability to perceive, think, and remember. An occupational therapist can certify your impairment regarding your ability to dress and feed yourself or to walk.

Tax Tip

If you or anyone else paid for an attendant or for care in a nursing home or other establishment because of your impairment, it may be more beneficial to claim the amounts paid as medical expenses instead of the disability amount. In some circumstances, both amounts may be claimed. See "Care by an attendant, or care in a nursing home, school, institution, or other establishment" on page 39for more information.

How to claim

• If you are making a new application for this amount, you have to submit a completed and certified Form T2201, Disability Tax Credit Certificate. We will review your claim before we assess your return to determine if you qualify. Once we approve your claim, you will be able to claim this amount for future years, as long as your circumstances do not change.
• If you were allowed the disability amount in 1997 and you still met the eligibility requirements in 1998, you can claim the disability amount in 1998 without sending us another Form T2201. However, you have to send us a new one if the period stated on the certificate ended in 1997 or earlier.

We will accept a photocopy of your Form T2201 only if the signature of the person authorized to sign it is an original, not a photocopy. For more information, get the guide called Information Concerning People with Disabilities. The guide also contains Form T2201.

Tax Tip

If you do not need all of your disability amount to reduce your federal income tax to zero, you can transfer the unused part 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

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 was a resident (including a deemed resident) of Canada at any time in 1998 if any of the following applies:

• 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, "Amount 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, "Amount 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 1998; or
• the dependant was your or your spouse's parent or grandparent, and you could have made a claim on line 306, "Amount 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, or you are required to make non-deductible child support payments for that child, you cannot claim a disability amount for your child. However, if you separated in 1998 due to a breakdown in your relationship, some special rules apply. For details, get the pamphlet called Support Payments.

Tax Tip

If you or anyone else paid for an attendant or for care in a nursing home or other establishment because of your dependant's impairment, it may be more beneficial to claim the amounts paid as medical expenses instead of the disability amount. In some circumstances, both amounts may be claimed. See "Care by an attendant, or care in a nursing home, school, institution, or other establishment" on page 39for more information.

How to claim

• Use the chart on page 37to 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 year and the dependant still met the eligibility
• requirements in 1998, you can claim the disability amount in 1998 without sending us another Form T2201. However, you have to send us a new one if the period stated on the certificate ended in 1997 or earlier. 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 p art of dependant's
disability amount

Dependant's disability amount $ 4,233.00 1

Total of amounts your dependant
can claim on lines 300 to 315 + 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.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 319 - Interest paid on student loans

Under proposed changes, you can claim an amount for the interest you, or a person related to you, paid in 1998 on loans for post-secondary education made to you under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or similar provincial or territorial government laws. Enter the total of the amounts shown on the receipts. If you do not wish to claim these amounts on your 1998 return, you can carry them forward and apply them on any one of the next five years' returns.

Receipts - Attach the receipts to your return.

Line  323 - Tuition and education amounts

Claim your eligible tuition and education amounts on this line. Attach to your return a completed Schedule 11, Tuition and Education Amounts, which includes lines for your tuition and education amounts carry-forward balance from 1997, your eligible tuition fees paid (line 320), and your education amount (lines 321 and 322) for 1998.

Eligible tuition fees

Claim the tuition fees paid for courses you took in 1998. You cannot claim other expenses, such as books, or board and lodging. Most courses at the post-secondary level or that develop or improve skills in an occupation qualify. However, more than $100 for the year must have been paid to each educational institution whose fees you claim. For more information about what kinds of institutions and fees qualify, get the pamphlet called Students and Income Tax.

Forms

• If you are claiming tuition fees paid to an institution in Canada, you must have either an official tax receipt or Form T2202A, Tuition and Education Amounts Certificate.
• If you are claiming tuition fees paid to an educational institution outside Canada, you must have your educational institution complete either Form TL11A, Tuition Fees Certificate - University Outside Canada, or Form TL11D, Tuition Fees Certificate - Educational Institutions Outside Canada for a Deemed Resident of Canada, whichever applies.
• 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, Tuition Fees Certificate - Flying School or Club.

You can get these forms from the International Tax Services Office. You can also get Form TL11B from your flying school or club.

Education amount

You can claim $200 for each whole or part month in 1998 that you were enrolled in a qualifying educational program. In most cases, you have to be enrolled as a full-time student. Your educational institution must complete Form T2202, Education Amount Certificate, or Form T2202A, Tuition and Education Amounts Certificate, for you to confirm the period you were enrolled in a qualifying program.

If you were enrolled in a qualifying program but could attend only part-time because of a mental or physical impairment, you still can claim the above amount. You have to complete Form T2202, Education Amount Certificate, to make your claim.

Under proposed changes, you can claim a $60-per-month education amount if you are studying in a part-time program that qualifies. Your educational institution must complete Form T2202 or Form T2202A for you.

You cannot claim more than one education amount for a particular month. Generally, you cannot claim the education amount for a program for which you received a reimbursement, benefit, grant, or allowance, or for a program related to your job if you received a salary or wages while studying. For more details, get the pamphlet called Students and Income Tax.

How to claim

Complete Schedule 11, Tuition and Education Amounts, to make your claim, and enter the result on line 323 of your return. You have to claim your tuition and education amounts, even if someone else paid your fees.

Tax Tip

If you do not need all of your tuition and education amounts to reduce your federal income tax to zero, you can transfer the unused part to your spouse (see line 326) or to your or your spouse's parent or grandparent (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 and education amounts.

If you do not need all of your tuition and education amounts (and you do not transfer them to your spouse or to your or your spouse's parent or grandparent) in the year, you can carry forward the unused part and claim it in a future year. However, if you carry forward an amount, you will not be able to transfer it to anyone. Complete Schedule 11 to calculate the carry-forward amount.

Tax Tip

If you are transferring an amount to another person, do not transfer more than the person needs to reduce his or her federal income tax to zero, so you can carry forward more of your amounts to use in a future year.

Receipts - Do not include your receipts or forms (other than Schedule 11) with your return. However, you have to keep them in case we ask to see them.

Non-residents and non-residents electing under section 217  - If the education amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 324 - Tuition and education amounts transferred from a child

A student who does not need all of his or her 1998 tuition and education amounts to reduce his or her federal income tax to zero may be able to transfer the unused part to you if you are a parent or grandparent of the student or of the student's spouse. The maximum amount that can be transferred by each student is $5,000 minus the amount the student needs, even if there is still an unused part.

How to claim

The student has to complete Form T2202, Education Amount Certificate, or Form T2202A, Tuition and Education Amounts Certificate, to calculate the transfer amount and to designate you as the parent or grandparent who can claim it. If the tuition fees being transferred to you are not shown on the student's Form T2202 or T2202A, you should have a copy of the student's official tuition fees receipt.

Amounts claimed by student's spouse - If a student's spouse claims amounts on line 303 or 326 for the student, you cannot claim the tuition and education amounts transfer. However, the student can designate that the spouse claim the transfer on line 326.

No amounts claimed by student's spouse - If no amounts are claimed for the student by the student's spouse, or if the student does not have a spouse, the student can choose which parent or grandparent will claim the tuition and education amounts transfer. Only one person can claim the transfer from the student.

A change to the rules for this claim was made public after the 1997 guide went to print. Under this change, for 1997 and later years, the student can transfer an amount to a parent or grandparent, even if a different parent or grandparent claims the student as a dependant on line 305 or 306. If this change affects how you would have filed your 1997 return, you can ask us to correct it. See "How do you change a return?" on page 11for details.

Receipts - Do not include the student's Schedule 11, forms, or official tuition fees receipt with your return. However, you have to keep them in case we ask to see them.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line  326 - Amounts transferred from your spouse

Your spouse (as defined on page 12) can transfer to you any part of the following amounts that he or she 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
• 1998 tuition and education amounts as designated by the student. The limit on the total of these amounts that can be transferred is $5,000 minus the amount your spouse needs, even if there is still an unused part.

Note

Your spouse cannot transfer any unused amounts to you if you were separated because of a breakdown in your relationship for a period of 90 days or more that included December 31, 1998.

Use Schedule 2 to calculate your claim. Attach a completed copy to your return. In the Identification area on page 1 of your return, be sure to show your marital status and your spouse's name and social insurance number or temporary taxation 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 year for your spouse's condition, and your spouse still met the eligibility requirements in 1998, 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 in 1997 or earlier.

Do not include with your return any receipts or forms (other than your own Schedule 2) for your spouse's tuition or education amounts. However, you have to keep them in case we ask to see them.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 330 - Medical expenses

You can claim medical expenses that were paid for any of the following persons:

• yourself;
• your spouse;
• your or your spouse's child or grandchild who was 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 who was a deemed resident of Canada at any time in the year and depended on you for support.

Notes

Under proposed changes, if you claim medical expenses for a dependant (other than your spouse) whose net world income is more than $6,956, you have to reduce your claim. See line 331 for details.

In addition, there is a refundable tax credit for working individuals with low incomes and high medical expenses. See line 452 for details.

You can claim medical expenses paid in any 12-month period ending in 1998 and not claimed in 1997. Generally, you can claim all amounts paid, 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.

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

Allowable medical expenses

The most common medical expenses you can claim are:

• 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
• premiums paid under the Quebec Medical Insurance Plan, and most premiums paid to private health services plans.

Under proposed changes, you can claim amounts paid for you or a relative to learn to care for a relative who has a mental or physical infirmity and who is in your household or is dependent on you for support.

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.

Travel expenses - If medical treatment is not available locally, you may be able to claim the cost of travelling to get the treatment somewhere else.

Reimbursement of an allowable 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

Guy was in the hospital while on a business trip to Mexico. He paid $2,800 in Canadian dollars for allowable medical expenses, which are generally 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, Guy can claim the full $2,800.

Care by an attendant, or care in a nursing home, school, institution, or other establishment

You may have paid for care by an attendant or care in an establishment for a person (including yourself) for whom you are claiming medical expenses. If so, you can make one of the following claims:

• If the person has a letter from a doctor or other medical practitioner certifying the person's dependence on others for care due to long-term mental or physical infirmity , you can claim amounts paid for full-time care at home by an attendant who was not your spouse and was 18 years of age or older when the amounts were paid.
• If the person has a letter from a doctor or other medical practitioner certifying the person's dependence on others for care due to lack of normal mental capacity , you can claim amounts paid for full-time care in a nursing home.
• If the person has a letter from a doctor or other appropriately qualified individual certifying the person's need, due to a physical or mental handicap (including any resulting behavioural problems and learning disabilities) for the equipment, facilities, or personnel available in a nursing home, school, institution, or other establishment operated for persons with that handicap, you can claim amounts paid for full- or part-time care (including training) in that establishment.

Note

If the person qualifies for the disability amount (see line 316) Form T2201, Disability Tax Credit Certificate, can be used in place of a letter for any of the above claims.

Persons who qualify for the disability amount (line 316)

A doctor, an optometrist (for sight impairments) or an audiologist (for hearing impairments) may certify that a person has a severe and prolonged mental or physical impairment that markedly restricts any of the person's basic activities of daily living. If the doctor, optometrist, or audiologist has completed Form T2201, Disability Tax Credit Certificate, for the person, and the form has been submitted to us, you can make one of the following claims, but not both (compare them to find out which is better):

• You can claim all amounts you or your spouse paid for the person for full-time care by an attendant who was not your spouse and was 18 years of age or older when the amounts were paid, or for full-time care in a nursing home . If anyone makes this claim for that person, neither you nor anyone else can claim the disability amount (line 316 or 318) for that person.
• You can claim $10,000 ($20,000 in the year of death) or less that you or your spouse paid for the person for full-or part-time care by an attendant in Canada who was not your spouse and was 18 years of age or older when the amounts were paid, and also claim the disability amount (line 316 or 318) for that person. You cannot make this claim if anyone claims child care expenses (line 214), attendant care expenses (line 215), or any amount for care by an attendant, or care in a nursing home, school, institution, or other establishment as a medical expense (line 330) for that person.

Under proposed changes, after February 24, 1998, a psychologist can certify an impairment regarding the ability to perceive, think, and remember. An occupational therapist can certify an individual's impairment regarding the ability to dress and feed himself or herself, or to walk.

How to claim

Calculate your allowable medical expenses as follows:

• Choose the 12-month period ending in 1998 for which you will claim medical expenses. You cannot include any expenses you deducted on your 1997 return.
• Add up your allowable medical expenses for that period, and enter the total on line 330.
• Subtract $1,614 or 3% of your net income (line 236) whichever is less.
• Compare your credit with the credit your spouse would be allowed. It may be better for the spouse with the lower income to claim the allowable medical expenses. You can make whichever claim you prefer.

The following example shows how to calculate your claim.

Example

Carol and her husband have no dependants. She has reviewed their medical bills and decided that the 12-month period ending in 1998 for which she will calculate their claim is July 1, 1997, through June 30, 1998. The total of their allowable expenses for that period is $1,842, which she enters on line 330.

Her net income on line 236 of her return is $32,000. She calculates 3% of that amount as $960. Because the result is less than $1,614, she enters $960 on the line below line 330, and subtracts it from $1,842. The difference is $882, which is the amount of the credit she could claim at line 332.

Carol's husband's net income is $48,000. When she calculates the credit that he would be allowed if he made the claim instead, she finds that he would be allowed only $402. In this case, Carol has found that it is better for her to claim the expenses.

Receipts - Attach your receipts to your return. Keep your health services plan premium receipts in case we ask to see them. Receipts for attendant care paid to an individual should show the individual's name and social insurance number.

For claims where it is required, also attach a properly completed and certified Form T2201, unless a disability amount was allowed for the person in a previous year and the person still met the eligibility requirements in 1998.

Non-residents and non-residents electing under section 217  - If this amount applies to you, complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine if you can claim it. Attach Schedule A to your return.

Line 331 - Medical expenses adjustment

If you claimed medical expenses for a dependant, other than your spouse, whose net world income (line 236 of
his or her return if a deemed resident, or income from all sources both inside and outside Canada if a non-resident) was more than $6,956, you have to reduce your medical expenses.

Under proposed changes, to calculate the adjustment, subtract $6,956 from the dependant's net world income. Multiply the result by 4. Complete this calculation for each such dependant. Enter on line 331 of your return the total of the amounts you calculated.

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

If the amount on line 335 equals, or is more than, the amount on line 260, and is less than $29,591, enter "0" on line 420, and complete the rest of your return. In any other case, see line 338.

Line 338

Deemed residents -To calculate your non-refundable tax credits, multiply the amount on line 335 by 17%. If you are not claiming charitable donations or government, cultural, or ecological gifts, enter the amount from line 338 on line 350 and go to "Federal tax calculation" on page 42.

Non-residents and non-residents electing under section 217 - To calculate your non-refundable tax credits, multiply the amount on line 335 by 17%. If you are not claiming charitable donations or government, cultural, or ecological gifts, enter the amount from line 338 on line 350. Complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine your allowable amount of non-refundable tax credits. Then go to "Federal tax calculation" on page 42.

Line 349 - Donations and gi fts

Enter your claim from the calculation on Schedule 9, which includes lines 340 (Allowable charitable donations and government gifts) and 342 (Cultural and ecological gifts).

Your federal tax credit is 17% of the first $200 of your donations and gifts, and 29% of the balance. A credit for these donations and gifts can also reduce your provincial or territorial tax, any federal, provincial, or territorial surtaxes, plus your surtax for non-residents and deemed residents of Canada. If you have to file a return for the province of Quebec, claim provincial tax credits on that provincial return.

Allowable charitable donations and government gifts

Maximum you can claim

You can claim whichever of the following is less :

• You can claim the total donations made in 1998 of cash or other property (see the pamphlet called Gifts and Income Tax for details) plus any donations made in any of the previous five years that you did not claim before. Remember to report any capital gain or loss on the donated property, as well as any recapture of capital cost allowance that may apply.
• The above amount includes unclaimed gifts to Canada, a province, or a territory made after February 18, 1997, other than those agreed to in writing before February 19, 1997. Include unclaimed gifts to Canada, a province, or a territory made before February 19, 1997, (or agreed to in writing before then if they were made after February 18, 1997) with your claim for "Cultural and ecological gifts" (see this page).

Note

Gifts to Canada, a province, or a territory do not include contributions to political parties. See lines 409 and 410 for information about donations to federal political parties.

• You can claim 75% of your net income (line 236). If you donated capital property (including depreciable property) you may be able to increase this limit. For more information, get the pamphlet called Gifts and Income Tax. For the year a person dies and the year before that, this 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.

Notes

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

Be sure not to claim, on your 1998 return, donations you made in January of 1998 that you claimed on your 1997 return.

Qualified donees

You can claim only amounts you gave to Canadian registered charities and other qualified donees. For a list of the types of donees that qualify, get the pamphlet called Gifts and Income Tax, or call our T.I.P.S. (Info-Tax) service. See the T.I.P.S. information at the end of this guide.

Note

You may want to make a monetary gift directly to the federal Debt Servicing and Reduction Account. If so, make it payable to the Receiver General and send it to: Place du Portage, Phase III, 11 Laurier Street, Hull QC K1A 0S5, with a note asking that we apply it to this account. Public Works and Government Services Canada will send you a tax receipt. All such gifts will be used only to service the public debt.

Donations of non-qualifying securities

If you made a charitable donation of a non-qualifying security, you may not be able to claim a credit for the donation. For details, get the pamphlet called Gifts and Income Tax.

Donations to U.S. charities

If you are a deemed resident and you are reporting U.S. income, you can claim any donations to U.S. charities that would be allowed on a U.S. return. You can claim up to 75% of the net U.S. income you report on your Canadian return.

Carrying forward donations

You do not have to claim on your 1998 return the charitable donations you made in 1998. You can carry them forward for up to five years, as long as you claim them only once.

Cultural and ecological gifts

Enter the total of the following three amounts:

• unclaimed gifts to Canada, a province, or a territory made before February 19, 1997, or agreed to in writing before then if they were made after February 18, 1997;
• 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; and
• the value of land you donated after February 27, 1995, to Canada, a province or a Canadian municipality, or to a registered charity the Minister of the Environment has approved. The Minister of the Environment has to certify the land to be important to the preservation of Canada's environmental heritage, and issue a Certificate for Donation of Ecologically Sensitive Land. Attach to your return both the official receipt and the certificate.
• If you donated a restriction (servitude, easement, or covenant) in respect of such land, the amount of the donation will be either the fair market value (FMV) of the restriction, or the reduction of the land's FMV caused by the restriction, whichever is more.

You have to report any capital gain or loss on property that you donated. For details, see the guide called Capital Gains.

Unlike other donations, your claim for these types of gifts is not limited to the percentage specified for charitable donations and government gifts. You can choose the part of your donations you want to claim in 1998, and carry forward any unused part for up to five years.

For more information, get the pamphlet called Gifts and Income Tax.

How to claim

Complete Schedule 9, Donations and Gifts, to make your claim. Enter the result on line 349.

Receipts - Attach to your return Schedule 9 and your official receipts, showing either your name or your spouse's name. You do not have to attach receipts for amounts shown in box 46 of your T4 or T4A slips, in box 36 of your T3 slips, in box 34 of your T5013 slips, or on 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 1998. If so, attach a note indicating the return with which 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. If you need more details on donations and gifts, get Interpretation Bulletin IT-110, Gifts and Official Donation Receipts.

Federal tax calcula tion

Generally, the federal 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, your surtax for non-residents and deemed residents of Canada, and your federal individual surtax. For information about calculating your provincial or territorial tax, see line 428.

Note

If you have to pay minimum tax (see below) or you want to claim an overseas employment tax credit (see Form T626, Overseas Employment Tax Credit) calculate these amounts before you complete Schedule 1.

Minimum tax

Minimum tax limits the tax advantage you can receive in a year from certain incentives. You have to pay minimum tax if it is more than the federal tax you calculate in the usual

manner. When calculating your taxable income for this tax, which does not apply to a person who died in 1998, you are allowed a basic exempt amount of $40,000.

Generally, to find out if you have to pay this tax, add together the amounts listed in paragraph B below and one-third of the taxable capital gain amount on line 199 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 it. To calculate if you have to pay it, use Form T691, Calculation of Minimum Tax.

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

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

B. You claimed any of the following:

a loss (including your share of a partnership loss) resulting from, or increased by, claiming capital cost allowance on 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 options and shares.

C. You claimed any of the following tax credits:

a federal political contribution tax credit on lines 409 and 410;

an investment tax credit on line 412;

a labour-sponsored funds tax credit on line 414; or

an overseas employment tax credit on Schedule 1 (see "Line 429 - Basic federal tax" on page 44).

Under proposed changes, you no longer have to consider deductions you claimed on line 207 for RPP contributions or line 208 for RRSP contributions. In addition, you may receive a refund of any unapplied minimum tax carryforward from 1994 to 1997 that arose due to RPP or RRSP contributions. Once the legislation has passed, we will calculate this refund and send it to you automatically if, at the end of 1997, you were a deemed resident of Canada.

Example

Sergio claimed a $50,000 deduction in 1998 for carrying charges. Because this deduction is more than $40,000, Sergio may have to pay minimum tax. To find out, he should complete Form T691, Calculation of Minimum Tax.

Tax Tip

If you paid minimum tax on any of your 1991 to 1997 returns, but you do not have to pay minimum tax for 1998, you may be able to claim a credit against your 1998 taxes for all or part of the minimum tax you paid in those years. See "Line 427 - Minimum tax carry-over" on this page for details.

Schedule 1, Federal Tax Calculation

Use either Method A or Method B, whichever applies, on Schedule 1 to calculate your federal tax. Attach a completed copy to your return. If you have a straightforward tax situation, use Method A . Otherwise, use Method B .

Method A

Line 445 - Section 217 tax adjustment

Complete the following chart if the amount on line 1 of Schedule 1 is your "net world income after adjustments" from line 16 of Schedule A.

Section 217 ta xadjustment

Amount from line 16 of Schedule A $ 1

Amount from line 260 of your return - 2

Line 1 minus line 2 (if negative, enter "0") $ 3

Amount from line A on Schedule  1 × 4

Multiply the amount on line 3 by the
amount on line 4 $ 5

Enter the amount from line 1 ÷ 6

Divide the amount on line 5 by the
amount on line 6 $ 7

Enter the amount from line 7 on line 445 of Method A on Schedule 1.

Note

If you are claiming an investment tax credit or a labour-sponsored funds tax credit, the above calculation may change. If this is your situation, contact the International Tax Services Office for the special rules that apply.

Line D - Surtax for no n-residents and deemed residents of Canada

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

If you did not have a business with a permanent establishment in Canada, follow the instructions on line D to calculate this surtax.

If you had income from a business with a permanent establishment in Canada, you have to pay provincial or territorial tax on that income. Use Form T2203, Calculation of Tax for 1998 - Multiple Jurisdictions, to calculate your provincial or territorial tax (except Quebec). Attach a copy of the form to your return.

Method B

Line 423 - Tax adjustments

We may allow you a tax adjustment if you reported either of the following on your 1998 return:

• on line 114, a lump-sum amount you received in 1998 from the Canada or Quebec Pension Plan, for benefits that were payable in a previous year; or
• on line 130, a lump-sum amount from your pension or deferred profit-sharing plan for benefits you earned before January 1, 1972.

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

Line 425 - Federal dividend tax credit

If you reported dividends on line 120, enter on line 425 of Schedule 1 the total of the dividend tax credits from taxable Canadian corporations shown on your information slips. If you did not receive dividend information slips, this is 13.33% of the taxable amount of dividends from taxable Canadian corporations (see line 120).

Note

Foreign dividends do not qualify for this credit.

Line 427 - Minimum tax carry-over

If you paid minimum tax on any of your 1991 to 1997 returns, but you do not have to pay minimum tax for 1998, you may be able to claim a credit against your 1998 taxes for all or part of the minimum tax you paid in those years. To calculate your claim, complete Parts 1, 2, and 8 of Form T691, Calculation of Minimum Tax. Attach to your return a completed copy of the form.

Line 445 - Section 217 tax adjustment

Complete the following chart if the amount on line 1 of Schedule 1 is your "net world income after adjustments" from line 16 of Schedule A.

Section 217 tax adjustment

Amount from line 16 of Schedule A $ 1

Amount from line 260 of your return - 2

Line 1 minus line 2 (if negative, enter "0") $ 3

Amount from line 33 on Schedule  1 × 4

Multiply the amount on line 3 by the
amount on line 4 $ 5

Enter the amount from line 1 ÷ 6

Divide the amount on line 5 by the
amount on line 6 $ 7

Enter the amount from line 7 on line 445 of Method B on Schedule 1.

Note

If you are claiming a federal foreign tax credit, an investment tax credit, or a labour-sponsored funds tax credit, the above calculation may change. If this is your situation, contact the International Tax Services Office for the special rules that apply.

Line 429 - Basic federal tax

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

Overseas e mployment tax credit - To make your claim, use Form T626, Overseas Employment Tax Credit. Enter the result of the calculation on line 429 of Schedule 1. For details, get Interpretation Bulletin IT-497, Overseas Employment Tax Credit, and Form T626.

Line G - Surtax for non-residents and deemed residents of Can ada

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

If you had income from a business with a permanent establishment in Canada, you have to pay provincial or territorial tax on that income. Use Form T2203, Calculation of Tax for 1998 - Multiple Jurisdictions, to calculate your provincial or territorial tax (except Quebec). Attach a copy of the form to your return.

Lines 431 and 433 - Federal foreign tax credit

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

Note

You may have deducted an amount on line 256 for income that is not taxable in Canada under a tax treaty. In that case, do not include that income, or any tax withheld from it, in your foreign tax credit calculation.

If you paid tax to more than one foreign country, and the total non-business income tax you paid to all foreign countries is more than $200, you have to do a separate calculation for each country for which you claim a foreign tax credit. In that case, enter the total of your allowable foreign tax credits on line 36 of Schedule 1.

You also have to do a separate calculation for business income taxes paid to each foreign country. In that case, use Form T2209, Calculation of Federal Foreign Tax Credits, to calculate your credit. You can carry unclaimed foreign business income taxes back three years and forward seven years.

In most cases, the foreign tax credit you can claim for each foreign country is whichever of the following two amounts is lower :

• the foreign income tax you actually paid; or
• the tax due to Canada on your net income from that country.

Note

If you paid tax on income from foreign property (other than real property) your foreign tax credit for the income

from that property 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 1998, 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 (and Form T2209, if you use it) to your return.
• Attach a note showing your calculations. Show all amounts in Canadian dollars. See "How do you report foreign income and other amounts?" on page 10.
• Attach to your return proof, such as an official receipt, showing the foreign taxes you paid. If you paid taxes to the U.S., attach your W-2 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 file 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

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

• 66.67% of the logging tax paid for the year to the province; or
• 6.67% 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 6.67% of your taxable income (line 260) not including any amounts on lines 208, 209, 214, 215, 219, and 220.

There is no line on the return to claim your tax credit. To claim this credit, write "federal logging tax credit" and the allowable amount below line 37 in Method B on Schedule 1. Subtract it from the amount on line 37, and enter the result on line 406 of your return. If the result is negative, enter "0."

Line 419 - Federal individual surtax

You have to pay a federal individual surtax of 3% of your basic federal tax. In addition, you have to pay an extra surtax of 5% (for a total of 8%) of the amount over $12,500. Use Schedule 1 to calculate your federal individual surtax.

Under proposed changes, if your basic federal tax is less than $12,500, you can reduce the surtax you have to pay. Complete the "Surtax reduction" area on Schedule 1.

Tax Tip

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

Line 464 - Additional federal foreign tax credit

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

Line 468 - Additional investment tax credit

You may be able to reduce your individual surtax by part of the unused investment tax credit you earned for 1998. See Form T2038(IND), Investment Tax Credit, for details.

Refund or Balance owing

Lines 409 and 410 - Federal political contribution tax credit

Enter on line 409 the total you contributed during 1998 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, enter $500 on line 410.

Federal political contribution tax credit

If your total federal contribution is $100 or less:

Your total
contribution $ × 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 the credit is $ 75.00 2

On the rest $ × 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 the credit is $ 300.00 5

On the rest $ × 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. You do not have to attach receipts for amounts shown in box 36 of your T5013 slips, or on financial statements showing an amount a partnership allocated to you.

Line 412 - Investment tax credit

You may be eligible for this credit if any of the following applies. 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;
• have unclaimed credits from the purchase of qualified small business property from December 3, 1992, to December 31, 1993;
• have an amount shown in box 13 of your T101 or T102 slip;
• have an amount shown in box 41 of your T3 slip;
• have an amount shown in box 38 of your T5013 slip; or
• have an amount shown on the financial statement given to you by a partnership.

How to claim

Attach to your return a completed copy of Form T2038(IND), Investment Tax Credit. For more information on the investment tax credit, get one of the following guides: Farming Income, Farming Income and NISA, or Fishing Income. All three guides also contain Form T2038(IND).

There is a time limit to submit a completed Form T2038(IND) for a qualifying expenditure. To be able to claim a credit for such an expenditure, you have to send the completed form to us no later than 12 months after the due date of your return for the year the expenditure arises.

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 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, 1998, to March 1, 1999.

If you became the first registered holder of an approved share from January 1, 1998, to March 2, 1998, and claimed the credit for it on your 1997 return, you cannot claim a credit for that share on your 1998 return. If you became the first registered holder of an approved share from January 1, 1999, to March 1, 1999, you can claim a credit for that share either on your 1998 return or on your 1999 return, but not both.

1998 ice storm

If you lived or helped out in certain areas of eastern Canada during the ice storm in January of 1998, you were allowed to claim, on your 1997 return, investments made in an LSVCC from March 3, 1998, to March 31, 1998. If you did, do not claim these contributions again for 1998.

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 the amount of the credit on line 414. The allowable credit cannot be more than 15% of the net cost, to a maximum, under proposed changes, of $750.

Receipts - Attach to your return either a T5006 slip, Statement of Registered Labour-Sponsored Venture Capital Corporation Class A Shares, or an official provincial or territorial slip.

Line 418 - Additional tax on RESP accumulated income payments

You may have received an accumulated income payment from a registered education savings plan (RESP) in 1998. If so, you may have to pay an additional tax on all or part of the amount in box 40 of your T4A slip. Enter the amount from line 8 or 11 (whichever applies) on Form T1172, Tax on Accumulated Income Payments From RESPs for 1998. Get the Registered Education Savings Plans (RESPs)information sheet for more details about tax changes affecting RESPs.

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

Enter the Canada Pension Plan contributions you have to pay, from line 310 of your return.

If you have to complete a return for the province of Quebec, this line does not apply to you. Enter on your Quebec provincial return the Quebec Pension Plan contributions you have to pay.

Line 422 - Social benefits repayment

Enter the amount of social benefits you have to repay, from line 235 of your return.

Non-residents electing under section 217 - Enter only the amount of your Employment Insurance (EI) benefits repayment as calculated on the charts included with your T4E slip. Do not enter the amount of your Old Age Security pension or net federal supplements repayment.

Line  428 - Provincial or territorial tax

Deemed residents - This line applies to you only if you had a business with a permanent establishment in a province or territory in Canada in 1998. If this is your situation, complete Form T2203, Calculation of Tax for 1998 - 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 1998, or from a business with a permanent establishment in a province or territory in Canada in 1998. If this is your situation, complete Form T2203, Calculation of Tax for 1998 - 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

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 on this return any of your Quebec provincial income tax deducted.

If you are not subject to Quebec tax but you had Quebec provincial income tax withheld from your income, attach to your return your provincial information slips. Include on this line the total Quebec income tax withheld.

Notes

If you paid tax by instalments, claim these payments on line 476.

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 electing under section 217 - If you received Old Age Security benefits in 1998, 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 438 - Tax transfer for residents of Quebec

If you have to file a return for the province of Quebec, you may have earned income, such as employment income, outside Quebec during 1998. In that case, tax may have been deducted for a province or territory other than Quebec, even though you owe your provincial tax to Quebec.

For 1998, you can transfer, to the Province of Quebec, up to 40% of the income tax shown on information slips issued to you by payers outside Quebec.

Enter on line 438 of your federal return and on line 454 of your Quebec provincial return the amount you want to transfer (up to the maximum). If the taxable income on your provincial return is zero, no transfer is necessary.

Line 440 - Refundable Quebec abatement

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

If you have to file a return for the province of Quebec and you did not have a business with a permanent establishment outside Quebec, your refundable Quebec abatement is 16.5% of the amount on either line C or line F of Schedule 1, whichever applies.

If you have to file a return for the province of Quebec and you had a business with a permanent establishment outside Quebec, or if you do not have to file a return for the province of Quebec and you had a business with a permanent establishment in Quebec, use Form T2203, Calculation of Tax for 1998 - Multiple Jurisdictions, to calculate your abatement.

Line 448 - Canada Pension Plan overpayment

If you do not have to file a return for the province of Quebec and you contributed more than you had to, as explained at line 308, enter the difference on this line. We will refund the excess contributions to you, or use them to reduce your balance owing. If you have to file a 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

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

Note

If you repaid 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 452 - Refundable medical expense supplement

You may be able to claim a credit of up to $500 if you have an amount at line 332, and all of the following apply. You:

• were a deemed resident of Canada throughout 1998; and
• were 18 or older at the end of 1998.

In addition, the total of the following two amounts has to be $2,500 or more:

• your employment income on lines 101 and 104 (other than amounts received from a wage-loss replacement plan) minus the amounts on lines 207, 212, and 229, and any deduction you claimed on line 232 for a cleric's residence (but if the result is negative, use "0"); and
• your net self-employment income (not including losses) from lines 135 to 143.

You cannot claim this credit if the total of your net income (line 236) and your spouse's net world income (if your spouse lived with you at the end of 1998) is $26,069 or more.

Complete Schedule 10, Refundable Medical Expense Supplement, and attach it to your return. You can claim both this credit and the amount for medical expenses on line 330 for the same expenses.

Line 454 - Refund of investment tax credit

If you are eligible for an investment tax credit (line 412), based on expenditures made in 1998, you may be able to claim a refund of your unused investment tax credit. This refund will reduce the amount of credit available to you for other years.

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

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/HST rebate

If you deducted expenses from your income as an employee (line 212 or 229) or as a partner (lines 135 to 143), you may be eligible for a rebate of the GST/HST you paid on those expenses. Generally, you can claim this rebate if either of the following applies:

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

To claim this rebate, if you incurred the expenses as an employee, use the Employment Expensesguide. If you incurred the expenses as a member of a partnership, use the GST/HST Rebate Guide for Partners. These guides list the expenses that qualify. They also include Form GST 370, Employee and Partner GST/HST Rebate Application, 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 1998 return. If we allow your claim, and assess that return in 1999, you have to report the rebate on your 1999 return.

You may have received a GST/HST rebate in 1998. If you did and you are an employee, see line 104. If you are a partner, contact the International Tax Services Office.

Line 476 - Tax paid by instalments

Enter the total instalment payments you made for your 1998 taxes. In February 1999, we will issue you either Form INNS1, Instalment Reminder, or Form INNS2, Instalment Payment Summary, that shows your total 1998 instalment payments that we have on record. If you made an instalment payment for your 1998 taxes that does not appear on this reminder or summary, also include that amount on line 476.

Note

If tax was withheld from your income, claim on line 437 the amounts shown on your information slips.

Non-residents and non-residents electing under section 217 - If you disposed of taxable Canadian property in 1998, enter the amount of tax withheld on the disposition.

Lines 484 and 485 - Refund or Balance owing

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 line 435 is more than 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

Although you may be entitled to a refund for 1998, we may keep some or all of it to:

• apply against any amount you owe us or are about to owe us;
• apply against certain other outstanding federal, provincial, or territorial government debts, such as student loans, Employment Insurance and social assistance benefit overpayments, Immigration loans, and training allowance overpayments; and
• satisfy a garnishment order under the Family Orders and Agreements Enforcement Assistance Act.

Note

You cannot transfer your refund to pay another person's balance owing.

Direct deposit

You can have your income tax refund, as well as your GST/HST credit and Canada Child Tax Benefit payments (including any related provincial or territorial payments we administer) deposited directly into your account at a financial institution in Canada. If you want your Canada Child Tax Benefit payments deposited into a different account, you will have to send us, either with your return or separately, a completed Form T1-DD(1), Direct Deposit Request - Individuals.

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 has not changed. Your direct deposit request will stay in effect indefinitely, 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 need help to complete the direct deposit information on page 4 of your return, or to cancel the service for one or more of these payments, contact the International Tax Services Office.

Line 485 - Balance owing

Attach to the front of your return a cheque or money order made out to the Receiver General and enter this amount on line 486. Do not mail cash. To help us credit your payment properly, please write your social insurance number or temporary taxation number on the back of your cheque or money order. If you attach a post-dated cheque, it may not show on your Notice of Assessment.

Notes

Another person's refund cannot be transferred to pay your balance owing.

If you make a payment with a cheque that your financial institution does not honour (including a cheque on which you put a "stop payment") we will charge you a fee. Generally, this fee will be $15 for each returned cheque.

Making a payment arrangement  - If you cannot pay your balance owing on or before April 30, 1999, you can make a mutually acceptable payment arrangement by contacting your tax services office. We will still charge daily compound interest on any outstanding balance starting May 1, 1999, 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 "What penalty and interest do we charge?" on page 9for details.

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

CANADA

Electing under s ection 217

What is a section 217 election?

Canadian payers are required to withhold non-resident tax on certain types of income paid to you as a non-resident of Canada. This tax withheld is usually your final tax obligation to Canada on the income.

However, under section 217 of the Income Tax Act, you can choose to report the types of Canadian-source income listed below on a Canadian return (referred to as a section 217 return). By doing this, you may be able to pay tax on this income using an alternate taxing method and may receive a refund of some or all of the non-resident tax withheld. Choosing to report these types of income on a Canadian return is called "electing under section 217".

Does section 217 apply to you?

You have to send us a section 217 return for 1998 if you submitted Form NR5, Application by a Non-Resident of Canada for a Reduction in the Amount of Non-Resident Tax Required to be Withheld, to us for 1998 and we approved it.

You have the option of sending us a section 217 return for 1998 if you did not submit Form NR5 to us for 1998, you were a non-resident of Canada in 1998, and you received any of the following types of Canadian-source income (referred to as section 217 income):

• Old Age Security pension;
• Canada Pension Plan or Quebec Pension Plan benefits;

Auto Pact benefits;

• prescribed benefits under a government assistance program;
• certain pension benefits;
• death benefits;
• Employment Insurance benefits;
• certain retiring allowances;
• registered supplementary unemployment benefit plan payments;
• registered retirement savings plan payments;
• deferred profit-sharing plan payments;
• registered retirement income fund payments; and
• amounts received from a retirement compensation arrangement, or the purchase price of an interest in a retirement compensation arrangement.

Note

Due to recent changes to the Canada-U.S. tax treaty, non-resident tax is no longer withheld on Old Age Security (OAS) benefits and Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits paid to a U.S. resident. Therefore, if you are a U.S. resident and the only section 217 income you received in 1998 was OAS, CPP, or QPP, it would not be to your benefit to file a section 217 return.

When is a section 217 return due?

Your 1998 section 217 return is due on or before June 30, 1999. However, if you have a balance owing, you have to pay it by April 30, 1999 , to avoid interest charges and a late-filing penalty.

Completing your section 217 return

Use the return included in this guide. Write "Section 217" at the top of page 1 and complete the remainder of the return as follows:

Identification

Complete the Identification area as explained on page 12.

Income

Include the following income on your return:

• all section 217 income (see listing on this page) that was paid or credited to you in 1998; and
• your 1998 Canadian-source business and employment income, and taxable capital gains from disposing of taxable Canadian property.

Under proposed changes, do not include any gain or loss from disposing of taxable Canadian property, if, under a tax treaty, the gain from that disposition would be exempt from tax in Canada. See line 127 for details.

Also, do not claim a loss from a business carried on in Canada if, under a tax treaty, any income from that business would be exempt from tax in Canada.

If you are a former resident of Canada, you only need to report employment income received from a Canadian resident, if, under the terms of a tax treaty between Canada and your new country of residence, the employment income is exempt from tax in your new country.

Deductions

Claim the deductions on lines 207 to 256 of your return that apply to you.

Non-refundable tax credits

Complete this area of the return following the instructions that start on page 30.

Complete Schedule A, Statement of World Income, and Schedule B, Allowable Amount of Non-Refundable Tax Credits, to determine the allowable amount of non-refundable tax credits to enter on line 14 (or line 29, whichever applies) of Schedule 1, Federal Tax Calculation. You will find these schedules included in this guide.

Be sure to attach Schedule A, Statement of World Income, to your return. We cannot allow non-refundable tax credits without a completed Schedule A.

Federal tax calculation

Complete Schedule 1, Federal Tax Calculation, to calculate your federal tax payable. You will also need to complete Schedule A, Statement of World Income.

On line 1 of Schedule 1, enter the greater of the following two amounts:

• your "taxable income" from line 260 of your return; or
• your "net world income after adjustments" from line 16 on Schedule A, Statement of World Income.

The "Section 217 tax adjustment" on line 445 of Schedule 1 may apply to you. See the applicable chart on page 43for details. For more information on calculating federal tax, see "Schedule 1, Federal Tax Calculation" on page 43.

Refund or Balance owing

On line 437 of your return, enter the non-resident tax withheld on your section 217 income. Also include the non-resident tax withheld on other Canadian-source income you are reporting on the return.

Be sure to attach your information slips and Schedule A, Statement of World Income, to your return.

As long as you file your section 217 return on time, we will refund any taxes withheld that are more than the amounts you owe.

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 six services listed below:

1. Telerefund (available from mid-February through December) - tells you the status of your 1998 refund.

2. Goods and Services Tax/Harmonized Sales Tax (GST/HOST) credit (available for five and a half weeks each time GST/HST credit payments are issued) - tells you if you are eligible for the GST/HST credit and the date you can expect to receive your payment.

3. Registered Retirement Savings Plan (RRSP) Deduction Limit  (available from mid-September through April) - gives the amount of RRSP contributions you may deduct for 1998 and, if it applies, any undeducted amounts available for you to claim on your 1998 return.

4. Bulletin Board (available year round) - contains recent information that may be of concern or interest to you.

5. Info-Tax (available from mid-January through June) - gives recorded tax information. For a list of topics, see the chart below.

6 . Business Information (available year round) - gives recorded information related to operating a business.

Telerefund, GST/HST credit, 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, Info-Tax, and Business Information are available 24 hours a day, 7 days a week.

How to use T.I.P.S.

From inside Canada, call 1-800-267-6999.

From outside Canada, call (613) 952-3550.

Select the language you want to use, either "1" for English or "0" for French. Next, select the service you want to use:

For Telerefund, press "1."

For GST/HST credit, press "2."

For RRSP, press "3."

For Bulletin Board, press "4."

For Info-Tax, press "5." Once you are in Info-Tax, to select the topic you want, use the three-digit number from the chart below.

For Business Information, press "6."

For Telerefund , GST/HST credit , and RRSP information, we will ask you to provide your social insurance number, your month and year of birth, and the total income you entered on line 150 of your return (so have your working copy handy). If you call before May 1 , use the amount on line 150 of your 1997 return . If you call on or after May 1 , use the amount on line 150 of your 1998 return .

Info-Tax message numbers and topics

International Tax Services Office

Revenue Canada
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 22, 1999, through April 30, 1999
Monday to Thursday (holidays excluded): 8:15 a.m. to 9:00 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 1-800-267-6999
Calls from outside Canada (Eastern Time) (613) 952-3550
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) 526-6332
Assistant Director, Non-Resident Withholding Accounts (613) 526-6584

Fax number (613) 941-2505

Insert Declaration of Taxpayer Rights